New trade route helps Russia and Iran bypass sanctions – Bloomberg

Cargo transportation between the two countries via the Caspian Sea has increased, tracking data compiled by the news outlet shows

Russia and Iran are building a new transcontinental trade route and are rapidly expanding supply chains, having stepped up mutual cargo deliveries across the Caspian Sea, Bloomberg reported on Wednesday, citing tracking data.

The trade corridor that stretches from the Sea of Azov and the mouth of the Don River in Russia to Iranian hubs on the Caspian Sea and ultimately the Indian Ocean has become increasingly busy in recent months, with new routes emerging, according to the report. Ship-tracking data compiled by the news outlet showed hundreds of both Russian and Iranian vessels along rivers that lead to the Caspian Sea.

Iran’s geographical location allows Russia to safely transport goods via the trade corridor through Iranian territory all the way to Asia and India without incurring the risk of Western sanctions.

“With European transport networks getting closed off, they’re focused on developing alternative trade corridors which support Russia’s turn to the East. You can impose controls over sea routes, but land routes are difficult to watch. It’s almost impossible to track them all,” Nikolay Kozhanov, a Gulf expert at Qatar University, told Bloomberg.

Trade with Iran, while significant on its own, is seen as “a logistical bridge” between Russia and the Middle East, as well as South and Southeast Asia, according to the head of the Russian Chamber of Commerce and Industry, Sergey Katyrin.

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At an economic forum in September, Russian President Vladimir Putin also drew attention to the need to develop the ship, rail, and road infrastructure along the route, as it “will provide Russian companies with new opportunities to enter the markets of Iran, India, the Middle East and Africa, and will facilitate supplies from these countries in return.”

“This is about establishing sanctions-proof supply chains all the way through,” Maria Shagina, an expert on sanctions and Russian foreign policy at the International Institute for Strategic Studies, told the news outlet.

Russia and Iran are investing some $25 billion in the expansion of the trade route, according to Shagina.

Russia is also reportedly in the final stages of establishing rules that would give ships from Iran the right of passage along the inland waterways of the Volga and Don rivers, according to Iran’s Maritime News Agency.

Trade between Russia and Iran has surged this year, with turnover exceeding $4 billion over January-October 2022 and expected to surpass $5 billion by the end of the year, according to Russia’s Federal Customs Service. Russian exports to Iran have so far jumped by 27% versus last year, while imports are up 10%.