ITC “North-South” and its influence on the development of relations between Azerbaijan and Russia

The North-South International Transport Corridor (ITC) project was launched with the aim of reducing the time and cost of cargo transportation from Russia to India and creating an alternative to maritime trade. During the Second Euro-Asian Transport Conference, held in St. Petersburg on September 12, 2000, an agreement was signed between Russia, Iran and India to launch the North-South project. Currently, the international corridor with a length of 7.2 thousand km covers 11 countries of the world.

Relevance of the ITC "North-South" project for Azerbaijan

ITC "North-South" consists of three main routes:

• Trans-Caspian or Centralwhich starts from the Indian port of Jawaharlal Nehru in the Mumbai region on the Indian Ocean and further covers the Iranian port of Bandar Abbas in the Strait of Hormuz, road and rail routes up to the northern part of Iran, the Iranian port of Anzali in the Caspian Sea, the Russian ports of Astrakhan and Lagan, as well as ports of Azerbaijan, Kazakhstan and Turkmenistan;
• Eastern, which connects Russia and India through the countries of Central Asia — Kazakhstan, Uzbekistan and Turkmenistan;
• Western — passes through Astrakhan, Makhachkala, Samur, the territory of Azerbaijan up to the Astara station and further through the territory of Iran through the cities of Astara, Rasht, Qazvin.

Due to the sanctions imposed by Western countries against Iran, in the period between 2005-2012. the project was frozen. In August 2016, a meeting of the heads of state of Azerbaijan, Iran and Russia took place in Baku. As a result of the summit, the ITC "North-South" project the official start was given.

Azerbaijan, whose territory falls on the Western route of the corridor, joined the project in 2005, and since then it has been actively involved in modernizing its own infrastructure.

In connection with the current geopolitical situation, the role of the North-South ITC has increased significantly. Baku in most cases stands for the implementation of international projects and cooperation, which has a positive impact on the economy of both Azerbaijan itself and the countries of the region. The Azerbaijani side is interested in the development of the project for the following reasons:

• the development of the project will affect the increase in the number of transit traffic;
• indicators for the development of the country’s foreign trade will increase;
• location of ITC "North-South" creates the opportunity to interface with other corridors.

Work done to improve infrastructure within the project

Against the background of the new geopolitical reality and the change in Russia’s foreign policy vector from West to East, the relevance of the North-South project has increased sharply recently. In this regard, the countries participating in the project began to solve problems that had previously slowed down the process of trade turnover.

Currently, among the main obstacles to the further development of transportation along the corridor are:

• insufficient potential of the transport fleet in the Caspian Sea;
• freezing of ports in the northern part of the Caspian Sea for several months a year;
• limited depths of passage along the Volga-Caspian Sea Shipping Canal and the Volga-Don Canal, which does not allow large vessels to pass;
• Iran's underdeveloped railway network;
• «one-sided» transportation of goods due to the fact that loading of ships and wagons on the return journey is not always ensured;
• limited information regarding the positions of the countries participating in the project in connection with its implementation (this information most often becomes available through the media).

According to expert Ilgar Velizadeh, despite the fact that colossal work was done within the framework of the project, Iran’s incomplete construction of the Rasht-Astara section of the railway slowed down the further activities of the ITC. In the spring of 2023, an agreement was signed between Iran and Russia on the construction of the missing part of the railway, 162 km long, its construction will be completed in 2027. The Russian side pledged to invest 1.3 billion euros in the project. It was also noted that Russian Railways may participate in the construction process. According to expert economist Miragi Akhmedov, a 5,200 km railway line will be created from India to the port of Helsinki in Europe. As a result, cargo transportation time will be reduced from 45 to 20 days, and the distance will be reduced by approximately 3 thousand km.

In addition, in the summer of 2023 it became known that being a section of the North-South ITC. in the Volgograd region, a transport interchange over a railway crossing in the area of the village of Vodstroy will be commissioned in 2024.

In September 2023, a declaration was signed in Baku between Iran, Russia and Azerbaijan, in which the parties expressed their readiness to cooperate on the issue of operating the ITC to the fullest extent. According to the plan, by 2030 trade turnover along the North-South ITC should increase to 30 million tons, and in the long term — by 100 million tons. The construction of the railway will provide Russia with direct access to the Persian Gulf through through railway communication.

October 25–26, 2023, an international forum entitled “ITC North-South — New concept” was held in the city of Astrakhan, where more than 150 companies from Azerbaijan, Russia, Iran, Kazakhstan, Turkmenistan, as well as Belarus, Uzbekistan, India and other countries participated. Representatives of the companies discussed areas of cooperation in the transport and logistics sector, as well as issues related to the implementation of the North-South project.

According to Russian Prime Minister Mikhail Mishustin, for 9 months of 2023, trade turnover within the framework of the North-South project increased by 30% compared to the previous year. Also, during the visit of Iranian President Ebrahim Raisi to Russia, negotiations were held with representatives of Russian transport companies in order to increase the volume of cargo transportation as part of the project. During the discussions, the parties noted that in addition to increasing the volume of cargo transportation, transit time decreased from 49 to 20 days.

The role of Azerbaijan in the development of the North-South project and its impact on Azerbaijani-Russian relations

In 2016, the President of the Republic of Azerbaijan Ilham Aliyev issued a decree according to which, within the framework of the North-South project, Infrastructure improvement work began on the territory of Azerbaijan. According to the national secretary of the TRACECA intergovernmental commission for Azerbaijan, Rufat Bayramov, the country's railways, starting from the border with Russia and ending with the border with Iran, are subject to restoration. As part of the above work, the railway connecting the Azerbaijani city of Astara with the Iranian city of Astara was also restored.

Despite the existing problems, work is currently underway along all three routes of the corridor to ensure its smooth operation. There is an opinion that over time the Trans-Caspian route will become the main direction for cargo transportation, and the Eastern and Western routes will play a secondary role. Thus, according to Alexander Karavaev, a researcher at the Institute of Economics of the Russian Academy of Sciences, in the field of military-technical cooperation between Russia and Iran, it is most profitable to use sea transit. According to the expert, in addition to the costly process of improving infrastructure, tensions between the Iranian and Azerbaijani sides may cause problems in using the Western route.

However, despite the fact that the significance of Azerbaijan’s role in the development of the project is at times not highlighted, indicators over the past year confirm that at the moment the Western route of the corridor is its main direction. In the first half of 2023, trade turnover under the project increased by 41.8% and amounted to 4 million tons. The main share of cargo transportation (namely — 3.6 million tons) fell on the Western route. In general, over the six months, trade turnover in this direction increased by 37.9%. During the same period of time, trade turnover along the Eastern route amounted to 353.5 thousand tons, and along the Trans-Caspian — 117.7 thousand tons.

In addition, Azerbaijan is a profitable partner due to the presence in the country of a double-track electrified railway equipped with optical communication channels. The Baku-Yalama section of the road was restored with a loan of $400 million allocated by the Asian Development Bank. There are also plans to restore the Alyat-Astara section in the future.

As for highways, the construction of the Samur-Baku expressway is planned to be completed by the end of 2023. Before this, in 2019, the Yalama-Gazmalar bridge across the Samur River, located on the Azerbaijani-Russian border, was put into operation. In order to ensure smooth transportation, a checkpoint (checkpoint) “Khanoba” was launched. and the Shirvanli checkpoint was reconstructed.

In addition, in October 2023, Ilham Aliyev announced the launch of the Baku-Guba toll road, 129 km long. It was noted that the operation of the road is of strategic importance within the framework of the North-South project, and this will have a positive impact on increasing the efficiency of the ITC.

As for relations between Iran and Azerbaijan, it should be noted that in the summer of 2023, representatives of the parties discussed the issue of implementing the project, despite the tension existing between the countries at that time. It is also worth noting that the success of the project largely depends on the relations of Russia and Azerbaijan with the Iranian side. For the implementation of the project and its normal operation, it is also necessary for the parties to create a single logistics operator.

The impact of the development of the North-South ITC for regional cooperation

Baku has always been a supporter of the implementation of both regional and global projects, the implementation of which contributes to the development of the region and cooperation between countries. The location of Azerbaijan at the intersection of the North-South and West-East corridors, as well as the presence of the necessary infrastructure in the country, makes it strategically attractive to other countries. Global work on the construction and restoration of infrastructure in the Karabakh and East Zangezur economic regions, in parallel with the international airports operating in the region, creates opportunities for both Russia and Iran, as well as other neighboring countries, to expand cooperation and gain access to new markets.

In the current geopolitical situation, the role of the North-South ITC is is of particular importance for the Russian side, since it will provide it with access to new international markets. The western route, covering the territory of Azerbaijan, is currently — the most important direction of the corridor, which takes Azerbaijani-Russian relations to a new dimension.

In turn, the restoration of transport communications between the countries of the South Caucasus will contribute to the development of both economic and political relations within the region, and will also have a positive effect on the development of cooperation between the South Caucasus and Central Asia.