IRAN’s Role in the Transit of Goods after the Implementation of OBOR

In order to develop the Silk Road project, every day China is making new investments in the construction of city, road and port. Meanwhile, many countries are trying to take a larger share of this project. In addition to revival of the land routs of Silk Road, a sea lane has been planned in the “One Belt-One Road” project too. The sea lane includes a network of routes connecting the east to the west. In this case, China has invested more than $20 billion in ports of foreign countries and is still looking for buying ports in the countries in the way of Silk Road. Due to its strategic position and advantages such as having the shortest route towards Europe, Iran can play a valuable role in the transit of goods after the revival and completion of the Silk Road. So we had an interview with Mojtaba Soleimani, the faculty member of the Institute for Trade Studies and Research. You will read this interview in the following paragraphs:

News ID: 77170

Date: 07 November 2017 - 09:21

1. What is the necessity of reconstructing of the new Silk Road?

The new Silk Road Project has been propounded by China since 2013 and consists of two land and sea routes. The land route, known as the “One Belt”, extends from China to Europe, passing through the several countries in Asia and Eastern Europe, and eventually reaches the city of Venice in Italy. Its sea route which is called “One Road” starts from the east of China, passes through the ports of some countries in South Asia, then continues along the coast of the African countries, and eventually reaches the city of Venice in Italy. As a result, both the routs of Silk Road start from two cities in eastern China and eventually reach to each other in Venice. China is developing a continental and maritime dual strategy. This maritime strategy is not just for business, but for strategic partnership to form a “The String of Pearls” (according to the Chinese) in south and southeast of Asia by establishing a set of permanent military bases to supply energy such as Chittagong in Bangladesh, Coco Islands in Myanmar, Hambantota in Sri Lanka, Marao in Maldives, and Gwadar in Pakistan. By investing a huge portion of its resources (about $ 900 billion) in One Belt-One Road project, one of the key policies of the President Xi Jinping, China wants to become the world’s first economy. By completing this project, China’s GDP could increase by 25%. While the Chinese economy has been hit by the crisis recently, the plan should be developed once more by facilitating exports and consolidating international relations and global affairs, so China could achieve the predicted growth of 6.8%. The implementation of this great strategy will help China increase its economic integrity with Western countries. Along the path of One Belt-One Road, there are 65 countries from Central Asia, Southeast Asia, South Asia, Eastern Europe, East Asia, and North Africa; with population of 4.4 billion, and $ 21 trillion disposable income which has 63% of a belt and 29% of the road in glob capacity. Over the past 10 years, China’s trade with these countries has increased at an annual average rate of 19%, which was 4% higher than the average annual growth rate of Chinese foreign trade over the same period. China’s main goal of implementing huge infrastructure projects in the form of a new Silk Road is to dominate markets of Western countries, although Chinese companies take benefit of partnership with American and European corporates. The construction of the new Silk Road is one of China’s widespread plans to increase business engagement with other countries in the world, especially countries in the West Asia and Eastern Europe. China has considered this plan under the title of “One Belt-One Road” and the slogans of “joint exploitation”, “joint responsibility”, and “joint destiny”.

2. It seems that the process of renovating the Silk Road by China is more land-based, while it is rational that by considering the volume of goods the sea was considered as the main path. By this way, is the revival of the Silk Road an opportunity or a threat (by considering the sea dimension in it)?

There are other factors that affect the land and sea dimension. The distance is one of them which have been taken into consideration in this project. For example, Gwadar port in Pakistan facilitates access to energy resources in the Central Asian republics, and it will significantly help China in the case of energy crisis in Pakistan. Currently, 60% of China’s energy is supplied from the Persian Gulf. This country pays a great deal for oil imports from the Middle East which is a 16,000 kilometers route while Gwadar port reduces the route to 5,000 kilometers. Gwadar gives China the opportunity to access faster and safer to a region that holds 48% of the world’s oil and 38% of the world’s natural gas reserves. The 15,000 kilometers gas pipeline in Afghanistan should also pass through Gwadar, which will help natural gas of Turkmenistan to reach the world markets. Gwadar will make a huge flow of trade for Pakistan, China, and the entire region. On the other hand, the presence of pirates in the Strait of Malacca and other maritime routes increases the incentive for countries to use this transit road.

3. What role does Iran play in this project?

Of course, Iran has its role in this plan. For this huge project, six land corridors have been defined, one of which is the China-Central West Asia Economic Corridor (CCWAEC), which passes through Iran. This corridor starts from Urumqi in China, and reaches to Europe through Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan, Iran and Turkey.

Regardless of the historical and fundamental relations between China and Iran, the policy of balancing power in the international system, with the phrase “east and west competition” on the one hand, and “geostrategic influence on remote areas” which meant the Persian Gulf on the other hand, make Iran the center of concentration for some of China’s strategic and key interests. The geopolitical role of Iran has been unpredictable for a long time, as among the countries that are on the path of new Silk Road, Iran is one of the countries that could play a positive and constructive role in the development of communications and relations among Asian countries. Although the relative decline of the ancient Silk Road has left many of the countries on its path, Iran has continued to play its important geopolitical role.

In the present situation, with its advantages such as having the shortest route to Europe, Iran can play a significant role in the transit of goods after the revival and completion of the Silk Road, as well as the collapse of the Soviet Union, and consequently, the independence of the Central Asian countries make the role of Iran in the Silk Road revival more important. The significance of such a position is related to confine of the Central Asia and the Caucasus region on land and to the presence of Iran as the only available option for access to the Persian Gulf and the High Seas for the countries of this region.

China has considered Iran as the central part in the economic belt of Silk Road. The belt that is heavily market-oriented and its goal is expanding China’s cross-border influence through Central Asia to the Persian Gulf and Europe. The geographic location of Iran has given it a special importance in the field of transporting goods and conveying oil and gas pipelines in the global economy. By taking advantage of this, Iran could gain many benefits and promote its economic status at the regional and global levels. This involves understanding the facts, taking advantage of opportunities and getting prepared to compete with regional and international rivals. NorthSouth corridor plan is an exceptional and unique economic and trade opportunity for Iran; on the other hand, the construction of Chabahar-Sarakhs railway seems necessary in order to strengthen the transportation of transit goods as soon as possible at a lower cost and more safe way. Furthermore, the location of the Chabahar port in the path of the North-South transit corridors so that establishing a transit relationship between Russia, Eastern Europe, Central Europe, North Europe, Central Asia and the Caucasus, on the one hand, and SouthEast Asia, the Far East, the Pacific and the Persian Gulf States, on the other hand, is a prominent advantage for Iran. Due to the short path in the North-South corridor and equipping facilities and infrastructure in a wide range of transportation sectors, Iran’s route has many attractions for the transit of goods. The new Silk Road is a desirable situation for Iran, in which the North-South corridor has a particular importance. Iran has plans to complete and expand its relation with the countries of the region. On the other hand, there is a plan for reconstructing of Taftan Quetta Railway in Pakistan to connect the national railway of Iran, Pakistan, Europe and Asia.

Chabahar-Sarakhs railway connects southeast of Iran, from the Chabahar Port (Iran’s only oceanic port), to the Sarakhs in the northeast of Iran on the border of Turkmenistan, and connects central Asia into the Indian Ocean. In the middle of this route, the Khaf-Herat railway connects Afghanistan from the nearest rail way to the Indian Ocean. Afghanistan and India as the strategic partner of Afghanistan are active on this project and are interested in building this corridor, which can be the southern route of the Silk Road to the sea. China’s growing cooperation with Iran, especially after the nuclear sanctions and expansion of the Chinese companies in various fields in the manufacturing and commercial markets, has so far advanced that China has now become the largest business partner of Iran. In this way, Iran is the third largest supplier of crude oil in China which provides part of its energy needs. The trade between Iran and China has been increasing since 2000, and trade volume between the two countries reached to $52 billion in 2014, which represents an increase of $12 billion compared to the previous year.

4. What are the benefits of renovation of the Silk Road through the sea?

The whole effort of China is to bypass the Malacca Straits. Therefore, one of China’s main plans is to create parallel routes with the Malacca Strait. Roads such as the railways of Pakistan, Malaysian, and Myanmar are among the ways in which China wants to bypass the Straits of Malacca and reduce the dependence on this strait. Sri Lanka also signed a $1 billion contract with China to lease the Hambantota port in the southern province of it to China. The Sri Lankan government is confident that China will use this port for only commercial purposes. The Hambantota port is one of the most important shipping routes between Asia and Europe. According to this contract, a stateowned corporation of China will employ the port and its land (150,000 square meters) for 99 years. The port of Hambantota is expected to play an important role in the plan of the new Silk Road in China on the sideline of Indian Ocean. The plan connects China’s ports and roads to Europe. Recently, the Financial Times reported about China’s large-scale investments in maritime routes and ports around the world. The report said China’s investment in foreign ports has exceeded $20 billion, and its companies are seeking to buy or participate in managing ports and berths from the shores of Russia in the northeast of China to northern Europe. It has been said that large Chinese companies have been purchasing ports in foreign countries from July 2016 to June 2017.

5. What is your suggestion to executive officials for the presence of Iran on the Silk Road?

Iran has a special position in this project, because it is an energy passage in the Middle East, and also it has maritime or terrestrial border with 15 countries. Maritime is also an important way to reach the northern and southwest areas of the world. Iran has a distributor role in shipping goods from China to the Caucasus and Central Asia. It is important issue that for something through this road, Iran should try to compete with China on one hand and should participate with it on the other hand. Independent former Soviet states have a lot of cultural, historical, and other trends to Iran. Iran must recognize the tastes, promote its products, and learn the languages of these countries in order to improve the communication with the people of this region. In this way, many things can be learned from China that has been able to find many export markets in a relatively short time. Iran should create a special place in this road by focusing on it’s the best products such as carpets, handicrafts and traditional ones, as well as market research. Silk Road along with economic prosperity should be a way of cultural dialogue for Iran. Based on studies and calculations of the International Monetary Fund, Iran can increase its production and non-oil exports into twice. Iran should not be ignorant of the independent states from the former Soviet Union. In this case and regard to the common borders of Iran with them, there is not any competition with the Arab world. Common history, cultural roots, etc. will increase the possibility of Iran’s communication with them. We have made a lot of efforts in the past decades to have economic relations with the Arabic and Near East countries, but the fact is that the countries that are located in north of Iran have made many paths for economic progress.