It is probably the most critical railway section of the International North-South Corridor (INSTC), and its construction has been planned for a few years, with several ups and downs along the way. The Rasht-Astara railway line is supposed to commence construction work in early 2024. Nevertheless, Russia and Iran, which are directly involved in the project, still have not fully agreed on the project’s technical aspects.
The Rasht-Astara railway project is a vital missing link between Iran and Azerbaijan. Its completion would mean that the western corridor of the INSTC–the most interesting and viable commercially, would be able to serve cargo transport between Russia and the southern Iranian posts solely by rail.
The project became all the more relevant since Russia started diversifying its supply chains following the series of Western sanctions in the context of the war in Ukraine. Despite the INSTC seemingly becoming an integral part of Russia’s diversification strategy and Iran’s expectation that Russia would fund the Rasht-Astara line, given the urgency, the project has stagnated.
The project has experienced setbacks and unfulfilled promises, mainly because Russia seemed hesitant to finance it. On the other hand, Iran has made clear that it cannot finance such a project alone and that Russian involvement is the only solution. Since late 2022, the two parties have been negotiating intensely. A draft agreement was expected to be formed between them in late 2022, opening the way for Russian investments and subsequent railway construction. Yet, this agreement was only reached in late 2023.
What is the current status?
The Rasht-Astara railway line is expected to cost 1.6 billion euros, while Russia will allocate 1.3 euros in interstate loans to Iran to kickstart the investment, according to Iran’s Minister of Roads and Urban Development. Under these conditions, the line was supposed to be completed in three to four years. However, the latest update from the Iranian Deputy Minister of Roads and Urban Development, Kheirollah Khademi, said that even if construction begins in early 2024, the railway line will be ready five years from now “if Russian funding remains consistent”.
In addition, Khademi underlined that the Russian and Iranian negotiations on the project’s technical aspects are ongoing. Khademi commented on the Iranian Tasnim news agency that “70 per cent of technical issues have been resolved” between the two sides. This development could signal progress on the project; however, it could also signal that there is still a long way to go before being realistically able to start construction work.
One should also consider the strained situation the Russian economy is experiencing due to the sanctions. The Russian transport sector is on track to face substantial challenges that may as well multiply in the coming months. Taking this into account, it would not be surprising if the Rasht-Astara railway line investment and construction were postponed once again.