Iran's Frustrated Attempts to Become a Regional Transit Hub

While Iran's efforts to become a regional transit hub over the last two decades have failed, talks are reportedly underway with 21 countries to launch free economic zones aimed at boosting the sector.

Presidential advisor Hojjat Abdolmaleki, who also serves as the secretary of the Supreme Council of Free Zones in Iran, claimed that the Islamic Republic has signed memoranda of understanding (MoUs) with six countries in this field. Although he did not specify the names, he mentioned that the Taliban is interested in investing in Iran’s Chabahar port, near Pakistan’s border.

His claim coincided with Iranian authorities seizing the first Afghanistan-Turkey rail freight transit through Iran since April 20, while officials made contradictory statements about the reasons behind the seizure.

The train, carrying 1,100 tons of talc minerals, traveled along the Khaf-Herat railway, which was inaugurated last summer in the presence of Taliban and Iranian officials. It arrived at Iran's Rozanak station on the border with Afghanistan on April 20 but was halted there for reasons that remain unclear.

Following this, Iran made a peculiar move by detaching the locomotive and relocating it to an undisclosed site.

While officials have yet to provide clarification on this matter, the Minister of Roads and Urban Development, Mehrdad Bazrpash, signed multiple Memoranda of Understanding (MoUs) with the UAE on May 2, encompassing the transportation sector. This occurred during the inaugural meeting of the Joint Economic Committee, marking its first convening in a decade following tensions between Iran and certain Arab states.

The Arab states, including Saudi Arabia, Kuwait, and the UAE, resumed diplomatic relations with Iran in 2022 following their ceasefire agreement with Iran-backed Houthi rebels in Yemen.

Iran’s transit plans

Iran has signed multiple unsuccessful deals with foreign countries over the last two decades in an attempt to become a regional transit hub, encompassing cargo, oil, gas, and electricity agreements.

One such agreement is the North-South Corridor, intended to facilitate the transit of cargoes from India to Afghanistan, Central Asia, and Russia, but it has yet to materialize.

India also signed an agreement to develop Iran’s Chabahar port as a part of the North-South corridor in early 2010s.

India partially initiated the Chabahar project and has been overseeing it since 2019. Though, apart from a few humanitarian shipments to Afghanistan, it has not yet facilitated the transit of any goods through Iran to foreign countries. This is largely due to Iran's failure to complete the 630-km Chabahar-Zahedan railway over the past two decades.

Iran has also failed to complete the 162-kilometer Rasht-Astara railway, which is intended to link with the rail networks of the Republic of Azerbaijan and Russia.

Tehran is additionally burdened by US sanctions and enduring tensions with both regional and Western states. Consequently, Iran managed to transit only 1.5 million tons of foreign cargo via its rail network last year, primarily consisting of Turkmen sulfur.

This volume represents a mere 20% of the international rail freight passing through the Republic of Azerbaijan, for example.

China has also omitted Iran from the $1-trillion "Belt and Road Initiative" project, opting instead to transit its goods to the West via the route through Central Asia, Azerbaijan, Georgia, and Turkey.

India has also excluded Iran from its transit routes priorities by signing MoUs with UAE and Saudi Arabia in 2023 to launch the India–Middle East–Europe corridor.

In terms of the logistics performance index (LPI), the World Bank has ranked Iran among the poorest countries. Last year, the Islamic Republic ranked 123 of the 139 countries compared, marking the lowest score among all neighbors, except Afghanistan. Even Iraq outperformed Iran in terms of LPI, ranking 115 globally.

Iraq is preparing to launch a huge transit project from The Faw Grand Port to Turkey's borders. The Faw Grand Port in southern Iraq, developed 80%, will be the largest port in the Persian Gulf. The port is being built by the South Korean company Daewoo on the Faw Peninsula, south of Basra, at a cost of about $5 billion and is projected to be completed in 2025.

Iraq plans to invest $17 billion to complete transit routes from the Faw Grand Port to Turkey. This initiative gained momentum when Iraq, Turkey, UAE, and Qatar signed a Memorandum of Understanding (MoU) to develop this project on April 22. Turkey itself ranks 11th globally in terms of logistics market value with $100 billion worth in 2023.

Widening Gulf Between Iranians and Government Fuels Dissent

May 4, 2024, 13:20 GMT+1

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Iran International Newsroom

The chasm between the Iranian populace and the government has widened to such an extent that it has become a defining feature of the Islamic Republic, serving as a primary driver behind the myriad challenges it currently confronts.

While the leaders of the Islamic Republic have been reluctant to acknowledge the divide, especially in the wake of recurring nationwide protests, their occasional remarks regarding existing problems suggest a growing recognition of the issue.

Supreme Leader Ali Khamenei's this week urged Iranian teachers to try to encourage students to adhere to his brand of anti-Americanism and antisemitism. Was certainly an indication that he knows he is not on the same page with young Iranians who are generally openminded, tolerant and most certainly not antisemitic.

One of Iran's former Higher Education Ministers, Mostafa Moeen, has said based on a major study conducted by the government about prevailing values and attitudes that “60 to 70 percent of Iranians do not trust government institutions and that politicians are among the least trusted individuals among other Iranians."

Moeen also referenced the study's findings, highlighting that 60 to 70 percent of Iranians lack trust in government-controlled media, including state-run television channels that echo Khamenei's rhetoric. Additionally, he noted that the study reveals even greater distrust of the parliament compared to the government in general.

According to conservative commentator Mohammad Mohajeri, although a key reason for the distrust is the government's inability to solve economic problems, even an improvement in this regard cannot mend the divide between the people and government.

Mohajeri remarked that the current divide seems deeper and more profound, with officials attributing the rift to the people's excessive demands, while citizens argue that officials consistently overlook the nation's issues. Furthermore, officials make promises they cannot fulfill.

He emphasized that Iranians' mistrust of state officials is a longstanding issue, not merely a recent development. Mohajeri recalled how observers and experts have cautioned about the widening gap between the people and officials, as well as the decline in the government's social capital since the 1990s.

The conservative commentator added that the difference between the people's liberal ideas and the officials' hardline policies and revolutionary approaches contributed to the crisis. Mohajeri said that the disputed 2009 presidential election and the ensuing bipolar situation was a major turning point in the confrontation between the people and the government. He was referring to Khamenei's biased support for Ahmadinejad while the people and moderate politicians insisted that he was elected in a rigged election.

He noted that following the 2019 protests, during which government forces killed hundreds of protesters, people initiated a negative campaign by abstaining from elections and boycotting government-sponsored political rallies. Simultaneously, the worsening economic crisis and the government's reluctance to implement reforms exacerbated the division. Consequently, society was engulfed by despair, eroding trust in the government and hope for the future.

Meanwhile, prominent sociologist Amanollah Gharai has told Nameh News website in Tehran that the divide between the people and government is the outcome of a decline in Iran's middle class. He said, traditionally, the middle class works like a shield between the ruling class and the working class.

Gharaei pointed out, "Rising prices, inflation, and other economic woes have pushed individuals from the upper middle class into lower socioeconomic strata." He elaborated that educated individuals, academics, entrepreneurs, and businesspeople comprise the middle class, which communicates messages and information to the impoverished lower class. When the middle class becomes discontented, instead of acting as a buffer, it joins protest movements and encourages the lower class to participate."

He further stated, "Today, information dissemination faces no barriers, and everyone is aware of societal happenings. When impoverished individuals learn of corruption among those in power, they are compelled to revolt and protest."