Meanwhile, the United States and Israel have escalated their rhetoric regarding Iran’s alleged nuclear weapons program, issuing significant threats which Iran intends to address through mediated talks in Oman. These threats not only focus on Iran’s nuclear intentions but condemn Iran’s support for regional resistance movements against the “Greater Israel Plan” and the Hebrew state’s ongoing ethnic cleansing campaign in Gaza and the West Bank. Additionally and perhaps more importantly, these threats should be viewed in the context of the “war of the corridors,” where Israel seeks to exert substantial influence.
India’s growing strategic partnership with Israel, particularly in defense and technology through arms deals and intelligence sharing, has bolstered bilateral relations and reinforced India’s alignment with the United States. However, despite these connections and shared strategic objectives with Israel and the U.S., India is very much aware it cannot overlook its relationship with Iran, which is vital for energy security and regional connectivity. A major concern for India’s Prime Minister Modi stems from a February executive order by the Trump administration that sought to modify or revoke India’s sanctions exemption for the Chabahar Port development in Iran. This port is vital for India’s access to Afghanistan and Central Asia and serves as a strategic counter to Pakistan’s Gwadar Port. The order threatens not only the Chabahar project but also India-Iran cooperation in various sectors, including the International North-South Transport Corridor (INSTC). Furthermore, it creates uncertainty regarding their collaboration in multilateral forums like the U.N., BRICS—which Iran joined in January 2024—and the Shanghai Cooperation Organization (SCO), endangering broader regional and economic partnerships.
As geopolitical tensions and threat of war rise in the Middle East, India’s capacity to manage its delicate relationship between Israel and Iran will be crucial in determining the sustainability of the The India-Middle East-Europe Economic Corridor (IMEC) as a valuable yet risky economic initiative, or will it fall victim to Trump’s policies—living Israel behind and the path wide open for Iran to become the heartland of the world’s corridors…
IMAGE: India-Central Asia Connectivity and the Role of International North-South Transport Corridor (INSTC)
International transport corridors (ITCs) are strategic multimodal routes designed to facilitate the efficient movement of goods and passengers across borders. They integrate air, sea, rail, and road transport to create predictable and transparent logistics pathways, enhancing trade connectivity, reducing costs, and fostering economic cooperation among participating nations. ITCs enable seamless transitions between transport modes, optimizing logistics and improving supply chain efficiency. By linking major economic centers, they boost trade volumes and contribute to economic growth. Strategically positioned, many corridors serve as crucial trade links, such as the International North-South Transport Corridor (INSTC), which connects India, Iran, Azerbaijan, and Russia, facilitating trade between South Asia and Europe. Ongoing modernization efforts focus on expanding infrastructure, including railway, port, and road upgrades, to accommodate increasing trade demands.
Examples include the INSTC, a 7,200 km route that cuts shipping times and costs between India and Russia, and the Silk Road Economic Belt, part of China’s Belt and Road Initiative, which strengthens connectivity between China and Europe through Central Asia.
Western-Backed Transport Corridors in Asia: Alternatives to Bypass Russia and Iran in Trade
There are several transport corridors in Asia, but many are more influenced by political decisions and strategic intentions rather than technical and economic feasibility. Key examples include the Trans-Caspian Trade Route (TRACECA), the India-Middle East-Europe Economic Corridor (IMEC), the Iraq-Turkey-Europe Development Road, and the Zangezur Corridor. These projects, largely supported by Western countries, aim to establish alternative routes that bypass Russia and Iran, but their viability remains uncertain due to various geopolitical, economic, and logistical challenges.
Iraq-Turkey-Europe Development Road: A Project Hindered by Geopolitical Tensions
The Iraq-Turkey-Europe Development Road, with the Grand Faw Port as a key component, aims to establish a strategic trade link connecting the Persian Gulf to Europe through Turkey. This corridor is expected to reduce transit times and generate economic benefits, including the creation of 100,000 jobs and annual revenue of approximately $4 billion for Iraq (Tumanishvili et al., 2018). However, multiple factors undermine the feasibility of the project. Geopolitical instability, Turkish military interventions, and concerns about Turkey’s increasing economic and political influence in Iraq present major challenges (Emerson, 2014). Security risks, unresolved regional conflicts, and economic uncertainties further hinder its prospects. Although the initial estimated cost stood at $17 billion, experts now believe it could exceed $24 billion (Gater-Smith, 2018). Without long-term stability and external financial support, the project’s future remains uncertain.
The India-Middle East-Europe Economic Corridor (IMEC): A Politically Driven Initiative
The India-Middle East-Europe Economic Corridor (IMEC), championed by the United States and the European Union, was introduced as a counterbalance to China’s Belt and Road Initiative (Shlykov, 2023). However, geopolitical events have significantly hindered its progress. The ongoing Israel-Hamas conflict and increased security threats in the Red Sea have cast doubts on the project’s feasibility (Yildirim, 2012). IMEC relies on regional stability, which remains fragile due to strained relations between Israel and its Arab neighbors. Turkey has also opposed IMEC in favor of its Iraq Development Road initiative, further complicating the corridor’s implementation (Keser, 2015). Beyond geopolitical concerns, the economic rationale behind IMEC remains weak. More cost-effective and operationally sound alternatives, such as those utilizing Iranian transit routes, present viable competition, calling IMEC’s long-term sustainability into question (Alshareef, 2023).
The TRACECA Corridor: Strategic Intentions Over Economic Feasibility
The TRACECA corridor, also known as the Trans-Caspian Trade Route, has resurfaced as a focal point for Western-backed infrastructure development. Originally conceptualized in the mid-1990s under the “Storm over the Caspian” initiative, it was designed to create alternative trade routes bypassing Russia. Azerbaijan’s geographical positioning plays a pivotal role in this corridor (Alshareef, 2023; Yildirim, 2012). Permanent representatives in Uzbekistan, Turkmenistan, and Kazakhstan actively promote TRACECA, anticipating significant economic benefits for transit countries (Kaw, 2019; Tumanishvili et al., 2018). However, the corridor faces challenges such as its large scale, the involvement of numerous participants, and the substantial investments required. OECD countries are exploring additional alternative corridors, such as the India-Europe route through the UAE, Saudi Arabia, and Israel, which faces opposition from Turkey (Emerson, 2014; Shlykov, 2023). Another proposed route through Iraq and Turkey faces geopolitical instability in Iraq, hindering its development. The Persian Gulf corridor, despite its strategic advantages, requires multiple transshipments, increasing logistical complexities. However, Gulf nations possess both the financial resources and political stability needed for infrastructure development (Gater-Smith, 2018). Importantly, these Western-backed corridors tend to exclude Central Asian nations from transcontinental trade networks, limiting their economic engagement (Gorshkov & Bagaturia, 2001; Keser, 2015).
The Zangezur Corridor: A Politically Motivated Project
Another politically influenced transport corridor is the Zangezur Corridor, which aims to connect Azerbaijan with its Nakhchivan exclave through Armenia, providing a direct link to Turkey. This project is a key strategic objective for Azerbaijan and Turkey, but it remains heavily contested by Armenia. Given the unresolved territorial disputes and the fragile ceasefire in the region, the feasibility of the corridor remains highly uncertain. Political backing from Turkey and Azerbaijan contrasts with Armenia’s reluctance, making the project’s implementation highly volatile.
In the scope of the last two corridors, Central Asian nations remain cautious about engaging in Western-backed initiatives such as TRACECA due to financial uncertainties and concerns over sovereignty. While China’s “One Belt, One Road” (OBOR) initiative presents opportunities for infrastructure development, it also carries risks, such as increasing debt dependency and strategic overreliance on Chinese investments (Kaw, 2019). The competition among TRACECA, OBOR, and the INSTC underscores the importance of Central Asia’s ability to navigate between different geopolitical and economic influences. A pragmatic approach for Central Asia would be to integrate the INSTC with other trade corridors, allowing for improved connectivity while maintaining economic sovereignty. By leveraging its geographic position and natural resources, Central Asia can enhance its regional standing, attract investment, and develop a more resilient trade network. The future of Eurasian trade corridors will be determined by a delicate balance between competition and cooperation among TRACECA, OBOR, and INSTC, with Central Asia playing a key role in shaping the region’s logistical landscape (Tumanishvili et al., 2018).
International North-South Transport Corridor (INSTC)
The International North-South Transport Corridor (INSTC) is a 7,200-kilometer multimodal trade route connecting India, Iran, Russia, and Europe, designed to reduce transit costs and time compared to traditional routes like the Suez Canal. Established in 2000 by India, Iran, and Russia, it later expanded to include Kazakhstan, Belarus, Azerbaijan, Armenia, Georgia, Turkey, and other nations. Iran’s strategic geographical location, robust infrastructure, and key investments make it a central player in INSTC’s success.
The INSTC is emerging as a key “southern” transport vector in Eurasia’s new logistics landscape, offering advantages such as the shortest route to South Asia, East Africa, and the Middle East, multimodal transport integration, and spare throughput capacity. Successful containerized freight deliveries between Turkey-Russia and Russia-China in 2021-2022 highlight its growing role. The INSTC reduces transit times and costs compared to traditional routes via the Baltic, Azov, and Black Sea. The corridor facilitates the geographical expansion of trade in key directions. An EDB 2021 report projects INSTC freight potential to reach 25-26 million tonnes (240,000-620,000 TEU) by 2030, covering 40% of Russia’s trade with the Global South (Nikolaev et al., 2022). Increased geopolitical interest and new trade flows (e.g., fertilizers, metals, and petroleum) could further boost traffic by 2-4 million tonnes in the short term and up to 5-7 million tonnes within a decade (Nikolaev et al., 2022).
INSTC Corridor: Investments and Soft Infrastructure
The International North-South Transport Corridor (INSTC) is a key logistics route within the Eurasian Transport Network, offering the shortest freight transport link between the EAEU, South Asia, East Africa, and the Far East. Post-COVID-19, its significance has grown, with increasing investments and policy initiatives aimed at strengthening trade connectivity. However, the INSTC still faces over 40 physical and administrative barriers, including missing transport links, bottlenecks, and bureaucratic hurdles. Countries such as Turkmenistan, Russia, Iran, and Kazakhstan are actively improving infrastructure, streamlining transit policies, and launching new containerized freight services to overcome these obstacles.
Investment Priorities for INSTC Development
To address the existing challenges, over 100 infrastructure projects have been identified and classified into three priority areas:
- Eliminating Missing Links and Critical Bottlenecks – Enhancing end-to-end international freight operations by filling infrastructure gaps along the corridor’s main sections.
- Improving Operational Efficiency – Upgrading key transport sections and developing alternative routes to increase the corridor’s transport capacity.
- Expanding the Corridor Network – Developing branches and junctions to connect the INSTC to other corridors and routes.
These priorities are visually represented in the following figure:
Geographic Structure and Funding of INSTC Investments
The total infrastructure investment for INSTC amounts to $38.2 billion, with the largest share allocated to Russia and Iran for transport modernization. The funding covers 95 major projects, focusing on the modernization of railway networks, road infrastructure, and port expansions to enhance freight movement efficiency. The geographic distribution of these investments is illustrated in the following chart, showing how funds are prioritized among key countries involved in the INSTC development:
INSTC in Northern Iran: Route Considerations
For the northern section of the INSTC in Iran, three alternative routes are being considered to optimize transit times and capacity. These routes aim to provide seamless connectivity between Iranian ports and railways, ensuring smooth freight movement between India, Russia, and Europe. By addressing existing barriers and implementing priority investments, the INSTC is set to become a highly competitive and efficient trade corridor, strengthening Eurasian connectivity and fostering economic integration among participating nations.
For INSTC, there are three main routes designed and considered in the north of Iran:
The Western Route requires the most investment, covering rail modernizations in Azerbaijan, Iran, Armenia, and Georgia, along with port upgrades in Bandar Abbas. While Azerbaijan remains a key transit country, parallel investments are being made to develop an alternative corridor via Armenia and Georgia to mitigate potential geopolitical risks or leverage issues related to Azerbaijan’s route. In Azerbaijan, rail modernization efforts focus on electrification and gauge standardization to improve interoperability with both Russian and Iranian networks. Iran is expanding its north-south rail links to strengthen connectivity with Persian Gulf ports, particularly Bandar Abbas, which is undergoing significant port expansion. Key infrastructure projects at Bandar Abbas include deep-water berths, modernized container terminals, and automated cargo handling systems.
To ensure resilience in the corridor, Iran and Armenia are jointly developing an alternative rail and road link, reducing reliance on Azerbaijan for transit. Armenia is investing in the Southern Armenia Railway project, connecting with Iran at the Norduz border and extending towards Georgia. This corridor enables Iran to bypass Azerbaijan when necessary and directly access Georgian Black Sea ports such as Poti and Batumi for European trade. Georgia is also upgrading its rail infrastructure, improving links to the Russian and Armenian borders, and modernizing the East-West highway to accommodate increased freight movement. Russia remains a crucial player in the Western Route, enhancing rail and road links through its southern regions, particularly in Dagestan and Astrakhan, to facilitate smooth cargo flows toward Iran and Armenia. Additionally, Georgia’s Black Sea ports are being further developed to support multimodal transport options, ensuring an alternative to Caspian Sea transshipment when needed.
To boost the overall success of the Western Route, priority projects include containerization, customs digitalization, and port expansions in the Caspian region, particularly in Baku and Anzali, aimed at facilitating seamless transshipment. Moreover, new logistics centers and dry ports are being planned along the route, enhancing freight handling and storage capabilities, while digital trade solutions and smart border systems are being implemented to improve customs clearance efficiency.
The Eastern Route focuses on improving the Russia-Kazakhstan-Iran corridor, with priority projects in Kazakhstan’s railway upgrades and Iran’s logistics hubs. Kazakhstan is modernizing its rail infrastructure to handle increased freight volumes, including track doubling and electrification along key transit corridors such as the Aktau–Beineu–Mangystau railway, which connects to the Caspian ports. Iran is developing logistics hubs in Tehran and Mashhad to optimize freight distribution and streamline customs procedures. The Eastern Route also benefits from railway network enhancements in southern Russia, particularly in Astrakhan and the Dagestan region, which serve as crucial transit points for goods heading to Iran. Additionally, investments are being made in cross-border facilities and intermodal terminals to reduce transit delays and enhance trade efficiency.
The Trans-Caspian Route requires port expansions in the Caspian Sea and enhanced ferry connections. International lenders support green transport projects, including railway electrification and digital trade solutions. The development potential of the multimodal (trans-Caspian) route is lower at this time than that of the land routes. The water transport infrastructure presents a number of bottlenecks, such as the dimensions of the Volga–Caspian Sea Canal and the accumulation of sediment. At the same time, one of the development objectives of the INSTC is its transformation into a fully functional multimodal corridor, where mono-modal sections are integrated with sea lanes connecting Iranian, Indian, Pakistani, and other ports. Another task is to increase the load of the multimodal (trans-Caspian) route of the INSTC, thus enabling it to attract international freight traffic, including containerized traffic, to the Volga water transport route.
The Importance of INSTC Routes in Transit Transport Potential
The International North-South Transport Corridor (INSTC) plays a crucial role in unlocking Eurasia’s transit transport potential. While all three routes—Western, Eastern, and Multimodal (Trans-Caspian)—contribute to regional trade, the majority of freight movement is concentrated on the Western and Eastern railway routes. These two routes collectively handle approximately 84% of total transit potential, with the Western Route alone accounting for 60% and the Eastern Route for 24%. This dominance highlights the critical role of railway transport in INSTC development. The corridor currently exhibits a high degree of “mono-modality”, as railway services are well-established in key regions, particularly in the Caspian area. This has made rail the preferred mode of transport due to its cost efficiency, reliability, and lower environmental impact.
Projected Freight Volume Growth Across INSTC Routes
The following figure illustrates the anticipated increase in freight volume across the three INSTC routes under baseline and best-case scenarios:
Railways as the Backbone of INSTC Development
Studies suggest that improving railway infrastructure quality will have the greatest impact on trade facilitation among INSTC countries compared to other transport modes. Railway transport also provides a significant environmental advantage, as switching freight traffic from maritime to rail can reduce greenhouse gas emissions. Like the East-West transport corridor, the INSTC is expected to expand Eurasian land-based transit potential through a combination of railway and road transport. However, several challenges persist, including border delays, outdated customs procedures, and limited infrastructure, all of which impact transit times and efficiency. Addressing these issues through targeted physical infrastructure development and digital trade facilitation measures is key to unlocking the full potential of the corridor…
Source: TLB
