Iran Air Cargo & Passenger Transits Up 128% On 2021
Iranian INSTC trade routes between Europe and Asia are flourishing but when will the EU be pressured into conducting its trade purely with North America?
The Ukraine conflict has resulted in unexpected increases in trade flows east, with one of the beneficiaries being Iran. This is because the International North-South Transportation Corridor (INSTC), originally intended as a link to boost India-Iran trade, has now become a key part of the far wider Southern Route between Europe and Asia as the EU’s Northern border with Russia remains closed.
The INSTC runs north-south across Iran and connects the Caspian Sea to the Persian Gulf allowing European goods transit east from the EU’s southern ports in Italy and Greece, in addition to the Bulgarian and Romanian Black Sea ports access via Turkey and Georgia to Azerbaijan’s Port at Baku. From there, Iran’s INSTC route takes them south and to markets in East Africa, the Middle East, Pakistan, India, and South Asia.
At present, the Iranian INSTC is a multi-modal road-rail connection, however rail construction is continuing and should be fully completed next year. This is having a significant impact in how Iran is now being seen as a vital link between Europe and Asia. To help speed up delivery times, Iran’s international cargo transportation through its airports increased by 128 percent, in the first month of the current Iranian fiscal year (March 21 through April 20, 2022), according to statistics of the Iranian Airports and Air Navigation Company.
4,100 tons of cargo were transported internationally through Iranian airports in that month compared to 1,800 tons in the same month last year. That increase has also been reflected in passenger traffic, with international passenger transits through Iranian airports rising fourfold to 202,000 for the same period, as opposed to 48,700 the previous year.
Iran’s airports are also undergoing significant upgrades, with both Chinese and Russian contractors retained to develop 116 Iranian airports in stages over the next two decades. Both China and Russia signed off 25 and 20 year investment and development agreements with Iran last year.
This on-going trend saw Iranian goods transit increase 52% in March and creates something of a political quandary for both the European Union and United States, as Iran, like Russia is also under significant US sanctions. Washington would prefer not to see any Iranian international trade or the facilitation of this, whereas Europe needs this access route to Asia following Russian sanctions.
At some point, the United States is going to make a call whether attaching the European Union to its own North American supply chains is more desirable than allowing Iranian trade to flourish. For now, Iran is being tolerated, however one can expect gradual, possibly decade-long sustained pressure to see that this is eventually reversed, and that North American trade routes eventually take priority for the EU over Iranian and Asian ones.
Chris Devonshire-Ellis is the Chairman of Dezan Shira & Associates. The firm assists British and Foreign Investment into Asia and has 28 offices throughout China, India, the ASEAN nations and Russia. For strategic and business intelligence concerning China’s Belt & Road Initiative please email firstname.lastname@example.org or visit us at www.dezshira.com