Corridor "North - South" and its hidden turns
In Bedera, bargaining for horses, for goods,
yes on damask, yes on silk and on all other goods,
Yes, black people can buy in it; and others have not bought in it.
Yes, all their goods are from Gundustan, but all edible vegetables,
but there are no goods for the Russian land.”
A. Nikitin "Journey beyond three seas"
yes on damask, yes on silk and on all other goods,
Yes, black people can buy in it; and others have not bought in it.
Yes, all their goods are from Gundustan, but all edible vegetables,
but there are no goods for the Russian land.”
A. Nikitin "Journey beyond three seas"
In one of the previous articles, we touched upon the issue of the formation and launch of new trade routes, which are now commonly called "corridors". The peculiar uniqueness of these projects lies in the fact that despite all the outward evidence of mutual benefit, the extreme interest declared by the parties to the negotiations, the availability (at least three main participants) of the necessary financial and political resources, movement in this direction is almost empty. Moreover, in recent years, it is these corridors that have become for Central Asia, in fact, projects of "last hope" for real and tight integration into the world production and trade systems.
These projects are very relevant today for Russia, with which the Western world has beaten all the pots with a rapture worthy of a better use. Literally from the very beginning of the special military operation, domestic government information mouthpieces voiced messages about the “great turn” and the restart of the North-South corridor.
Logistics was mentioned at the recent Central Asia-China summit of heads of state. Our neighbors, having listened with stoic patience to the parting words of the Chinese Foreign Minister that
“the region should be wary of attempts by external forces to involve the countries of the region in major power conflicts and force them to take one side or the other,”
went straight to the point - the transport infrastructure. For example, the railway line China - Kyrgyzstan - Uzbekistan ("Kashgar - Kara - Suu"). It is logical, because the idea "entered the age" and has already exchanged the third decade. Our domestic project "North - South", if younger, then not much - for a couple of years.
What can be done in twenty years? You can build a house, plant a tree, give birth and raise a child. If you walk one way through the forest, then by the end of the twentieth year there will be a country path in the forest, with places for rest and lodging for the night, parking for barbecues and other innocent joys of life. You can also write several international trade projects and even approve them in whole or in part. These words are undoubtedly sarcasm, but behind this sarcasm there are reasons and prerequisites, having understood which it is possible and necessary to find the answer to the questions: “what is done wrong” and “how it should be”. The importance and necessity of such an analysis is also determined by the fact that our classic search for the guilty (officials, managers, business representatives, and others) in this case, if they turn out to be true, is only partly true.
A bit of history
We are used to the fact that the sphere of state interests is such a sphere of activity “in itself”. Yes, this is true, but in this case it is hardly possible to recognize all the problems of design and implementation in this direction as derivatives of this feature. Why? Because the performers sometimes really tried. However, the Crimean Bridge was built and works to the delight of people, and the North-South is in fact not much better than in the days of Afanasy Nikitin. Once again, I want to emphasize that this is a problem for the region as a whole, not only for Russia. But Russia is closer to us, and the analysis of the problems of this route allows us to capture a whole range of issues of the entire trade cluster: from Murmansk to Calcutta and from Baku to Kashgar.
First, a little stories. Several years ago, the author and colleagues were invited to attend a discussion of one of the projects for the modernization of transport infrastructure on the topic "North - South" in terms of specifying the FTP. At the meeting, we were presented with three volumes of project documentation, one of which was a theoretical part, the second was a description (modernization of the port network), and the third was a feasibility study. The feasibility study described the construction of a new port in the Caspian Sea, as well as the modernization of one large sea and one regional river port. A bonus was the creation of a network of transport and logistics centers.
After two hours of rather active discussion, my colleagues and I asked why, in fact, they called us? Well, why, but we have set indicators in the feasibility study, could you confirm them, for example, in terms of container transportation for specific groups of goods. As a result, we want to achieve growth by N percent, in such and such shares and so on.
We could neither confirm nor refute the conjectures and wishes of the “summit” participants. Because the very first counter question, and who will provide the container fleet in the required volume, put the respected meeting to a standstill, the way out of which, it seemed, was found in the word "lease" - count on the terms of the lease. And then it turned out that there was no one to rent the park from. The park is entirely owned by container lines, which practically do not work on these routes, and what they have is tears. Well, well - count the "leasing". And who? Those who offer them for leasing give Chinese ones (now there are none after the “pandemic”), they practically do not produce their own, and the cost is almost twice as expensive. What to put in the project, if we have "import substitution" in the project? The costs for the digital accounting system for each unit of goods and documents along the way (at all stages) were laid down, and this was logical, it was illogical in another way - there was nothing to carry.
By the way, the reader may ask a question, why are the major lines (Maersk, Fesco, MSC, Yang Ming, etc.) so inactive in the Caspian? No turnover at all? No, there is, it's just that customers are not satisfied with the volumes, terms, risks and product diversity. Therefore, the park is used in other directions - nothing personal.
There were other questions that the feasibility study did not answer. For example, where to get the river-sea merchant fleet. Right at the meeting, we opened "marinetraffic" and asked to look at the number of active vessels - there were thirty-odd small-tonnage vessels (without ferries) for the entire (!) Caspian. Where were the rest, after all, if you look at the formal size of the cargo fleet of all operators, then the figure will be close to several hundred? The map showed what it was supposed to show - the Black and Azov Seas, although the required hundreds were still not recruited. Vessels went to reload on profitable routes. Stop, but we have a whole program for the resuscitation of river and sea transport, factories are working. Yes, but who are the customers? Kazakhstan, Turkmenistan.
It would be fine if only this, orders can be placed, but while the fleet is being built, you need to carry something, in the end you can subsidize transportation. And then an interesting detail came to light - even in the presence of this or that vessel, the owner of it turned out to be the closest in Latvia. Here is import substitution: the freight of a river barge on the Volga is in fact an import, however, the freight of a container is also. I will say more, the services of a surveyor (a company that confirms the quality and quantity of cargo) is the same import. Do you need an international certificate? Iran is for nothing that it is itself under sanctions, but it will not let goods into its port without such a certificate. And he has some good reasons for it.
All these dialogues took place before the NWO, until February 24.02.2022, XNUMX. Until the refusal of a number of container lines to provide services in Russia. Before country affiliation issues fleet, sanctions in the banking sector and so on. Even before the “pandemic”, which created serious distortions on trade routes.
In general, we learned how to draw trading projects, we also know how to put data from reference books in a feasibility study, but about the fact that a cart must be rented abroad, as well as a horse, harness, cab driver, wheel, and even insurance and a carriage certificate - that’s about it forgot. Even about the fact that if anything happens, you will have to sue in London.
Will everything line up around the road by itself?
Here one could develop (to infinity) the topic of what our average Volga ports are in general (investments are still underway in Makhachkala and Astrakhan) in terms of technical equipment, storage capabilities, logistics features in the winter, navigation and the state of towing and icebreaking park, the state of the bottom in the upper reaches and so on and so forth.
Well, it's our fault and our misfortune. Maybe the neighbors approached this issue more carefully? After all, there is such a stable thesis that the main thing is to make the road and infrastructure, and around it everything will grow by itself. It is so firmly established in circulation that it is considered not requiring proof. Is that so? This thesis is in reality more terrible than the old port granary, because the store can be cleaned, expanded and filled, but to fight against the axiom “it will all line up around the road by itself” it turns out to be much more difficult, because proofs are not needed - you need to build and invest, spend and build.
Our neighbors really approached the task of infrastructural filling of the southern trade route more thoroughly and thoughtfully. And here we have two outstanding examples before our eyes: Iran and Azerbaijan. What is the difference and what are the similarities? The similarity is that both states actually built infrastructure based on specific tasks, and the difference is that Iran did it for tasks that were not announced, but under the flag of declared ones, while Azerbaijan did not share these tasks among themselves - it simply built the trans-Caspian route declared everywhere. Two projects - two opposite results.
The idea of building a commercial highway Baku-Poti-Odessa/Constanta was enthusiastically accepted by the Azerbaijani elite as a real alternative to the unchanging "fruit route" Astara-Derbent-Moscow. Azerbaijan has no direct access to the Turkish markets, and, by and large, there was nothing to transport there, except for hydrocarbons. If Iranian products could be re-exported at a premium (significant) or sent in transit to Russia, then Iran is able to bring everything to Turkey itself, and even provide a corridor. The development of transit through Armenia is associated with insurmountable political costs, which are not covered by the return.
Moreover, over time it became obvious that sooner or later, but Iran, relying on the network of its Caspian ports, will still be engaged in the development of direct supplies of its products to the Russian market. Sooner or later, a railway line to Russia through Astara, which today is the main border "hub" for repurchasing Iranian agricultural products and a number of other goods, will also start working. If the railway communication starts operating, the income for a significant stratum of the population earning by transportation, and a significant part of the elite that has been sitting on this “barrier” for years, will go away, because Astara is a kind of “Transcaucasian Tortuga”. Under such conditions, the logistics of Chinese exports to Europe looked like a win-win alternative, and for this, investments were made in the infrastructure of the Baku port complex, as well as in the ferry fleet.
What is the result? As a result, the trade turnover has really grown, and there is transit from Turkmenistan and Kazakhstan, but deliveries to Europe have not developed. And where to put the power? Go to feasible dumping and provide a similar corridor for Turkish goods to Central Asia. Azerbaijan, in general, is not against such a turn, but only the project volumes along the lines of China - the European Union and Turkey - China / Central Asia are not comparable, and discounts reach up to 18-22%. At the same time, Turkish investments in the transport infrastructure of non-commodity goods turned out to be minimal. It can be stated that Azerbaijan, succumbing to the general impulse to build the East-West path, received at its own (and considerable) expense not quite, to put it mildly, what it expected.
The second player who systematically approached the implementation of the idea of "corridors" is Iran. It must be said that a whole galaxy of stable myths circulates in our information space about this state: about religious fanatics, about a weak economy, about a rigid political system, etc., etc. Experts who support and develop these narratives, in turn, , cannot clearly explain how this very system has achieved success in various areas of the military-industrial complex over the past ten years, actually controls a quarter of Middle East trade, the political sphere of Iraq, finances (exactly) the Syrian economy and the reconstruction of the country and its armed forces, controls a third of Lebanon's trade and its politicians, established de facto control as a result of a costly and difficult war in North Yemen.
As a country that has fully tasted "international sanctions", Iran was one of the first to realize that sooner or later, but the continent will need a land trade route, because maritime trade requires a developed military fleet. If for China the threat to maritime navigation from the side of "partners" has become real (and then only relatively) in recent years, then Iran has been living in its conditions for decades. Among the main reasons for the stability of the Iranian system, one could single out the two-loop economy and the peculiarities of American policy in the economic sphere in Iraq in the post-Saddam era.
The economic sphere of Iran is rather rigidly divided between the military complex and other society. Simply put, there are those areas that, despite their purely civilian nature, are controlled by representatives of the military class. In fact, this is a kind of rear services that carry out a huge range of trade operations around the world. They also control trade routes, such as the region of Kirkuk and Mosul, Sulaymaniyah in Iraqi Kurdistan, Sinjar, Ramadi - Al Qaim - Damascus, Damascus - Beirut, food supplies to Afghanistan.
If you decide to make a delivery to Lebanon, banks may well ask you to confirm that the goods are not going to the needs of the Hezbollah movement (which, wait a minute, is officially represented in the country). Why? Because the money may be Iranian. If you supply grain to Iran, then be sure that 35% will go to resale to Iraq, and another 35% to Damascus as part of humanitarian aid. At the same time, payment for deliveries will be made to you through a European bank and a counterparty, where the money will come from the UAE or Qatar. A picture that does not really fit in with the traditional narrative about how Arabs and Persians are not friends with each other. Yes, they are not friends, but ...
Where does the money come from? Yes, in many respects from the same Iraq and Afghanistan, in which the United States, during the operation of the oil-for-food program and as part of the support of the Afghan puppet government, brought hundreds of tons of unreported cash. At the same time, the Americans themselves for a long time completely controlled the entire sphere of non-cash payments in both countries. As a result, standard transactions began to look something like this.
As part of the Iraqi food program, an order is being formed for a particular product. Further, the money is literally “on foot”, in parts, forwarded to Qatar or Kuwait, where it diverges through a system of private exchangers that make further transfers to the UAE or Jordan, from where the intermediary affiliated with the customer acts as the recipient of the cargo and the payer for the goods. Curators from the United States do not see such a payment and are not able to track it without a special operation, but those persons in the United States who have been responsible for this direction for years are not interested in conducting such a special operation. And it would be extremely strange if Iran, having access to the same grain market of Russia or Kazakhstan and convenient borders with Iraq, would not integrate into this system of "Middle East SWIFT".
The scale of this kind of "banking" should not be underestimated, since it and the related supplies keep the population of entire regions through which the American and British games of democracy have swept.
Transport Corridor "South - North"
Iran's problem is that, due to complex payment schemes (money can take weeks to flow), it has to put up with extreme weakness in its currency, the development of unequal barter, and restrictions on exports. The benefits of these strategic combinations lie in the long term, and in the harsh present, the population is forced to pay with limited consumption and a relatively low standard of living in the central provinces. The two contours of the economy allow the Iranian political elite to provide relatively stable living conditions for the military class and the part of society associated with it, which leads to periodic unrest, which, however, does not affect the social system itself.
It is also quite logical that, having created such an extensive network of regional trade routes affecting millions of potential buyers, Iran today is the main regional beneficiary of the One Belt - One Road projects, the North-South corridor, etc. Having received the opportunity to form transport network from the Caspian Sea to the Persian Gulf, Iran automatically turns into a trading gateway for Chinese and South Asian goods to Central Asia and Russia, for the Middle East and Afghanistan - into a seller of goods from these regions, and for India and Pakistan - into a transit corridor of raw materials . And this path is more economically profitable and cheaper for China than the development of the huge and deserted Xinjiang from scratch. The whole problem is that someone has to help Iran build this route, since their own funds are not enough - they need investments in the energy system, railways, and highways.
Iran, for its part, is really doing what it can: ports in the Caspian have been modernized and rebuilt “from the ground up”, representative offices have been deployed in the countries of Central Asia and Russia, in which hundreds of analysts and “resellers” know the prices, quantity and quality of grain in each farm Volga region, no worse, and maybe even better than the representatives of our Rosselkhoz.
For the sake of objectivity, it should be said that many terminals in the Caspian Sea are still underloaded by the Iranians, and they quite openly offer to rent them and build distribution centers there. But they offer it with an eye on their own exports and transit to Russia and Central Asia, and not vice versa. It is quite openly said that sooner or later the sanctions will be lifted, and in this case, Iran will receive the main thing - free payments and investors who will develop these logistics corridors. Only this mega-project should stop being called "North-South", and it's time to call a spade a spade - the transport corridor "South-North".
And maybe good?
Returning to the first part of the material, where we went over some amusing episodes of domestic design, the author offers a seditious, at first glance, thesis: Or maybe it’s good that during these agreements and discussions we have built not much, but on the contrary, so little? Indeed, otherwise, in a situation of real lifting of sanctions against Iran, building such a costly infrastructure of the route at its own expense, a realistic approach to trade from China and, in turn, imposed “eternal sanctions” on us by the EU and the USA, this corridor will do nothing let pass from Murmansk and St. Petersburg to Calcutta, it will work exactly the opposite.
In the current chaotic policy in the same food market, all these “multimodal” distribution centers will work in the opposite direction - intermediaries will continue to buy food directly from farmers, and far from the price calculated from the exchange (this is not a figure of speech, this is a fact) , to sell it in the Middle East already at a premium price (since private commodity channels are in hand). The fact that the formal owners of these centers will be state-owned companies, in fact, does not solve anything, because they will not directly carry out the activities, and they will mainly not provide funds for purchases “in the fields”. At the same time, we ourselves will build, equip, lay roads, electrify, provide generation, and so on, at our own expense.
If we are to seriously discuss such projects, then it is worth at least using the experience of countries that approached trade not only pragmatically, but often even cynically - Holland and Great Britain. To start trading, the first thing to do was to establish a trading platform and a currency exchange zone - an exchange and exchange offices. And in the modern world - an exchange and a clearing center. The place where the price is set and deals are made, the place where you buy the currency.
We can take advantage of the unique situation, which lies in the fact that the region does not actually have an accounting mechanism for the exchange of national currencies, and the weakness of its own currency is sometimes the only mechanism for ensuring economic growth, which, in turn, works to the limit. First of all, before investing in “corridors”, it is necessary to create a mechanism for an equilibrium currency exchange based on the Russian ruble or another new, but domestic currency equivalent, given that Russia is the main and priority market for any trading partner from the “Caspian orchestra”.
The second pillar of the trade route is the creation, within the framework of an all-regional exchange mechanism with restrictions for buyers and exporters at a lower price limit. And this will work in the current conditions, because we have accumulated food resources that can influence world consumption.
The third step is that Russia itself needs to acquire shares in the Caspian port infrastructure, while acting tough and pragmatic. Now we are creating "separate economic zones", "free economic zones" in Makhachkala, Astrakhan - yes, everywhere you look, we either have a separate zone, or a free one, or a leading one, etc. And there should be exactly on the contrary, we should invest in the free economic zone of Amirabad and Anzali, Turkmenbashi and Aktau.
We have a strange notion that the FEZ will attract some "investors", probably international ones. But we will not have any investors in the Caspian except for ourselves, but our neighbors may have them. And what is the practical meaning for Russia? If Iran today has underutilized terminals, it is necessary to buy them out, enter into shares and set and regulate pricing and imports on its own, buy products in the central regions of Iran, and sell them to intermediaries in Iraqi Sulaymaniyah or Afghanistan.
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