“Our markets are in Asia and Africa” – Russia’s Deputy PM

Moscow, Russia (Ports Europe) October 21, 2022 - “Our markets are in Asia and Africa,” was the acknowledgment of Russia’s Deputy Prime Minister, Alexey Overchuk, forced on Moscow by western sanctions. With the developed world less dependent on Russian energy and raw materials, Moscow is only left with the bargain-hunting markets of China, India, Iran and Africa for its natural resources-based economy. In 2022, an active reorientation to the markets of countries lying south of Russia began, which requires accelerated development of the North-South transport and logistics direction – the International North-South Transport Corridor (INSTC), Overchuk said during the International forum Made in Russia’22. He did not mention the reason for the shift – Russia’s invasion in Ukraine. The new Russia’s market is the former Soviet Union, China and Iran Overchuk proudly listed countries with a “friendly or neutral position” towards Russia which are the current and future markets for Moscow. He referred to five alliances, which apart of BRICS states, consist only of former Soviet states, highly dependent on Russia: Eurasian Economic Union (EAEU) - Armenia, Belarus, Kazakhstan, Kyrgyzstan & RussiaCommonwealth of Independent States (CIS) - Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia Tajikistan, Turkmenistan & UzbekistanCollective Security Treaty Organization (CSTO) - Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia & TajikistanShanghai Cooperation Organisation (SCO) – China, Kazakhstan, Kyrgyzstan, Tajikistan & UzbekistanBRICS - Brazil, India, China, Russia & South Africa The deputy prime minister also went as far as to suggest that the International North-South Transport Corridor will be a “convincing competitor to the Suez Canal”. In the shadow of Iran Overchuk outlined the three routes of the INSTC again without mentioning that all three are highly depended on another international pariah state, Iran: Along the western coast of the Caspian Sea through Dagestan, Azerbaijan and Iran (road & rail)Interconnections between the ports of all Caspian Sea littoral statesAlong the eastern shore of the Caspian Sea from Russia through Kazakhstan and Turkmenistan to Iran (road & rail) Overchuk believes that the advantage of the INSTC is access to the seaports of Iran that can provide access to the markets of Pakistan, India, Southeast Asia, Persian Gulf & Africa. He acknowledged that the road and railway infrastructure along the INSTC does not come near the requirements of the desired, expanded trade and needs to be modernised with an increased capacity. He said that Russia, Azerbaijan and Iran are negotiating the creation of a tripartite transport and logistics operator for the western route of the INSTC. Dredging and reconstruction of the Volga-Caspian sea shipping channel is underway, as well as the development of the ports of Astrakhan, Olya and Makhachkala in Russia. Overchuk’s list of pending large, expensive and time consuming projects continues with the Alyat port in Azerbaijan that is being expanded; Iran starting to modernise and integrate its ports with the country's railway system; investments in the development of terminals and the construction of logistics centers in Iran’s ports of Bandar Abbas and Chabahar. Railway corridor via Afghanistan? Overchuk said that a second international transport corridor will pass through Kazakhstan and Uzbekistan to Afghanistan, Pakistan and India. The implementation of the project will provide a direct rail link for Russian exporters with Pakistani ports in the Indian Ocean, as well as a connection with Indian railways. He did not elaborate how exactly the Afghanistan’s section is going to be build. Mongolia as a land bridge to China The development of the third international transport corridor depends on the modernization and construction of railways and roads between Russia and China through the territory of Mongolia – a dream project since the time of the Soviet Union which entirely depends on China’s financing. More containers via Astrakhan Russia’s Astrakhan region, with its Caspian Sea port of Olya, handled five times more containers in June-September compared to the same period of 2021; and expect more increases this year. This was said by Deputy Prime Minister of the Region, Denis Afanasiev, at a meeting of the Union of Industrialists and Entrepreneurs of the Southern Federal District (SFD). The increase is due to the collapse of the north-west logistics chains because of western sanctions against Russia. It also follows Russia’s attempt to find ways to by-pass this sanctions and import/export cargo to and from countries that are still not supporting them, like Iran, another global pariah state and a Caspian littoral state. The meeting discussed ways to increase cargo traffic and the creation of new logistics chains along the INSTC. A desperate Russia keeps pushing for increase in cargo volumes via the INSTC. Some 14 million tonnes of cargo were transported along it in 2021. Moscow would like to double this figure by 2030. The Caspian Sea region could be one of the largest international transport hubs in Eurasia, Russis’s Prime Minister Mikhail Mishustin, said. However, this upbeat statement can’t hide the fact that in the Caspian region Russia relies on Iran, also under intense western sanctions. Mishustin also admits what experts are saying for months now; southern Russian regions lack modern road and railway connections. Also, Russia’s Caspian Sea ports are not connected with contemporary multimodal infrastructure and not equipped to handle increased cargo volumes. Port of Olya According to Afanasiev, the launch of the first stage of Olya’s port special economic zone in 2023 will contribute to the growth of container shipping in the region. Transport companies from Iran, Azerbaijan, Turkmenistan and India are interested in creating their own logistics terminals in the region. Olya is in the Limansky District of the Astrakhan Region on the bank of Bakhtemir River connecting Volga River with the Caspian Sea. The reconstruction of its berths No. 8 and No. 9 in 2023 will increase cargo handling capacity of the port to 3-4 million tonnes per year. Half of the capacity will be containers, Sergey Milushkin, General Director of Lotos, port’s special economic zone (SEZ) in Olya said. The head of the Volga Directorate for the management of the terminal and warehouse complex, Nikita Tyurin, said that as part of the development of the INSTC, the Kutum cargo terminal in Astrakhan would be modernized by 2024. The renovation provides for the reconstruction of container and heavy-weight platforms, the modernization of lifting mechanisms. These transformations will make it possible to process more than 3.5 million tonnes of cargo per year. The Iranian company Golden Line has confirmed its readiness to invest in Olya’s SEZ Lotos and create, together with the anchor resident Caspian transport and logistics center Milushkin said that work is underway with the Iranian economic zones Anzeli and Chabahar. In addition, the company of the Iranian holding Golrang Industrial Group is building a plant for the production of detergents in the Lotos SEZ. He recalls that the Russian port SEZ at the end of 2023 will be ready to receive the first containers from Iran, as well as from India in transit through Iran. INSTC INSTC is a multimodal transportation corridor established in 2000 for the purpose of promoting transportation cooperation among the Member States. It connects India Ocean, Persian Gulf and the Caspian Sea via Iran, and is then connected to Saint Petersburg, Russia. The transport corridor is a 7,200-km network of ship, rail, and road cargo route. Russia has three ports on the Caspian Sea coast: Makhachkala, Olya (where a new port is being developed, is just 50 km to the north) and Astrakhan. These ports need significant investments in order to be turned into modern multimodal transport hubs. They lack developed railway and road connections, modern port-related infrastructure. Volga-Caspian shipping canal The Astrakhan region is also currently dredging the Volga-Caspian shipping canal to increase its depth to 4.5 m. Currently, the canal is 3.5 m deep and during part of the year it is even shallower. RosMorPort, which is part of RosMorRechFlot, is currently dredging the canal, but much more work is needed to ensure the canal width for two-way traffic and the safe movement of ships. Conclusion “Our markets are in Asia and Africa”. The above information shows this to be an ambitious, international plan, needed because Russian President Putin started a war in Ukraine. Russia seeks new markets for its energy and raw material resources. It is a huge jigsaw of projects which requires a huge amount of new infrastructure and international cooperation. To realise any of this would most probably take many years. More Ports Europe news about Caspian Sea ports Copyright (C) Ports Europe. All Rights Reserved. 2022.

“Our markets are in Asia and Africa” – Russia’s Deputy PM

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“Our markets are in Asia and Africa” – Russia’s Deputy PM

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