Down Angle Symbol A symbol in the form of an angle pointing downwards. Russian President Vladimir Putin is seen on screen as he rides a train across the bridge connecting Russia and the Crimean peninsula at Taman train station near Anapa, Russia, on December 23, 2019. Mikhail Svetlov/Getty Images
- Russia is investing in rail transport to circumvent Western sanctions.
- Major railway lines are being modernized to connect Russia with China, India, Iran and the Persian Gulf countries.
- The new trade routes are intended to strengthen the Russian economy by maintaining imports and opening alternative markets.
Forget ships – Russia relies on rail transport to avoid Western sanctions.
As Bloomberg reported on March 7, Moscow was already pouring billions of dollars into expanding two key eastern railway lines connecting Russia and China.
And it now also connects the South with India and Persian Gulf countries, The New York Times reported Wednesday. This includes a new 100-mile railway costing $1.7 billion that will connect Russia with ports in Iran – which in turn will help Russia connect to India's trade hub of Mumbai, the Times reported. Construction of the railway line is scheduled to begin this year.
Russia has touted its railway line with Iran as a new link that can compete with the Suez Canal as a major trade route, Reuters reported in May, as the two sides signed a deal on the railway.
In addition, Russia is restoring another railway line that would connect to Turkey, the Times reported Wednesday.
Russia's push for rail freight follows two years of Western sanctions against the country over its war in Ukraine. The restrictions are affecting Russia's trade with Europe, traditionally its largest single market.
But Russia has managed to keep its economy afloat by shifting its trade to alternative markets such as India, China and Iran, the latter of which is also heavily sanctioned by the West.
The new rail connections are intended to help Russia maintain its imports despite the sanctions.
As Ram Ben Tzion, the CEO of cargo screening platform Publican, told the Times, Russia is “creating a trade route for the pariahs.”
“Developing relations with the Global South is essentially one of Russia's biggest priorities,” David Szakonyi, a political science professor at George Washington University, told Business Insider.
The new trade ties will not only help Russia's oil and gas sales to alternative markets, but also help the country import goods that it cannot produce itself due to a lack of advanced technology or labor, added Szakonyi, the author of “Politics.” for Profit: Economics, Elections and Policymaking in Russia.
“To prevent this economy from collapsing, the Russian government must continue to maintain close relations with almost every country that is not already sanctioned,” he said. “So I think we’re going to see a lot more of this kind of economic diplomacy in the next few years.”
The Russians have been creative in circumventing sanctions since annexing Crimea in 2014, so the West should “think like them” and stay one step ahead of Moscow to beat them at their game, Szakonyi said.
“We should expect the Russians to adapt and evolve, rather than pretending that these current measures will solve the problem forever,” Szakonyi said.
Comments are closed.