Railway transport as a tool to diversify economy

By Aynur Karimova

Amid a decreasing oil prices and divergent monetary policies globally, the national economies are forced to develop new economic scenarios.

To minimize the impact of the ongoing economic crisis to the nation, not only oil producing, but also oil-free economies are keen on diversifying the economy and reducing their dependence on petrodollars.

In this regard, the Azerbaijani government sees the transport sector as a central direction in a bid to diversify the national economy. Azerbaijan, with its advantageous geographical position at a crossroads between East and West, enjoys good conditions to develop transport sector.

First of all, the South Caucasus nation has established good partner relations with regional countries - Iran, Russia and Turkey. Secondly, Azerbaijan has developed transport infrastructure, which paves the way for the country to become a regional transport hub.

Thirdly, Azerbaijan has traditionally paid significant attention to the development of railway transport and the implementation of major projects of international importance.

In this regard, development of the western segment of the North-South transport corridor is of significant importance. The North-South railway, which is a part of the North-South corridor, railway is expected to serve as a bridge to connect the railways of Iran, Azerbaijan and Russia as well.

The North-South corridor, originating in India and stretching to Helsinki, is one of the most important routes for the region. It is a multimodal route for transportation of passengers and cargo from Russian St. Petersburg to the Mumbai (Bombay) port. It is designed to carry transit cargo from India, Iran and other Persian Gulf countries to the territory of Russia (the Caspian Sea) and further - to Northern and Western Europe.

The importance and capabilities of the North-South corridor is believed to be significant. Forecasts show that the capacity of this corridor is estimated at more than 20 million tons per year. The North-South route suggests three routes - the trans-Caspian (in fact, the sea route between Russia and Iran with an access to the railway), the eastern (a railway link to the east of the Caspian Sea) and the western (via Azerbaijan).

The year of 2015 was a quite productive year in terms of promotion of the North-South project. Meetings, negotiations and intensive discussions held last year once again show the willingness of the sides to develop the railway transport.

Also, Baku will host a meeting of the authorities of Iranian railway, Iran's ports and representatives of shipping companies engaged in transportation operations in the Caspian Sea as part of the North-South project on January 12.

Azerbaijan’s transit role is increasing by the day in view of the expected lifting of international sanctions from the Islamic Republic. Also, it is expected that the complete removal of international sanctions against Iran after the final settlement of issues related to Tehran's nuclear energy program will unveil new opportunities for economic development for countries in the region.

Earlier, Javid Gurbanov, the Head of the Azerbaijani Railways, told local media that in 2016, Azerbaijan and Iran will be engaged in the construction of the railway bridge over the Astara River on the border between the two countries.

"We continue negotiations with our Iranian partners, and the next meeting will be held on January 12. The purpose of the meeting is to provide the transportation of Iranian goods to Russia, Europe (Helsinki and via the Georgian ports - in the Black Sea) and to renew our work in this direction," said Gurbanov.

Azerbaijan does not have a railway link with Iran. Currently, the vast majority of cargo traffic between the two countries is implemented by road transport, which greatly limits the possibilities of development of trade and economic relations between them and their transit potential.

In this regard, Azerbaijan and Iran are working over the project of joining their railway systems with an aim to develop the North-South corridor. It will be possible after the Iranian side completes construction of the Gazvin-Rasht-Astara (Iran) rail, with a total length of over 350 kilometers. Work in the Iranian territory is expected to be completed in 2016.

Azerbaijan also takes decisive steps in this regard. In particular, it is planned to complete the first stage of construction works in 2016, which envisages laying 8-kilometer railway from the Azerbaijani Astara to the Iranian border, where a bridge across the river of Astara will be built. Along with this, a terminal and a broad road will be built in the territory of Iran, which will simplify the transportation of goods arriving from Iran via the Azerbaijani territory.

Gurbanov believes that by expanding cooperation with Azerbaijan, Iran intends to import grain from Ukraine through Georgia and Azerbaijan, sending oil products in return. The Iranian side has already shouldered the construction of the missing two-kilometer section of the railway to the port of Amirabad on the Caspian Sea.

"We, together with the Iranian and Georgian sides, agreed to coordinate efforts for the construction of railway tracks of two standards (1,520 and 1,435 millimeters), which will allow us to carry cargo from the port of Amirabad to Baku international port not only via the sea but also by railway," he noted, adding that Ukraine is extremely interested in the development of cargo traffic with Iran.

Iran does not harvest grain, but purchases it from Kazakhstan and Ukraine. In the first stage, Iran intends to purchase 2-3 million tons of grain a year from Ukrainian ports of Odessa and Ilyichevsk, delivering it through Georgia and Azerbaijan via the North-South corridor and on the Caspian Sea. In return, Tehran plans to supply fuel oil, bitumen and other petroleum products.

Thus, the establishment of railway communication between Azerbaijan and Iran and the development of the North-South transport corridor will open significant prospects for the development of cargo and passenger traffic between Europe and Asia.

Azerbaijan, in turn, will be able to increase its transit potential: it will bring great benefits not only to the country, but also to the region as a whole. The corridor will make greater contribution to the diversification of Azerbaijan's economy and make the country even more efficient and more resistant to any potentially possible global crisis.

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Aynur Karimova is AzerNews’ staff journalist, follow her on Twitter: @Aynur_Karimova

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