Iran, Russia finalizing technical details of Rasht-Astara railway project

November 6, 2023 - 13:34

TEHRAN - Kheirollah Khademi, the managing director of Iran's Construction and Development of Transportation Infrastructures Company (CDTIC), has said 70 percent of the technical issues regarding the Rasht-Astara railway project have been discussed and finalized with Russia, and the rest will also be finalized soon.

“An agreement has been signed with Russia so that this country will provide us with a government loan for the construction and completion of the Rasht-Astara railway; this agreement includes the general and private terms of the contract, the employer's requirements, the funding methods, and the project implementation schedule,” Khademi told the news portal of the Iranian Transport Ministry.

The official also announced the signing of the executive blue prints of the railway and added: “After many technical and specialized meetings by the experts of the two countries, the railway’s blue print was prepared with special amendments to increase the speed and capacity of the route.”

Iran and Russia, both under harsh Western sanctions, on May 17 inked an agreement on the long-stalled construction of a railway connecting the northern Iranian cities of Rasht and Astara.

The railway is key to the International North-South Transit Corridor (INSTC).

Spanning 162 km (100.6 miles), the railway is a crucial element of the INSTC. The corridor integrates road, rail, and sea transportation, facilitating the movement of goods between Russia and India via Iran.

Through a video link, Iranian President Ebrahim Raisi and his Russian counterpart Vladimir Putin addressed the ceremony in Tehran where the two countries' transport ministers signed the agreement.

Raisi thanked Putin and the Russian government for their involvement in the initiative and referred to it as an "important strategic step" in bilateral cooperation that will benefit all countries involved in the INSTC. Putin, for his part, called the occasion a "landmark moment for the entire global transport infrastructure."

According to this agreement, the Russian Federation will invest 1.6 billion euros in this railway route.

The deal came a day after the former Head of Iran's Trade Promotion Organization (TPO) Alireza Payman-Pak announced that Russia's second-biggest bank, VTB, had opened a representative office in Tehran.

Peyman-Pak said that the office, which marks the first "direct presence" of a Russian bank in Iran, will be used for foreign currency transfers.

State-owned VTB was sanctioned by the EU, UK, and the U.S. following the conflict between Russia and Ukraine in Feb. 2022.

The railway deal has been hailed by state officials and media in Iran as part of a significant future source of income.

Raisi's Deputy Chief of Staff for Political Affairs Mohammad Jamshidi has predicted that the earnings from the INTSC would be able to rival Iran’s oil revenue. In this vein, the ISNA news agency on May 17 estimated annual revenue of $20 billion from the Corridor.

The Jam-e Jam newspaper described Iran as the "golden path of trade" in an article highlighting the potential benefits of the railway.

Meanwhile, the Tasnim News Agency said ahead of the deal that the "curse" that has so far stalled the railway project would be broken through "Russian partnership."

India, Iran, and Russia initially struck an accord in 2002 to forge the INSTC. The ambitious undertaking aims to create a new transit route linking India to Afghanistan, Central Asia, and Russia via Iran's southern and northern coastal regions.

The corridor is seen by Russia as a potential rival to the Suez Canal, a far longer route for trade with northern Europe.

Iran has been a key player in the INSTC and stands to benefit greatly from its full realization. As reported by Amwaj.media, the Raisi government has seemingly banked significantly on transit becoming a top revenue generator. But Iran stands to gain from the project in more ways.

The operationalization of the corridor could mean improved relations between Iran and India, aligning New Delhi more closely with Tehran’s regional interests.

A vital element of the INSTC, the Rasht-Astara railway project has been stalled for years due to costs, engineering, and logistical complications.

Leader of the Islamic Revolution Ayatollah Seyed Ali Khamenei stressed the importance of completing the stretch of the railway in his July 2022 meeting with Putin in Tehran.

VTB's new office in Tehran is part of Iran and Russia's ongoing efforts to connect their banking systems.

The two countries signed an agreement on January 29 to link their inter-bank messaging systems.

Due to Western sanctions, both countries have been cut off from SWIFT—a leading Belgium-based financial messaging service.

Both Iran and Russia are looking to reap the potential economic benefits of increased transit amid Western sanctions.

The Raisi government seeks to mitigate the adverse effects of sanctions through de-dollarization of trade and the establishment of direct banking and payment channels outside the international banking system.

EF/MA