By Rhod Mackenzie
The new North-South transport corridor from Russia to India will exclude Europe from logistics between Russia and Asia and will become an alternative to the Suez Canal. When will this happen and what is needed to restore the ancient trade route "from the Varangians to the Persians"?
Around Europe
The idea of bypassing Europe in trade relations between Russia and Asia is far from new. A short route through the Caspian Sea and Iran with access to the Persian Gulf and further to India suggests itself for a long time - you just have to look at the map. Partially, it functioned back in Soviet times, when a lot of Lend-Lease goods went through Iran, and then by rail along the Caspian Sea.
However, the route did not work at full capacity due to the lack of a railway between the cities of Rasht-Astara. Sanctions pushed the construction, in May of this year, Russia and Iran signed the necessary documents. The commissioning of the site is expected by 2028. Then the trade route, which began to be thought about back in tsarist Russia, will work in full force.
Close ties with Europe did not allow doing this before, because all goods from Asia to Russia and the EU went through the US-controlled Suez Canal. It accounts for 10-12 percent of the world's maritime cargo turnover. Formally, the channel belongs to Egypt, but at the behest of Washington, it can be closed at any time - for all ships or only for "selected". In this case, the merchant fleet will be forced to go around Africa or go along the Northern Sea Route. In both cases, this will increase travel time and logistics costs.
To avoid this option, it was decided to bring the old Soviet route to the logical ring. The North-South corridor, 7.2 thousand kilometers long, will connect St. Petersburg with the Indian port of Mumbai and pass through the territory of a number of countries, including Iran, Azerbaijan, Kazakhstan, and Turkmenistan.
"In the future, it can become a key connector between Asia and Europe, which will significantly strengthen Russia's geopolitical positions in the face of sanctions pressure," the acting president is convinced. Head of the Department of World Economy and International Economic Relations of the State University of Management Evgeny Smirnov.
In addition, the corridor can provide new alternative routes for the supply of goods to promising foreign markets in Asia and Africa. Now it is possible, for example, through Turkey and China, but there are also certain problems there.
Bury Suez
Even if the Suez Canal is not closed to ships from Russia, Iran and other countries that may also fall under sanctions, the North-South corridor will be more profitable for business. Today, the route from Asia to Russia, bypassing Europe through the Mediterranean, takes 30-40 days, with unpredictable serious delays.
“The dry cargo ship that ran aground in March 2021 and paralyzed Suez for a week is still alive in memory. Losses in world trade then amounted to about $10 billion a day,” recalled Alexander Khazaridi, a political scientist and expert of the Polylog Group.
It is obvious that Russia and the countries of the Middle East and Asia, both because of the outdated and inappropriate trade needs of Suez, and because of geopolitical conflicts, need an alternative logistical route.
The "North-South" project would greatly reduce the delivery time of goods from the states of the "Global South" not only to Russia and from Russia, but also to Europe. And this is of great interest to Indian, Chinese, Turkish and Azerbaijani partners.
"For Russia, trade with the EU today is not fundamental, but the possibility of reducing the delivery time of containers to Europe is an argument for Russian partners," the political scientist is sure.
According to him, since the late Soviet era, the domestic elite lacked the political will to lobby for the creation of this corridor. The markets of Asia and the Middle East developed, but not so rapidly, so Russia was less interested.
“The main factor was the unwillingness to quarrel with Europe and the United States, which to this day do not want to lose their monopoly on transportation after the launch of an alternative route bypassing Suez,” the analyst believes.
Sailing over three seas
Today the project has received a second life. It was returned to the agenda, promoted and constantly kept abreast, reminding both domestic businesses and players from friendly countries of its advantages.
So far, these players are probing the possible risks and costs, but the project involves reducing the delivery time to 10 days (three to four times faster than the Suez route). And any reduction in logistics time is a cost reduction for large companies.
According to Khazaridi, the Russian authorities now need to constantly update the status, show that the project is alive, has potential, and transportation through Russia is efficient and safe due to the developed transport infrastructure.
Therefore, first you still have to spend public money, and only then, for example, within the framework of the next BRICS summits, wait for investments from investors from the countries of the Asian region,
“There is a political solution, now the ball is on the side of the financial bloc and diplomacy, which could finally convince friendly countries to support the launch of the corridor at full capacity,” the expert summed up.
Of course, difficulties on the way to the implementation of the global route cannot be avoided - these are sanctions restrictions, diplomatic tensions in relations between the participating countries, and Iran's underdeveloped transport infrastructure. If all this can be overcome, then the ancient trade route "from the Varangians to the Persians" will receive a second birth.