Russia Iran India Trade Route Will Shift The Existing Geopolitical Order

A new trade route between Russia, Iran, and India will shift the existing geopolitical order by lowering transit times and charges and will make it very difficult to keep these countries locked away and duly sanctioned by the West.

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A shipment of 41 tons of wood laminate sheeting from Russia is on its way to India. The cargo itself isn’t noteworthy, but the fact that it’s passing via Iran is—potentially signaling the start of a major new economic corridor that enhances Iran’s ties with India…and has important geopolitical ramifications.

Iran’s Islamic Republic News Agency (IRNA) said on Saturday that a pilot run for the new trade route was begun, with the state-owned Islamic Republic of Iran Shipping Lines Group managing the wood laminate’s transportation. According to IRNA, the shipping arrangement allows for the use of a single bill of lading for the entire journey, which minimizes transportation expenses, red tape, and wait periods.

Two 40-foot shipping containers will make their way from Saint Petersburg to the Caspian Sea to test logistics, customs, and other operations. They’ll be trucked across Iran to the Persian Gulf port of Bandar Abbas, then delivered to the Indian port of Nhava Sheva after arriving by ship in the northern Iranian port of Anzali. According to an Iranian official, the journey will take 25 days.

The pilot, according to IRNA, is a part of the long-awaited International North-South Transport Corridor (INSTC). This 22-year-old project aims to connect the Caspian Sea to the Indian Ocean and Persian Gulf via Iran, connecting key ports and drastically lowering transit times when compared to other routes through the Suez Canal, Mediterranean Sea, Atlantic Ocean and North Sea.

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The INSTC was founded in 2000 by India, Russia, and Iran, and today includes Azerbaijan, Armenia, Kazakhstan, KyrgyzKyrgyz Republic, Tajikistan, Turkey, Ukraine, Belarus, Oman, and Syria.

Building a rail line from the Caspian Sea to the southeastern Iranian port of Chabahar is one of Iran’s INSTC goals. A considerably more ambitious plan envisions the construction of a canal that connects the Caspian Sea and the Persian Gulf directly. The Caspian Sea, which stretches 750 miles from north to south and covers an area larger than Japan, is the world’s largest inland water body.

The INSTC pilot follows Iranian Foreign Minister Hossein Amir-pleasant Abdollahian’s formal visit to India, during which he was allowed meetings with Prime Minister Narendra Modi and India’s national security advisor.

According to an official statement from the Indian government summarizing the visit, the two countries “share close historical and civilizational ties. Our bilateral relations are marked by strong linkages across institutions, culture and people-to-people ties .” India praised Iran for allowing India’s medical aid to Afghanistan, including the distribution of Covid-19 vaccines to Afghans living in Iran.

India also praised Iran’s Persian Gulf port of Chabahar, which “has provided much needed sea-access to landlocked Afghanistan and has also emerged as a commercial transit hub for the region, including for Central Asia.”

Rajeev Agarwal of The Diplomat says that India-Iran ties are due for a reset:

India and Iran share close historical ties from the times of Persian Empire and Indian kingdoms. Iran is an important nation in India’s neighborhood and in fact, the two countries shared a border until India’s partition and independence in 1947. Iran is also important to India as it provides an alternate route of connectivity to Afghanistan and Central Asian republics, in the absence of permission for India to use the land route through Pakistan.

In mid-2019, India succumbed to US pressure and stopped importing Iranian oil. India had previously been Iran’s second-largest buyer, after China. With talks on resuming the Iran nuclear deal stalled, Agarwal believes India’s views may shift:

No nuclear deal means no lifting of economic sanctions on Iran and no crude oil exports from Iran. India, which has stressed exercising its strategic autonomy while importing oil from Russia amid sanctions on Russia due to its war with Ukraine, could explore a similar decision point in Iran, opening up a huge potential for trade and cooperation.

India’s economy is the world’s sixth largest. Other countries may follow its lead if it opts out of the Iran sanctions regime.

It’s worth noting that India has been strengthening its business ties with Saudi Arabia and other Gulf countries. Iran has been exploring reconciliation with Saudi Arabia via five rounds of discussions hosted by Iraq, which might be a complementary development.

“We continue to encourage our neighbors in Iran to lean into what can be a very, very important sea change in our region…a new era of cooperation,” Saudi foreign minister Faisal bin Farhan Al Saud said in May.

All of these trends, adds Argawal, indicate to the possibility of a substantial geopolitical shift:

Iran enjoys very good relations with China and Russia. It has commenced opening up to other Gulf nations. If India comes on board with Iran, it will create a huge bloc of countries, money, population, and power, which could then make it very difficult to keep Iran locked away and duly sanctioned by the West. 

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