Economy

The Persian Gulf-Black Sea Corridor: Why should India consider an alternative getaway?

Recently Armenian has suggested the creation of a corridor linking the Persian Gulf and the Black Sea to facilitate trade between India, Russia, and Europe. On March 3rd, 2023, delegation of high-ranking officials and experts from Armenia proposed the idea of creating a corridor linking the Persian Gulf and the Black Sea while visiting India. This suggestion came from the visit of Armenia’s foreign minister Mr. Ararat Mizoyan to India; he has suggested the creation of an alternative trade Corridor that will operate alongside the International North-South Transport Corridor(INSTC) to establish a trade link between Mumbai and Bandarabas Seaport in Iran and then proceed to Armenia and further on to Europe or Russia. This alternative route’s main objective is to bypass Azerbaijan because Azerbaijan has closer ties with Turkey and Pakistan, so Armenia is asking for India’s support and financial assistance. India and Armenia both have a very cold relationship with Turkey and Pakistan. Historically, Turkey has been the closest ally of Azerbaijan and supports Azerbaijan in the Nagarno-Karabakh dispute. Azerbaijan also has close diplomatic relations with Pakistan, and Pakistan also supports Azerbaijan in the Karabakh dispute, and in return, Azerbaijan backed Pakistan’s narrative on the Kashmir Issue. Azerbaijan has entered into defense cooperation and shown interest in incorporating JF-17 Thunder fighter aircraft jointly developed by China and Pakistan. Periodically participated in joint military exercises bilaterally and multilaterally. Azerbaijan has repeatedly supported the Kashmir issue on Pakistan’s position and criticized the India-Armenia defense deal on PINAKA multi-barrel rocket launchers, anti-tank munitions, and a wide range of ammunitions and warlike stores worth US $250 million to the Armenian Forse. India has overtly positioned itself on Armenia’s side in the Nagorno-Karabakh conflict and has consequently opted to resist Azerbaijan and its supporter, including Pakistan and Turkey, over the Kashmir issue and Turkey’s imperial aim of establishing a pan-Turkic empire, governed from Ankara. These factors created a lack of warmth in India-Azerbaijan’s political relations. Thus, India and Armenia both the country have some sets of issues with Azerbaijan as well as Turkey. Armenia’s relationship with India has been growing steadily due to defense exports in recent times.

Historically Armenia shares strong political and business ties with Iran. Both countries share a 35-kilometer-long border that runs along the northern edge of Iran. Iran’s foreign policy towards South Caucasus is very pragmatist in the case of Armenia and Azerbaijan. The conflict between Muslim-majority Azerbaijan and Christian-majority Armenia is viewed differently by Iran, which supports Armenia rather than Shia-majority Azerbaijan. India also maintains a strong relationship with Iran. For India, Iran plays an important role in its connectivity projects to link Central Asia and Europe. India also invested in Iran’s Chabahar Port to develop transit hub that will benefit Indian trade reaching Europe, bypassing Suez Canal. Chabahar Port holds strategic importance for India, mainly because it is the direct competition with Chinese operated Gwadar Port in Pakistan, situated in the Arabian Sea, which is an important part of China Pakistan Economic Corridor(CPEC).

Armenia is seeking Indian Investments for the corridor within Armenian territory in light of the ongoing Russia-Ukraine conflict. The Indian investment could also facilitate the development of other regional projects like the International North-South Transport Corridor (INSTC) and put India on the map of Central Asian transport with links to Europe and Russia. India’s trade with Russia has substantially increased through the INSTC, which provides trade link between Mumbai and Russia via Iran and the Caspian Sea. Azerbaijan plays a vital role in the INSTC mainly because of its geographical location and connectivity links with Iran. However, Azerbaijan has been slow in developing infrastructure projects under INSTC.

With the ongoing cold war between Russia and the West, any large-scale cargo transit passing through the Russia Europe border looks too risky for international Logistics and Insurance companies. Armenia intends to initiate a discussion with India to explore the possibility of Indian companies’ involvement and funding of the Persian Gulf Black Sea Corridor project. Armenia doesn’t have direct access to the Black Sea, which means Goods have to be further transported to Georgia. Only then can reach Europe and Russia. Armenia recognizes the need for Indian traders to do business with Europe, so they have proposed this idea to the Indian government.                          

The proposed Persian Gulf Black Sea Corridor aligns with India’s objective of seeking new trade routes to Europe that avoid the Suez canal, significantly reducing transportation costs and time. This corridor which will link Iran and Georgia via Armenia also reduces the risk of sanctions for India moving to Europe from the West because of ongoing West and Russian hostility. It will boost the confidence of the Indian Treadres and will be beneficial for the Indian economy.

In this sense, the Persian Gulf-Black Sea project has a reasonable cause. However, the question is, why would Iran agree to launch a multimodal corridor through territories with proven issues when it can reach the Black Sea via Turkey? Iran and Turkey have a conflict of interest in this case. Their relations have been tense lately since Turkey informally blocks Iran from using its rail routes to reach Europe. The root of this problem is situated within between Armenia-Azerbaijan conflict. The cold relations between Iran and Turkey are one of the main reasons behind the stagnation of the INSTC. Iran is closer to cooperating with Armenia, while Turkey backs Azerbaijan.  The conflict in Nagorno-Karabakh has the greatest impact on the issue. Turkey is key stakeholder in the conflicts and empowers Azerbaijan to overcome Armenia and block the Iran-Armenia border. If Iran eliminates Turkey, then Iran only has two options to reach the Black Sea: pass through Armenia or Azerbaijan via Georgia. Georgia has existing railway and highway connections with both Armenian and Azerbaijan, and Azerbaijan has a railroad reaching the Iran-Azerbaijan border, but the problem is there is no direct Railway connection that connects Iran to the  Black Sea via Armenia.

On the other hand, Iran and Azerbaijan also working on a 165-kilometer Railway section of the Rashtra-Astra line, which is missing link to connect the Azerbaijani and Iranian Railways. The railway line will connect the city of Rasht, the capital of Gilan province, with the city of Astra, located on the border with Azerbaijan. This Railway link is part of the International North-South Transport Corridor, which aims to provide a more efficient trade route between India, Iran, the Caucasus, and Russia. Recently in January 2023, Russia and Iran agreed to fund the construction of this Missing Link. But the project completion is in question because of the ongoing cold war between Russia and the west. 

For India, INSTC is more than enough to trade only with Russia, Iran, and the caucus region, but India also wants to trade with Europe to throw an alternative route and not via Suez Canal. Thus, the Armenian government is proposing to the Indian government. If India uses the  Russian route to reach Europe via Iran through the Caspian Sea, then it has more chances of getting sanctioned from this Black Sea Corridor will reduce the chances of getting sanctioned by West. However, this alternative trade route involves two countries, Armenia and Georgia, which is calling for heavy infrastructure Investments. However, there can be several potential negative sites to investing in infrastructure projects in other countries, such as political and economic risks, cultural and Social Challenges, legal and Regulatory issues, Financial risks, and geopolitical risks, so it is going to be a tough call for India nevertheless opportunities are there, but nothing is risk-free. Currently, it is a proposal by the Armenian government, we have to see how the Indian government will respond.

Biswarup Baidya

Masters in International relations, Research Intern at Indian Council of World Affairs

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