Iran, Russia finalizing agreement for constructing Rasht-Astara railway

Tehran and Moscow are finalizing the draft of a contract for the implementation of the agreement to construct the Rasht-Astara Railway

Tehran and Moscow are finalizing the draft of a contract for the implementation of the agreement to construct the Rasht-Astara Railway.
In a meeting held between Deputy Minister of Russian Railways Sergey Pavlov and Iran’s Ambassador to Russia Kazem Jalali, the two sides emphasized compiling the contract for the implementation of the agreement to construct the Rasht-Astara Railway.

During the meeting, the two sides explored avenues for the development of transportation within the framework of the International North-South Transport Corridor (INSTC). In addition, the two sides examined the trend of bilateral cooperation regarding the construction of the Rasht-Astara Railway with the framework of the INSTC, according to the website of Iran’s Ministry of Roads and Urban Development.

The Deputy Minister of Russian Railways acknowledged during the meeting that transporting containerized cargo from the eastern side of the INSTC registered a 400 percent growth through ‘Sarakhs’ and ‘Incheh boroun’ customs in the first quarter of the current year (January-March) compared to the same period last year.

Talks are ongoing between Tehran and Moscow to determine the tariff for transporting chemical fertilizer and coal from Russia to Iran, the United Arab Emirates and India, Pavlov added. Iran and Russia, both under harsh Western sanctions, on May 17 inked an agreement on the long-stalled construction of a railway connecting the northern Iranian cities of Rasht and Astara.

Spanning 162 km (100.6 miles), the railway is a crucial element of the INSTC. The corridor integrates road, rail, and sea transportation, facilitating the movement of goods between Russia and India via Iran.
Through a video conference, Iranian President Ebrahim Raisi and his Russian counterpart Vladimir Putin addressed the ceremony in Tehran where the two countries’ transport ministers signed the agreement.

Raisi thanked Putin and the Russian government for their involvement in the initiative and referred to it as an “important strategic step” in bilateral cooperation that will benefit all countries involved in the INSTC. Putin, for his part, called the occasion a “landmark moment for the entire global transport infrastructure.”

According to this agreement, the Russian Federation will invest 1.6 billion euros in this railway route.
Iran has been a key player in the INSTC and stands to benefit greatly from its full realization. As reported by Amwaj media, the Raisi government has seemingly banked significantly on transit becoming a top revenue generator. But Iran stands to gain from the project in more ways. The operationalization of the corridor could mean improved relations between Iran and India, aligning New Delhi more closely with Tehran’s regional interests. A vital element of the INSTC, the Rasht-Astara railway project has been stalled for years due to costs, engineering, and logistical complications.

Leader of the Islamic Revolution Ayatollah Seyed Ali Khamenei stressed the importance of completing the stretch of the railway in his July 2022 meeting with Putin in Tehran. VTB’s new office in Tehran is part of Iran and Russia’s ongoing efforts to connect their banking systems. The two countries signed an agreement on January 29 to link their inter-bank messaging systems.

Due to Western sanctions, both countries have been cut off from SWIFT—a leading Belgium-based financial messaging service.
Both Iran and Russia are looking to reap the potential economic benefits of increased transit amid Western sanctions. The Raisi government seeks to mitigate the adverse effects of sanctions through de-dollarization of trade and the establishment of direct banking and payment channels outside the international banking system.