If you want to understand this article in video mode, here is the YouTube video:-
Armenia has suggested the creation of a corridor linking the Persian Gulf and the Black Sea, with the aim of facilitating trade between Indian traders and Russia/Europe.
Armenia has suggested the creation of a trade corridor that will operate alongside the International North-South Transport Corridor (INSTC), in order to establish a trade link between Mumbai and Bandar Abbas (Iran), and then proceed to Armenia, and further onto Europe or Russia.
In case you want to understand everything about the International North-South Transport Corridor (INSTC), Here is a video on it.
This alternative route is supposed to bypass Azerbaijan because Azerbaijan has closer ties with Turkey and Pakistan. And that is the reason Armenia is asking for India’s support.
If you want to know about the Armenia-Azerbaijan conflict, I have a video on that as well.
If you look at Armenia, their relationship with India has been growing steadily due to defence exports. India is supplying missiles, rockets, and ammunition to Armenia.
And Historically, Armenia shares strong political and business ties with Iran. Both countries share a 35 km long border that runs along the northern edge of Iran. And now Armenia is seeking Indian investments for the corridor within Armenian territory.
Because of the ongoing Russia-Ukraine conflict, India’s trade with Russia has substantially increased through the INSTC, which provides a trade link between Mumbai and Russia via Iran and the Caspian Sea. However, Azerbaijan, which plays a vital role in the INSTC, has been slow in developing an infrastructure link under the INSTC, despite its importance.
Armenia intends to initiate discussions with India to explore the possibility of Indian companies’ involvement and funding for the Persian Gulf-Black Sea corridor project. But then you will realize that Armenia doesn’t have direct access to Black sea. That means goods have to be further transported to Georgia. Only then you can reach Europe as well as Russia.
The proposed Persian Gulf-Black Sea corridor aligns with India’s objective of seeking new trade routes to Europe that avoids the Suez Canal and the risk of the Russia-West conflict. Because the fact of the matter is the United States is silently looking for opportunities to sanction India.
This new Persian Gulf-Black Sea corridor will link Iran and Georgia. Iran now has two options that is to pass through Armenia or Azerbaijan. Because Georgia has existing railway and highway connections with both Armenia and Azerbaijan, and Azerbaijan has a railroad reaching the Iran-Azerbaijan border. But then there is no direct railway connection from Armenia to the Iran border.
An approximately 165 km railway section (the Rasht-Astara line) is missing in Iran to connect the Azerbaijani and Iranian railways. The railway line will connect the city of Rasht, the capital of Gilan Province, with the city of Astara, located on the border with Azerbaijan. This railway link is part of the International North-South Transport Corridor (INSTC), which aims to provide a more efficient trade route between India, Iran, the Caucasus, and Russia. Recently, in January 2023, Russia and Iran agreed to fund the construction of this missing link.
Now for India, if they want to trade only with Russia, Iran, and the Caucus region, then INSTC is more than enough. But India also wants to trade with Europe that too through an alternative route and not via the Suez Canal. This is what Armenian Govt is proposing to Indian Govt.
On one hand, the United States is silently looking for opportunities to sanction India. If India uses the Suez Canal route, then it has more chances of getting sanctioned.
But this alternative trade route involves two countries, Armenia and Georgia which is calling for heavy infrastructure investments. Plus Georgia is also facing civil unrest these days and slightly inclining towards Western belief system. So things look shady for India as of now.
Plus you may also know this, there can be several potential negative sides to investing in infrastructure projects in other countries such as:- Political and Economic Risks, Cultural and Social Challenges, Legal and Regulatory Issues, Financial Risks and Geopolitical risks.
So it is going to be a tough call for India. Nevertheless, opportunities are there, but nothing is risk-free. I will update you if there is any further progress. As of now, it is a proposal by the Armenian govt. So let’s see how the Indian Govt will respond.