International Rail Corridors Passing Through Middle East

Main International Rail Corridors Passing through Middle East

Connecting Asia to Europe Prepared by: Poupak Ashtari, Fahimeh Rahbari, Azadeh Poursaddami Revised by: Mozhgan Kordbacheh, Deputy Director General of International Affairs Bureau, RAI UIC Middle East Regional Office Designed by: Fahimeh Rahbari, Mehdi Torabi

November 2019 Endorsed by: Abbas Nazari, Director General, 1 International Affairs Bureau of RAI &

UIC M.E. Regional Office Director

Prepared by: Ashtari Poupak (1973); Rahbari Fahimeh (1981); Poursaddami Azadeh (1979). Title: Main International Rail Corridors Passing through Middle East, connecting Asia to Europe; Revised by: Mozhgan Ahmadkhan Kordbacheh; Designed by: Fahimeh Rahbari, Mehdi Torabi; Endorsed by: Abbas Nazari. Publication: Tehran: Maryam Pourzand Vakil Publication, 2018. No. of pages: 294 ISBN: 978-964-2814-20-6 Subject: Railway corridors National bibliography No.: 5589009 Doi: 385/095694

Table of contents

Contents Page

Introduction……………………………………………………………………………….. 12

Chapter 1: Middle East, General Information 14

1.1 Middle East, Regional Information…………………………………………...... 15 1.2 Population………………………………………………………………………………. 16 1.3 Climate: A hot, dry land………………………………………………………………... 16 1.4 Water and history………………………………………………………...... ………. 17 1.5 Shipping to Middle East………………………………………………………..……..... 17 1.6 Top Middle Eastern export countries…………………………………………..……..... 17 Chapter 2: Main International rail corridors passing through Middle East 20

2.1 Silk Road………………………………………………………………………………. 21 2.1.1 Silk Road Development …………………………………………………………. 21

2.2 Baku-Tbilisi-Kars Corridor…………………………………………………………... 25 2.2.1 History…………………………………………………………...... 25 2.2.2 Pre-existing railways…………………………………………………………….. 25 2.2.3 The Baku-Tbilisi-Kars Project was formed of four main elements……………... 26 2.2.4 Opening of the Train…………………………………………………………….. 26 2.2.5 Objectives and political issues…………………………………………………… 27 2.2.6 Caspian Region Transportation Projects ………………………………………... 28 2.2.7 The Silk Wind Project…………………………………………………………… 29 2.2.8 Caspian Sea (combined) Transit Route………………………………………….. 29 2.2.9 The ―Azure‖ Route (Lapis Lazuli)………………………………………………. 29 2.2.9.1 En-route Points……………………………………………………...... 30 2.2.9.2 Scope…………………………………………………………………….. 30 2.2.9.3 Current Status……………………………………………………………. 30 2.2.10 A Glance to the export and import of the en-route countries of Baku-Tbilisi- 31 Kars Corridor…………………………………………………………………………... 2.3 Iran- Afghanistan- Tajikistan- Kyrgyzstan- China Corridor (KTAI + China)…... 43 2.3.1 History…………………………………………………………………...... 43 2.3.2 En-route Countries……………………………………………………………...... 43 2.3.2.1 Afghanistan Segment……………………………………………………. 43 2.3.2.2 Tajikistan Segment………………………………………………………. 45 2.3.2.3 Kyrgyzstan Segment…………………………………………………….. 45 2.3.3 Current Status……………………………………………………………………. 45 2.3.4 Positive outcomes of the rail project…………………………………………….. 46 2.3.4.1 Political and economic interests of all members in building a new rail 46 corridor…………………………………………………………………………... 2.3.4.2 Positive political and economic benefits for individual 46 members…………………………………………………………………………. 2.3.4.2.1 Benefits for China……………………………………………. 46 2.3.4.2.2 Benefits for Iran……………………………………...... 47

2.3.4.2.3 Benefits for Tajikistan……………………………………….. 47 2.3.4.2.4 Benefits for Kyrgyzstan……………………………………… 47 2.3.4.2.5 Benefits for Afghanistan……………………………………... 47 2.3.5 A Glance to the export and import of the en-route countries of Iran- 48 Afghanistan- Tajikistan- Kyrgyzstan- China Corridor (KTAI + China)……………….

2.4 GCC (Gulf Cooperation Council) Railway Route…………………………………... 66

2.5 Islamabad- Tehran- Istanbul Corridor (ITI)………………………………………... 67 2.5.1 General Information……………………...... 67 2.5.2 Benefits…………………………………………………………………………... 67 2.5.3 Problems and bottlenecks the corridor encounters……………………………….. 68 2.5.4 Sea vs. Railway………………………………………………………………….. 69 2.5.5 Transshipment between Iran/ Pakistan………………...... 70 2.5.6 Connection with Europe and China……………………………………………. 71 2.5.7 Tariff and charges for ECO Container Train on ITIT Route……………………. 71 2.5.8 Tariff rate in the route of Pakistan………………………………………………. 72 2.5.9 A Glance to the export and import of the en-route countries of ITI International 74 Transport Corridor……………………………………………………......

2.6 Trans-Caspian International Transport Route (TITR)...... 82

2.7 Istanbul- Almaty corridor…………………………………………………...... 85 2.7.1 General information……………………………………………………...... 85 2.7.2 Current Status……………………………………………………………………. 85 2.7.3 Problems and bottlenecks in Istanbul- Almaty Corridor………………………… 86 2.7.4 A Glance to the export and import of the en-route countries of Istanbul- Almaty Corridor………………………………………………………………………………... 91

2.8 Germany-Czech-Austria-Slovakia-Hungary-Romania-Bulgaria-Turkey-Iran 95 Corridor (towards China)………………………………………………………………… 2.8.1 History…………………………………………………………………...... 95 2.8.2 A Glance to the export and import of the en-route countries of Germany-Czech- Austria-Slovakia-Hungary-Serbia-Bulgaria-Turkey-Iran Corridor……………………. 97

2.9 Iran-Iraq-Syria-Mediterranean Sea International Transport Corridor...... 113 2.9.1 General information…………………………………………………………...... 113 2.9.1.1 Origin of the corridor………………………………………………… 113 2.9.1.2 Corridor destination……...... 113 2.9.1.3 Missing Links……………………………………………………...... 113

2.10 International North South Transport Corridor (INSTC)………...... 116 2.10.1 History……………………………………………………...... 116 2.10.2 The corridor advantages………………………………………………………... 117 2.10.3 Missing Links…………………………………………………………………... 118 2.10.4 Problems and obstacles of the corridor in the territory of Iran before 118 construction of Qazvin- Rasht-Astara (Current Status)………………………………... 2.10.5 Non-tariff barriers: Change of gauge…………………………………………... 118 4

2.10.6 The proposed measures and solutions for activating North-South Corridor…… 119 2.10.7 Combined transport…………………………………………………………….. 119 2.10.8 Not a road to nowhere: Making the economic case for the INSTC……………. 120 2.10.9 Type of goods…………………………………………………………………... 122 2.10.10 Financing and returns on investment………………………………………….. 123 2.10.11 Conclusion…………………………………………………………………….. 124 2.10.12 A Glance to the export and import of the en-route countries of INSTC 126 International Transport Corridor……………………………………………………..... 2.11 Bandar Abbas- Almaty Corridor…………………………………………...... 144 2.11.1 General information……………………………………………………...... 144 2.11.2 En-route Countries…………………………………………………………….... 144 2.11.3 Illustration of each country‘s role for the region……………………………….. 145 2.11.3.1 Kazakhstan……………………………………………………………. 146 2.11.3.2 Uzbekistan……………………………………………………………. 146 2.11.3.3 Turkmenistan…………………………………………………………. 147 2.11.3.4 Iran……………………………………………………………………. 147 2.11.4 Time schedules review of Bandar Abbas-Almaty route……………………….. 147 2.11.5 Tariff structure for Bandar Abbas-Almaty route………………………………. 150 2.11.6 Strengths and weaknesses of Bandar Abbas- Almaty train………………….. 151 2.11.7 Problems and bottlenecks in Bandar Abbas- Almaty Corridor………………… 152 2.11.8 A Glance to the export and import of the en-route countries of Bandar Abbas- 153 Almaty Corridor……………………………………………………………...... 2.12 Kazakhstan_Turkmenistan_Iran Rail Corridor (KTI)…………………………… 166 2.12.1 General information…………………………………………………………... 166 2.12.2 History………………………………………………………………...... 166 2.12.3 Alternative and competing corridors………………………………………...... 167 2.12.4 Latest status of freight traffic along the route………………………………… 167 2.12.5 Technical Points………………………………………………………………. 167 2.12.6 Movement of regular trains………………………………………………….... 167 2.12.7 The efforts of international organizations to activate the Kazakhstan- 168 Turkmenistan-Iran International Rail Corridor………………………………………. 2.12.8 The objectives of the KTI route project………………………………………. 168 2.12.9 Deliverables/outputs of the project…………………………………………... 168 2.12.10 Implementation mechanism…………………………………………………. 169 2.12.11 Conclusion…………………………………………………………………… 169 2.12.12 Offers for the activation of the Kazakhstan-Turkmenistan-Iran Corridor 170 (KTI)…………………………………………………………………………………. 2.12.13 A Glance to the export and import of the en-route countries of KTI transport 171 Corridor…………………………………………………………………...... 2.13 Kazakhstan– Uzbekistan– Turkmenistan– Iran– Oman International Transport 181 and Transit Corridor……………………………………………………………………… 2.13.1 General information……………………………………………………...... 181 2.13.2 Accession of Kazakhstan to ―Ashgabat Agreement‖…………………………... 182 2.13.3 Volume of railway transportation between Ashgabat Agreement 182 members……………………………………………………………………………….. 2.13.4 Length of the Corridor………………………………………………………….. 183 2.13.5 A Glance to the en-route countries of (Kazakhstan)-Uzbekistan- 184

Turkmenistan- Iran- Oman International Transport and Transit Corridor…………….. 2.14 South –West International Transport Corridor………………………………….... 206 2.14.1 General information…………………………………………………………….. 206 2.14.2 Objectives………………………………………………………………………. 206 2.14.3 Introduction…………………………………………………………………….. 206 2.14.4 Poland as the European Transit hub 207 2.14.5 South –West International Transport Corridor, an alternative to the North - 208 South corridor………………………………………………………………………….. 2.14.6 Kaliningrad, Russian Business Opportunities………………………………….. 209 2.14.7 Access to Scandinavia and Britain from north of Poland………………………. 209 2.14.8 Access to the Mediterranean Sea and South Europe…………………………… 210 2.14.9 Current status…………………………………………………………………… 210 2.14.10 The advantages of using Poti port to access Mediterranean Sea……………… 210 2.14.11 A Glance to the export and import of the en-route countries of South –West 211 International Transport Corridor………………………………………......

Chapter 3: Corridors defined by International Organizations 227 3.1 ECO...... 228 3.1.1 ECO Railway Network Development Plan……………………………………… 228 3.1.2 ECO Rail Routes………………………………………………………………… 228 3.1.3 The Euro-Asian Transport Links (EATL) project EATL Project……………….. 238 3.2 OSJD Railway Transport Corridors………………………………………………… 239 3.3 TER (Trans-European Railway)...... 244 3.3.1 The main objectives……………………………………………………………… 244

3.4 UNESCAP TAR (Trans-Asian Railway) Project...... 246 3.5 TEN-T (Trans-European Network-Transportation)...... 248 3.5.1 Current Status……………………………………………………………………. 248 3.6 PAN-European Transport Network…………………………………………………. 250 3.6.1 Corridors…………………………………………………………………………. 250

3.7 TRACECA (Transport Corridor Europe-Caucasus-Asia)…………………………. 253 3.7.1 Transport Corridor Europe-Caucasus-Asia (TRACECA)……………………….. 253 3.7.2 The Extent of the TRACECA Railway………………………………………….. 253

Chapter 4: Corridors Management and Commercializing……………………………... 255 4.1 Market Access………………………………………………………………………….. 256 4.2 Allocation of Liabilities………………………………………………………………… 256 4.3 Cabotage………………………………………………………………………………… 256 4.4 Commercialization of Services………………………………………………………….. 257 4.5 Competition Policy……………………………………………………………………… 257 4.6 Role of Corridors……………………………………………………………………….. 258 4.7 Corridor Functions……………………………………………………………………… 259 4.8 Infrastructure and Facilities…………………………………………………………….. 259 4.9 Transport and Logistics Services………………………………………………...... 260 6

4.10 Regulatory Procedures………………………………………………………………… 260 4.11 Implications for Management…………………………………………………………. 261 4.12 Approaches to Corridor Management…………………………………………………. 261 4.13 Role of Agreements……………………………………………………………………. 262 4.14 Three Management Structures…………………………………………………………. 262 4.15 Developing and Managing Corridors………………………………………………….. 263 4.16 Types of Initiatives…………………………………………………………………….. 264 4.16.1 Asset Management……………………………………………………………… 264 4.16.2 Regulation………………………………………………………………………. 264 4.16.3 Information……………………………………………………………………… 264 4.17 Recommendations……………………………………………………………………... 266

Chapter 5: General problems and bottlenecks in the introduced corridors 268 5.1 Two legal regimes……………………………………………………………...... 269 5.2 Gauge differences………………………………………………………………………. 269 5.3 International railway lines with different gauges…………………………. 269 5.4 The break-of-gauge problem in corridors………………………………………………. 269 5.5 Lack of customs………………………………………………………………………… 271 5.6 Regulations……………………………………………………………………………... 271

Chapter 6: En-route countries’ situation in introduced corridors, top exports and 274 imports, top export destinations, top import origins,… 6.1 Afghanistan……………………………………………………………………...... 275 6.2 Azerbaijan………………………………………………………………………………. 275 6.3 Austria………………………………………………………………………………….. 276 6.4 Bulgaria………………………………………………………………………………… 276 6.5 China………………………………………………………………………………...... 276 6.6 The Czech Republic…………………………………………………………………….. 277 6.7 Finland………………………………………………………………………………….. 277 6.8 Georgia……………………………………………………………………………...... 278 6.9 Germany…………………………………………………………………………...... 278 6.10 Hungary………………………………………………………………………...... 278 6.11 India………………………………………………………………………………… 279 6.12 Iran…………………………………………………………………………...... 279 6.13 Kazakhstan…………………………………………………………………...... 280 6.14 Kyrgyzstan…………………………………………………………………...... 280 6.15 Oman…………………………………………………………………………...... 281 6.16 Pakistan……………………………………………………………………………... 281 6.17 Poland………………………………………………………………………………. 282 6.18 Romania…………………………………………………………………………….. 282 6.19 Slovakia………………………………………………………………………...... 282 6.20 Syria………………………………………………………………………………… 283 6.21 Tajikistan…………………………………………………………………...... 283 6.22 Turkey……………………………………………………………………...... 283 6.23 Turkmenistan…………………………………………………………………...... 284 6.24 Uzbekistan……………………………………………………………………...... 284 6.25 Ukraine……………………………………………………………………………... 285 Conclusion………………………………………………………………………………..... 287 References………………………………………………………………………………...... 292 7

List of Maps

Map 1.1 Middle East Region……………………………………………………………….. 15 Map 2.1 Main Eurasian routes with track gauge …………………………………………... 22 Map 2.2 Route of Baku–Tbilisi–Kars corridor ……………………………………………. 25 Map 2.3 Close-up view of Baku–Tbilisi–Kars corridor……………………………………. 28 Map 2.4 Length of routes in Baku–Tbilisi–Kars corridor……………...... 28 Map 2.5 LAPIS LAZULI Transit Transport Corridor……………………………………... 30 Map 2.6 Scheme of the project proposals for construction of Iran- Afghanistan- Tajikistan- 44 Kyrgyzstan- China Railway………………………………………………………………… Map 2.7 Satellite map of Chah-e-Sorkh Bala………………………………………………. 44 Map 2.8 En-route countries of Iran- Afghanistan- Tajikistan- Kyrgyzstan- China 45 Corridor………………………………………………………………………………… Map 2.9 GCC Railway route………………………………………………………...... 66 Map 2.10 Rail service and door to door delivery in ITI corridor…………………………... 68 Map 2.11 Satellite map of ITI corridor……………………………………………………... 70 Map 2.12 Development of the Trans-Caspian International Transport Route………………... 83 Map 2.13 Route and length of routes in ECO Istanbul-Almaty Corridor...... 86 Map 2.14 Route of Germany-Czech-Austria-Slovakia-Hungary-Romania-Bulgaria- 95 Turkey-Iran Corridor (towards China)……………………………………………………… Map 2.15 European en-route countries position of Germany-Czech-Austria-Slovakia- 96 Hungary-Romania-Bulgaria-Turkey-Iran Corridor (towards China)……………………… Map 2.16 Route of Iran-Iraq-Syria-Mediterranean Sea International Transport Corridor….. 113 Map 2.17 Iran-Iraq-Syria-Mediterranean Sea International Transport Corridor……………. 114 Map 2.18 INSTC route and standard route…………………………………………………. 117 Map 2.19 Qazvin-Rasht-Astara-Astara Railway Project…………………………………… 119 Map 2.20 The new route versus the old one (INSTC)……………………………………… 120 Map 2.21 Duration comparison in rail freight versus maritime shipping……………………. 120 Map 2.22 Bandar Abbas- Almaty corridor…………………………………………………. 145 Map 2.23 International railway transport corridors in the territory of Kazakhstan………… 146 Map 2.24 Kazakhstan-Turkmenistan-Iran Railway project………………………………… 166

Map 2.25 International transport corridors in Kazakhstan…………………………………. 167 Map 2.26 En-route countries of Kazakhstan – Uzbekistan– Turkmenistan– Iran– Oman 181 International Transport and Transit Corridor………………………………………………... Map 2.27 South-West International Transport Corridor…………………………………… 206 Map 2.28 South-West Corridor…………………………………………………………….. 207 Map 2.29 Poland situation………………………………………………………………….. 208 Map 2.30 Kaliningrad situation……………………………………………………………... 209 Map 3.1 OSJD Railway Transport Corridors……………………...... 240 Map 3.2 Turkey- TER line sections...... 245 Map 3.3 Trans-Asian railway Network...... 246 Map 3.4 Length of TAR Route in km………………………………………………………. 247 Map 3.5 Trans-European Transport Network (TEN-T)...... 249 Map 3.6 PAN-European Transport Network……………………………………………….. 251 Map 3.7 TRACECA routes…………………………………………………………………. 254

List of Tables

Table 1.1 Top Middle Eastern Export Countries……………………………………….. 18 Table 2.1 The analysis for "Potential of Eurasian rail freight transport incl. the Silk 23 Road" encompasses 38 countries in Europe and Asia...... Table 2.2 Revised tariffs and charges for the ECO Container Train on Islamabad- 71 Tehran-Istanbul Route…………………………………………………………………... Table 2.3 Tariff rates for ECO Container Train………………………………………… 72 Table 2.4 Example of a timetable of Container Train on Istanbul- Almaty Route……... 87 Table 2.5 Analysis of travel time in Almaty- Istanbul………………………………….. 88 Table 2.6 Length of routes in INSTC………………………………………………...... 116 Table 2.7 Volume of goods from Southeast Asia/South Asia to Europe via Suez Canal 121 Table 2.8 Tariffs structure for Bandar Abbas – Almaty (vv) route – full containers...... 150 Table 2.9 Tariffs structure for Bandar Abbas – Almaty (vv) route – empty containers... 150 Table 3.1 ECO Rail Route 1……………………………………………………………. 230 Table 3.2 ECO Rail Route 2A………………………………………………………….. 233 Table 3.3 ECO Rail Route 2B…………………………………………………………... 234 Table 3.4 ECO Rail Route 3……………………………………………………………. 236 Table 3.5 ECO Rail Route 4……………………………………………………………. 237 Table 3.6 ECO Rail Route 5……………………………………………………………. 237 Table 4.1 Sources of Data on Route Performance…………………………………...... 266

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List of Figures

Figure 2.1 Transport between China and Europe via rail (Trains)……………...... 21 Figure 2.2 Rail Potential base case forecast…………………………...... 24 Figure 2.3 Share of length of routes of Baku-Tbilisi-Kars Corridor……………...... 27 Figure 2.4 Infrastructure projects of Saudi Arabian Railways…………...... 66 Figure 2.5 Share of length of routes of ITI Corridor in each country……………...... 67 Figure 2.6 Share of length of routes of Istanbul- Almaty Corridor in each country...... 85 Figure 2.7 Travel time, Almaty- Istanbul………………………………………………… 90 Figure 2.8 Cross-border e-commerce is flying…………………………………………… 123 Figure 2.9 Share of length of routes of Bandar Abbas- Almaty Corridor in each country 144 Figure 2.10 Share of length of routes in Kazakhstan-Turkmenistan-Iran Rail Corridor… 166 Figure 4.1 Evaluation of Corridor Performance………………………………...... 265 Figure 4.2 Areas of Management Focus……………………………………………...... 266 Figure 7.1 Different levels of corridors development……………………...... 289

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Introduction UIC Middle East Regional Office in Tehran is pleased to publish this study entitled ―Main International rail corridors passing through Middle East, connecting Asia to Europe‖. The purpose of this study is helping to provide a better picture of the on-going modernization of the Middle East transport network and contribute to gain more knowledge about the existing situation of the Middle East Region‘s rail networks and corridors as well. This document is the updated version that has been conducted over the period of 2017-2018 and consists of the following sections: . Middle East, General Information, . International rail corridors passing through Middle East along with some projects, . General problems and bottlenecks within the introduced corridors, . En-route countries, situation in the introduced corridors, top exports and imports, main export destinations, and main import origins, . Corridor management and commercializing, . And conclusion.

The above sections have different subtitles as mentioned in the table of contents. Before beginning the first section, it seems necessary to begin this research by a definition of various types of corridors.

A domestic trade corridor is a designated route within the national transport network that is used to distribute goods within the country. It includes links and nodes for the various modes as well as nodes that connect different modes and different service areas, e.g. intraurban and interurban transport. These corridors usually cross over provincial borders and are established through national legislation. Responsibility for the development and management of these corridors is given jointly to the national and provincial governments; both provide funding for development of the basic infrastructure. The objective of establishing domestic corridors is to promote internal trade and economic growth along the corridors. The costs for developing and maintaining the corridors are generally covered through general revenues. Foreign trade corridors are used to transport the imports and exports of a country. As such, they have an endpoint at either a border crossing or international gateway. The corridors are determined by a combination of the market, the location that determine where production of exports and consumption of imports are concentrated and by national legislation that stipulates the locations where foreign trade may enter and exit the country. Corridor may be defined more precisely by regulations that allow the movement of cargo under customs bond between a border crossing/gateway and an internal facility for clearing cargo. The national government would control the land border crossings but only regulate the international gateways, which are usually administered by the provincial government. In the case of the land borders, the customs and other agencies that control the crossings generally have provincial offices of these agencies responsible for administration. The objective of establishing foreign trade corridors is to promote economic growth of the country through increased trade and competitiveness. The costs for the gateways and the border crossings are generally recovered through user fees but the costs of the links and other nodes are usually covered through general revenues.

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Finally, Transit trade corridors are used to transport the cargo of other countries. They are bounded by a border crossing at one end and an international gateway or border crossing at the other. While these routes are determined by national legislation, this legislation governing movement of transit goods is often coordinated with adjoining countries through bilateral agreements or, in a few cases, regional agreements. These agreements stipulate the procedures to be followed at the end points. The jurisdiction for transit corridors is similar to that for the foreign trade corridors with which they normally overlap. The objective of these routes is to promote regional integration and economic cooperation between neighboring states. The costs are covered in the same way as for the foreign trade routes but in many cases there is also a transit fee collected to cover the marginal costs for maintaining these routes. Now there is a point to note before beginning the first section: We have already been able to improve information based on feedback from the respondents. Since it is very important to us to increase the quality of our documents, we look forward to receiving your feedback and assure you that it will be greatly appreciated. The higher the level of participation, the better we will be able to draw reliable conclusions about the audience satisfaction with documents that we offer. If you are interested in participating, please contact us: [email protected], or [email protected]. UIC M.E. Regional Office expresses thanks to all members who contributed to this study by providing information and data, and by lending us their support.

November 2018 UIC Middle East Regional Office

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1.1 Middle East, General Information

The Middle East is a vast region with a total area of nearly 9,000,000 square kilometers (3,500,000 square miles), it is only slightly smaller than the United States. Saudi Arabia is the largest country of the Middle East in area. Bahrain, an island nation in the Persian Gulf, is the smallest of the Middle Eastern states. Iran, Turkey, Iraq, Saudi Arabia, Egypt, Yemen, Syria, United Arab Emirates, Jordan, Palestine, Lebanon, Oman, Kuwait, Qatar, and Bahrain are Middle East countries.

Map 1.1 Middle East Region

The Middle East has many different ethnic groups sprawled across the countries, including Arabs, Bengalis, Egyptians, Filipinos, Jews, Hindus, Greeks, Sri Lankans, Sikhs and Pakistanis, just to name a few. 1.2 Population Its estimated population of over 411 million includes 13 million Arab migrants. It is easy to assume that there are extremely populated countries located in this region. The five most populous countries in the Middle East are:  Egypt: 97,553,151 (2017)  Iran: 81,162,788 (2017),  Turkey: 80,745,020 (2017)  Iraq: 38,274,618 (2017)  Saudi Arabia: 32,938,213 (2017) The five least populous countries of the Middle East are:  Oman: 4,636,262 (2017)  Kuwait: 4,136,528 (2017)  Qatar: 2,639,211 (2017)  Bahrain: 1,492,584 (2017)  Cyprus: 1,179,551 (2017) Population of other Middle East countries is as the following:  Yemen: 28,250,420 (2017)  Syria: 18,269,868 (2017)  Jordan: 9,702,353 (2017)  United Arab Emirates: 9,400,145 (2017)  Lebanon: 6,082,357 (2017)  Palestine: 4,920,724 (2017) Calculations above were obtained from World Population Prospects (2017 Revision) - United Nations population estimates and projections. One of the things that the Middle East is known for is its religious diversity. Many major religions originated in this region, and those religions include Christianity, Judaism and Islam, among other religious beliefs that have been formed there. Islam is the most practiced religion across the region, although this can vary by country. Lebanon, for example, has over 40% of people that follow Christianity. Because this region is made up of different countries, there is not just one official language. There are five languages that are spoken throughout the Middle East: Arabic, Persian, Turkish, Kurdish and Berber. Arabic is the most spoken language in Middle nd Eastern countries, with Persian taking 2 place. 1.3 Climate: A hot, dry land Hot, dry weather is common to the Middle East for much of the year except in the highest mountains, where snow is frequent. The rainy season in most places lasts from about October to April. In the southern part of the Arabian Peninsula, rain comes mainly between May and September. But there is only light, brief rainfall in most of the region and in some areas it never rains at all. In the deserts, which are baked by the blazing sun,

the daytime temperature often rises to more than 52°C (125°F). Yet at night the deserts are cool or even cold. 1.4 Water and history Long ago the availability of water determined where people could live in the Middle East and how they would earn their livelihood. The amount of available water limited the farmerʼs choice of crops. It compelled the nomads, who traveled from place to place seeking grazing land for their herds, to rely on goats, sheep, and camels, since cattle could not easily survive in the harsh, dry environment. 1.5 Shipping to Middle East Shipping services are offered to all Middle East countries. 20ft container, 40ft container, LCL Cargo (less than container load), FCL Cargo (full container load) are transported to Middle East from anywhere in the world. Middle East has huge demand for vehicle shipping. Every year thousands of vehicles are shipped to the Middle East from various ports of the world. Providing safe and secure transportation service for the customer is the first priority for the Region. 1.6 Top Middle Eastern Export Countries Below are Middle Eastern export countries presented in the order of highest dollar value for 2016 global shipments. Also shown is each country‘s overall share of Middle Eastern exports.

Table 1.1 Top Middle Eastern Export Countries

Source: www.worldstopexports.com/top-middle-eastern-export-countries

Middle Eastern exports represent an estimated 5.1% of global exports from all countries during 2016. Based on statistics from the International Monetary Fund‘s World Economic Outlook Database, the total Gross Domestic Product for Middle Eastern countries amounted to an estimated $9.118 trillion in 2016. Exports accounted for roughly 8.9% of the Middle East‘s total economic output for 2016. But what are the major exports coming out of the region? Gems and precious metals Given the area‘s rich stores of oil and other fossil fuels, it is perhaps no surprise that the Middle East also exports a significant amount of gems, industrial metals and other precious metals that are used for a variety of purposes and industries. For example, the Dubai Diamond Exchange, which is a leading global diamond trade center, has seen its trade jump exponentially. In 2010 alone, US$14.6 billion worth of polished diamonds were exported. Electrical machinery and equipment According to figures from 2016, the largest economy in the Middle East, Saudi Arabia, exported electrical machinery and equipment totaling more than US$1 billion. Vehicles The Middle East region, as a whole, exports about US$1.5 billion worth of cars, trucks and other vehicles. Of the top 10 countries, Saudi Arabia leads the Middle East in a number of vehicles exported with $745.5 million; Kuwait following closely in second place with exports totaling $557.7 million. The United Arab Emirates trails a distant third with $96.3 million. Aluminum The Middle East exported US$12.9 billion of aluminum in 2016. 2017 marks the second highest growth in the industry when measured by year-on-year figures. The region is expected to continue in its role as a leader in the production of aluminum by constantly implementing technologies in the metal‘s refinement, processing and production.

Ships and boats Experts estimate that the Middle East is accountable for 20 percent of the world‘s workboat market. More than 70 percent of the industry‘s very large crude oil carriers (VLCOC) originate from this area. However, the Middle East also produces and repairs ships and boats such as fire, police, rescue, patrol and oil spill boats, barges, dredgers and floating cranes. Organic chemicals Representing 5.7 percent of the global shipments of organic chemicals, the Middle East exports in this category amounted to US$31.9 billion. Anhydrous ammonia topped the region‘s list of organic chemical exports at $1.3 billion. At a distant second, third and fourth were exports of phosphoric acid ($372.3 million), distilled/conductivity water ($305.6 million) and carbon ($234.9 million). The United Arab Emirates leads the Middle East in exporting organic chemicals such as sulfuric acid with nearly $546 million of sales in 2015. Plastics Exporting more than US$370 million worth of plastics signals the Middle East‘s concerted push to become a more dominant force in the exportation of this industry. Recognizing that the region is exposed to a certain amount of economic instability due to its dependence in the oil sector as the primary source of its exports, the Middle East has sought to be more aggressive with its efforts to diversify. By attempting to capture a larger portion of the already highly-profitable downstream petrochemicals industry via plastics, the region is expected to enhance its position. Demand for high-value plastics such as ethyl vinyl acetate (EVA), acrylonitrile butadiene (ABS) and polycarbonate is expected to grow. Mineral fuels Both the production and the processing of mineral fuels, including crude oil and natural gas, are a major foundation for the economies of most of the 15 countries in the Middle East. The region is among the largest sources of mineral fuel exports with the area accounting for about 18 percent of the amount imported by the United States, for example. Of those Middle Eastern countries that exported mineral fuels to the United States, Saudi Arabia was the country‘s largest source. The Middle East was responsible for more than 40 percent of the world‘s crude oil exports with a value of US$325 billion in 2015.

International rail corridors passing through Middle East

2.1 Silk Road

2.1.1 Silk Road Development With the continuing economic development, cargo traffic flows between Asia and Europe are expected to increase. Moreover Rail transport on the Asia-Europe route is increasing as well but its share stays small. Disadvantages regarding border crossings, reliability, infrastructure and other factors are still holding it back. Dropping sea freight rates aggravate the competition with sea freight. Nevertheless, business initiatives to improve the competitiveness and quality of rail transport are growing on the Northern Eurasian rail routes and, more recent, on the Southern routes. Especially China, Iran and Turkey are investing and promoting the Southern infrastructure links to Europe along the former Silk Road trading routes. At the same time, Europe is investing in its cargo rail by creating common standards for the interoperability of networks in the nine Rail Freight Corridors (RFCs) and the Trans-European Transport Networks. According to the study carried out by Roland Berger in 2017, from a volume of 140,000 TEU in 2016, a total rail potential of 640,000 TEU is forecasted for 2027, after a historic CAGR of 140% between 2014-2016, a CAGR of 15% is forecasted for 2017-27. Significant volume coming from shift from sea. Strong improvements in infrastructure/terminals, customs, procedures and frequencies have enabled the growth in recent years. Important features that need to be improved further are reliability, balance of transport volumes and competitive pricing. Southern rail routes will only have a small share of the rail cargo transport between Asia and Europe. Their potential lies in the connection of new regions and freight flows. At present, European RFCs are only weakly interconnected with Eurasian rail freight – Customer needs are not fully covered. To foster a sustainable development of Eurasian rail freight, market players should improve the efficiency of their operations, tailor their products to evolving customer needs and explore the options of new markets. Eurasian rail cargo transports have grown significantly, but still have a low intermodal market Share.

Figure 2.1 Transport between China and Europe via rail (Trains)

In addition to the Europe-Asia routes in place in North Asia, new routes via Iran and Turkey are developed for rail cargo. One of the bottlenecks on the way of increasing cargo exchange between China and Europe is break of guage. Below figure shows track gauges of the railways along China-Europe route.

Map 2.1 Main Eurasian routes with track gauge

Generally 7 routes are considered to connect China to Europe where the best ones are the first two routes: Alashankou (China)-Doystik (Kazakhstan) 10 000 km in length and Manzhouli (China)-Zabaykalsk (Russia) 11000 km in length both through Baku-Tbilisi – Kars. Another proposed route is Khorgos-Tashkent-Tehran 12500 km and as well Tehran-Baku- Moscow 13500 km (see below table).

Table 2.1 The analysis for "Potential of Eurasian rail freight transport incl. the Silk Road" encompasses 38 countries in Europe and Asia Rail potential of around 636 000 TEU is forecasted for 2027.

Southern routes' share of the traffic potential for 2027 is projected to reach 19,000 TEU corresponding to 3% of Eurasian rail traffic. The traffic on the Southern routes would reach 389,000 TEU, if other expected international traffic is accounted for as upside

Figure 2.2 Rail Potential base case forecast

2.2 Baku-Tbilisi-Kars Corridor

2.2.1 History The project of a railroad between Azerbaijan and Turkey through Georgia was first discussed in July 1993, the Kars–Gyumri–Tbilisi railway, was going through Armenia, was closed. A multi-lateral accord to build the link was signed by the three countries in January 2005. Because of a lack of funding at that time, the project was more or less abandoned. However, during the inauguration of the Baku–Tbilisi–Ceyhan pipeline in May 2005, the Presidents of Azerbaijan, of Georgia and of Turkey evoked once again the possibility of building a railroad between the three countries. In February 2007 in Tbilisi, Azerbaijan, Georgia and Turkey signed a trilateral agreement to launch the construction of the railroad the same year. On November 21, 2007, the presidents of Azerbaijan - Ilham Aliyev, Georgia - Mikheil Saakashvili, and Turkey - Abdullah Gül inaugurated the construction of the railroad at a groundbreaking ceremony at the Marabda junction south of Tbilisi, and the first rails in Turkey began to be laid in July 2008 from Kars.

Map 2.2 route of Baku–Tbilisi–Kars corridor

2.2.2 Pre-existing railways The (Poti)- Tbilisi–Baku railway (the Transcaucasus Railway) was completed in 1883, and has since remained the backbone of Transcaucasia's railway network. By 1899, a branch line (Kars–Gyumri–Tbilisi railway) from Tbilisi to Marabda to Gyumri (then Alexandropol) to Kars was completed. In 1986, the construction of a 160 kilometers (99 mi) branch railway line from Marabda (on the Tbilisi-Gyumri line, 23 kilometers (14 mi) south of Tbilisi Junction) west to Akhalkalaki was completed. However, this branch fell into disuse at a later stage.

2.2.3 The Baku-Tbilisi-Kars Project was formed of four main elements:  The existing 563 km main line between Baku and Tbilisi; Parts of this 1520 mm gauge double-track electrified line from Baku to the border station between Azerbaijan and Georgia at Boyuk Kasik have been upgraded to carry the additional traffic which the scheme is expected to generate;  The 23 km section from Tbilisi to Marabda, which forms part of the 1520 mm gauge line from the Georgian capital to Gyumri in Armenia; No additional work has been needed on this part of the route;  153 km of 1520 mm gauge line between Marabda and Akhalkalaki in Georgia; this was inaugurated in 1986, but since then has remained largely unused, meaning that major rehabilitation has been necessary, absorbing a large share of the available funds;  110 km of brand new alignment linking Akhalkalaki in Georgia and Kars in Turkey. This newly constructed 1435 mm gauge segment lies at the heart of the whole project. The Georgian part of the new link, from Akhalkalaki to kartsakhi on the Georgian Turkish border, along with the rebuilt Marabda- Akhalkalaki section, owned and managed by Azeri national railway ADY. Contracts for the works were awarded to ARWC JSC Georgian Office and Azerinsaatsevis. The US$ 720.8m cost was financed by a loan provided from Azerbaijan to the Georgian state-owned company Marabda- Kartsakhi Railway LLC. On the Turkish side, construction and operation of the new alignment between Kartsakhi and Kars was the responsibility of Turkish Ministry of Transport, Maritime Affairs and Communications. 2.2.4 Opening of the Train The first train ran on the Turkish section of the Baku – Tbilisi – Kars railway corridor on July 19, 2017 and finally the inauguration ceremony of the Baku-Tbilisi-Kars Railway Project took place at the Alat Port of Baku, Azerbaijan on 30 October 2017. In concurrence with the opening, one of the rings of the New Silk Way initiative was put into operation and the most important pillar of the Middle Corridor was completed when the train of the Baku-Tbilisi-Kars Railway Project made its first journey. The total length of the line is 829 km, of which 79 km is in Turkish territory, 246 km is in Georgian and 504 km is in Azerbaijani territories. The border crossing between Turkey and Georgia is provided by a tunnel. The 2.375 meters of the tunnel is in Turkish territory and 2.070 meters is in Georgian territory. For the Baku-Tbilisi-Kars Railway, 79 km of new railway line was constructed in the Turkish section and 105 km of new railway was constructed whereas 154 km of railway line has been renovated in the Georgian section. 503 km of railway line have been rehabilitated for the project in the Azerbaijani section.

This line, together with the Marmaray tunnel in Istanbul, will significantly increase the importance of the railway in this region, between Asia and Europe. This railway will increase co-operation in this region and expand trade.

Figure 2.3 Share of length of routes of Baku-Tbilisi-Kars Corridor The railway line can transport 1 million passengers and 6.5 million tons of freight. By 2034 the projection for passenger transport is 3 million passengers and 17 million tons of freight. The BTK route is expected to carry up to 500 000 TEU/year and an agreement has now been reached for the construction of a freight terminal in Kars. Although the route is primarily intended to carry freight, Stadler is supplying Azerbaijan‘s national railway ADY with a fleet of gauge-changing sleeping cars for a planned Baku – Istanbul passenger service. 2.2.5 Objectives and political issues The key objective of the project is to improve economic relations between the three countries and gaining foreign direct investment by connecting Europe and Asia. Some commentators in Armenia have viewed this new route as an attempt by Azerbaijan to bypass and isolate Armenia from regional economic projects. However, the route through Armenia was politically impossible due to the unresolved war between Armenia and Azerbaijan over the status of Nagorno-Karabakh. This project will contribute to further regional cooperation between Azerbaijan, Georgia and Turkey. With commissioning of railway line Baku–Tbilisi–Kars the cargo traffic from China through Kazakhstan, the ports of Aktau, Kuryk, Alat by a shorter route will head to Turkey and Europe. With taking into account the transport infrastructure projects the potential of corridors running through the territory of the countries of the region increases by many times.

Map 2.3 Close-up view of Baku–Tbilisi–Kars corridor

2.2.6 Caspian Region Transportation Projects

Within the scope of the ― Logistics Centers and Sea Highways II Project‖ under TRACECA and with the efforts of Kazakhstan, Turkey, Georgia and Azerbaijan have started the Block Train Project named ―Silk Wind‖ which extends from the border of China to Europe Border Through Kazakhstan, Azerbaijan, Georgia and Turkey on the TRACECA Corridor. Within the scope of the project, ―Agreement on the Development of Sea and Railway Traffic in the Black Sea‖ has been negotiated among Azerbaijan, Georgia, Kazakhstan, and Turkey Governments.

Map 2.4 Length of routes in Baku–Tbilisi–Kars corridor

Route: Kazakhstan, Azerbaijan, Georgia, Turkey (Ferry will be used between Aktau-Alat Ports.

Route Length: with the completion of the Zhezkazgan- Beineu Line in Kazakhstan existing 4658 km line will reduce 3723 km. The length of the route from China Border of Kazakhstan to Haydarpasa will be 5.599 km. (Length of the line before the construction of the mentioned line: 6564km) Travel Time: 16 days, transportation time will decrease 12 days. Border Procedures: Waiting time at the border will be reduced from 3-12 hours to 30 minutes-3 hours.

2.2.7 The Silk Wind Project The block train project named as ―Silk Wind‖ being implemented within the TRACECA program, to start from the border of China and to end at the border between Europe and Kazakhstan, Azerbaijan, Georgia, Turkey within the Eurasia Transport Corridor has been initiated. Baku-Tbilisi-Kars Railway Project stands as a complementary element of the Silk Wind Project. An important contribution has been made to continuous Transport to be provided between China and Europe with completion of the Baku-Tbilisi-Kars Railway Project. With this project, transport will be possible by railways through Georgia to Azerbaijan starting from Turkey; by ferryboat between the Port of Alat- Azerbaijan and Port of Aktau- Kazakhstan and by railways beyond Kazakhstan up to China. It is aimed at exchanging information through improved electronic infrastructure and to form the route for rapid container block train in order to shift door to door freight shipment into TRACECA Railway corridor with this project. 2.2.8 Caspian Sea (combined) Transit Route This is another route of the mentioned Corridor. It starts from Kazakhstan (Dostyk), continues to Poti Port in Georgia, and goes to Haydarpasa Port in Istanbul. The length of this route is 5451 km. So the en-route points can be described as follows: Dostyk (Kazakhstan) - Aktau Port (Kazakhstan) - Alat Port (Azerbaijan) - Poti Port (Georgia) – Haydarpasa Port (Turkey) 2.2.9 The “Azure” Route (Lapis Lazuli) The Azeri route crosses Turkmenistan, Azerbaijan and Georgia and reaches the Black Sea, and then bypassing Turkey, it will connect Afghanistan to free waters. Convergence among countries in the region would be beneficial for stability.

2.2.9.1 En-route Points: Mazari Sharif- Türkmenbaşy-Alat Port- Poti Port- Haydarpaşa. 2.2.9.2 Scope Afghanistan – Turkmenistan – Georgia – Turkey Transit Transport Corridor (Lapis Lazuli): with Lapis Lazuli Project it is aimed at forming a transit corridor reaching Europe by using the ports of Black Sea between Afghanistan-Turkmenistan-Caspian Sea-Azerbaijan- Georgia or via the bridges at Bosporus Straight and Marmaray through Baku-Tbilisi-Kars Railway. Since its initiation in 2012, the Lapis Lazuli Transit, Trade & Transport Route Agreement has been developed with a view to enhancing regional economic integration and trade- based connectivity between the countries of Afghanistan, Turkmenistan, Azerbaijan, Georgia, and Turkey. Lapis-Lazuli makes a notable contribution to building an integrated transit and transport system among the contracting parties, and beyond by expanding economic and cultural links between Asia and Europe. The name ―Lapis Lazuli‖ is derived from the historic route that Afghanistan‘s lapis lazuli and other semiprecious stones were exported along, over 2,000 years ago to the Caucasus, Russia, the Balkans, Europe, and North Africa. 2.2.9.3 Current Status Key priorities under the initiative in the medium to long term include: 1) improve road conditions and transit facilities along major highways; 2) expand rail links between Afghanistan and Turkey and beyond; 3) improve multi-modal land ports in priority places in each of the five Lapis Lazuli Route countries; and 4) undertake a Cost-Benefit Analysis on establishing Cross-Border Economic (Tax Free) Zones between the countries along the corridor. The Lapis Lazuli Corridor will connect with Turkey‘s Middle Corridor Project (―East-West Trans-Caspian Trade and Transport Corridor‖) and will also complete other regional transport corridors. Lapis Lazuli Corridor Agreement was signed between Afghanistan, Turkmenistan, Azerbaijan, Georgia, and Turkey on the sidelines of the 7th Regional Economic Cooperation Conference on Afghanistan (RECCA VII) in Turkmenistan.

Map 2.5 LAPIS LAZULI Transit Transport Corridor

2.2.10 A Glance to the export and import of the en-route countries of Baku-Tbilisi-Kars Corridor 10 Main Exported Items (Azerbaijan-Georgia), 2015

No. Export Export value Percent

1. Refined Petroleum $ 140 M 42% 2. Petroleum gas $ 91.1 M 27% 3. Margarine $ 16.3M 4.9% 4. Gypsum $ 11.5 M 3.5% 5. Electrical Control Board $7.33 M 2.2% 6. Copper Ore $ 6.62 M 2.0% 7. Cement $ 4.2 M 1.3% 8. Tea $2.35M 0.71% 9. Oscilloscopes $ 2.09 M 0.63% 10. Bran $ 1.49M 0.45%

10 Main Imported Items (Georgia to Azerbaijan), 2016

No. Import Import value Percent

1. Car $49M 32% 2. Packaged Medicaments $18.9M 12% 3. Human or Animal Blood $4.33M 2.8% 4. Flavored water $4,32M 2.8% 5. Soy Bean Meal $4.32M 2.8% 6. Ferro alloys $4.1M 2.7% 7. Raw Iron Bars $4.09M 2.7% 8. Rubber Tires $ 3.71 M 2.4% 9. Sheep and Goats $2.61M 1.7% 10. Potatoes $1.96M 1.3%

10 Main Export Destinations of Azerbaijan, 2015

No. Country Export value Percent

1. Italy $4.22B 25%

2. Germany $1.68B 10% 3. France $1.13B 6.7% 4. Indonesia $1.07B 6.3% 5. Czech Republic $929M 5.5% 6. Spain $694M 4.1% 7. Norway $674M 4.0% 8. India $609M 3.6% 9. Russia $427M 2.5% 10. Portugal $415M 2.5%

10 Main Importing Countries to Azerbaijan, 2015

No. Country Import value Percent

1. Russia $1.69B 15% 2. Turkey $1.69B 15% 3. Germany $838M 7.6% 4. Italy $730M 6.6% 5. China $532M 4.8% 6. Japan $526M 4.7% 7. United States $405M 3.6% 8. Georgia $249M 2.2% 9. France $225M 2% 10. Switzerland $166M 1.5%

10 Main Exported Items (Georgia to Turkey)

No. Export Export value Percent

1. Knit T-Shirts $ 37.3M 21%

2. Animal Meal and Pellets $ 13.7M 7.9%

3. Electricity $13.1M 7.5%

4. Raw Iron Bars $12.4 M 7.1%

5. Semi-finished Iron $12M 6.9%

6. Ferro Alloys $11.7M 6.8%

7. Knit Men‘s suit $ 10M 5.8%

8. Nitrogenous Fertilizer $ 7.6M 4.4%

9. Non-knit women‘s shirt $ 4.88M 2.8%

10 Fish $ 4.88M 2.7%

Some of the Main Imported Items (Turkey to Georgia), 2016

No. Import Import value Percent

1 Iron Structures $ 30.8 M 3.8% 2 Toilet Paper $41.2M 3.5% 3 Other small Iron Pipes $ 38.3 M 3.1% 4 Insulated wire $ 30.8 M 2.6% 5 Plastic Pipes $ 28.1 M 2.4% 6 Cleaning products $ 24.2 M 2.1% 7 Other furniture $ 17.3M 1.5% 8 Particle Board $ 17.2 M 1.5% 9 Grapes $ 16.9M 1.4%

10 Main Export Destinations of Georgia, 2016

No. Country Export value Percent

1. Russia $206M 9.8% 2. Turkey $174M 8.2% 3. China $5.66B 8.0% 4. Bulgaria $167M 7.9% 5. Azerbaijan $153M 7.3% 6. Armenia $151M 7.1% 7. Ukraine $73.3M 3.5% 8. Italy $72.5B 3.4% 9. United States $68.3M 3.2% 10. Spain $41M 1.9%

10 Main Importing Countries to Georgia, 2016

No. Country Import value Percent

1. Turkey $1.35B 19% 2. Russia 675M 9.3% 3. China $547M 7.6% 4. Azerbaijan $495M 6.9% 5. Germany $419M 5.8% 6. Ukraine $417M 5.8% 7. Netherlands $217M 3.0% 8. United Kingdom $144M 2.0% 9. Spain $66.3M 0.92% 10. Belgium $61.9M 0.86%

10 Main Export Items (Azerbaijan to Turkey), 2015

No. Export Export value Percent

1. Refined Petroleum $124M 35% 2. Raw Aluminium $67.8M 19 % 3. Ethylene Polymers $56M 16% 4. Coal Tar Oil $22.3M 6.4% 5. Acyclic Alcohols $17.3M 5.0% 6. Gold $12.8M 3.7% 7. Raw Lead $5.56M 1.6% 8. Refind Copper $5.19M 1.5% 9. Non-Retail Pure Cotton $5.05M 1.4% 10 Aluminium Plating $ 4.56M 1.3%

10 Main Import Items (Turkey to Azerbaijan), 2016

No. Import Import value Percent

1. Furniture $39.1M 3.0% 2. Toilet Paper $37M 2.9% 3. Cleaning Products $33M 2.6% 4. Iron Structures $30.2M 2.3% 5. Insulated Wire $17.2M 1.3% 6. Electrical Transformers $15M 1.2% 7. Packaged Medicament $19M 1.5% 8. Baked goods $17.5M 1.4% 9. Raw Plastic Sheeting $15.2M 1.2% 10 Monofilament $13M 1.0%

10 Main Export Destinations of Turkey, 2016

No. Country Export value Percent 1. Germany $14B 10%

2. United Kingdom $11.7B 8.4% 3. Iraq $7.64B 5.5% 4. Italy $7.58B 5.4% 5. United States $6.62B 4.7% 6. France $6.03B 4.3% 7. United Arab Emirates $5.41B 3.9% 8. Spain $4.99B 3.6% 9. Netherlands $3.59B 2.6% 10 Saudi Arabia $3.17B 2.3%

10 Main Importing Countries to Turkey (2016)

No. Country Import value Percent 1. China $25.4B 13% 2. Germany $15.2B 8% 3. United States $10.9B 5.8% 4. Italy $10.2B 5.4% 5. France $7.36B 3.9% 6. South Korea $6.38B 3.4% 7. India 5.76B 3.0% 8. Spain $5.68B 3.0% 9. United Kingdom $5.32B 2.8% 10 Iran $4.7B 2.5%

2.3 Iran- Afghanistan- Tajikistan- Kyrgyzstan- China Corridor (KTAI+ China)

2.3.1 History This project has been proposed by the Tajik and Afghan officials and accepted by the Iranian officials. Accordingly, memoranda of understanding for the follow-up of this rail link have been exchanged. In the transport agreement between the three countries of Iran, Afghanistan and Tajikistan (Approved by the government on July 27, 2003), the study of Sangan - Herat - Shirkhan Bandar – Dushanbe, and its extension to the Tajik neighbors was agreed in cooperation with three countries. It seems that transport market assessment studies, the study of freight and passenger transportation demand in the region and its financial and economic assessments have apparently not been done; and the completion of the study, in terms of the traffic and economic dimensions, is necessary for the feasibility of the project (cost-benefit analysis) and technical design of the route, stations and technical installations; and the Iranian side has the ability and readiness to conduct technical and engineering studies of the project. Tajikistan and Afghanistan are landlocked countries that need to cross other countries to access the high sea. At present, Tajikistan Railways extends to the border of Afghanistan (Although in the current situation, the railway stretches to Afghanistan via the border point of the Temez, after entering Uzbekistan). Iran has also constructed its railways up to Shamtigh border (81 kilometer) and its extension to the Juno station in Afghanistan is under construction (62 kilometers). The Afghan side has also announced its commitment to construct extension to the city of Herat (87 Kilometers). Therefore, a new rail link should be constructed in Afghanistan for aforesaid rail connection, which is about 1250 kilometers from Tajikistan-Afghanistan border to Herat; and a small segment of this route should be constructed in Tajikistan which is about 60 kilometers. In case of the construction of the project, the railways of Tajikistan and Afghanistan will be connected to the Iranian railways via Khaf-Herat railway. 2.3.2 En-route Countries Iran, Afghanistan, Tajikistan, Kyrgyzstan + China. An agreement to conduct feasibility studies on a railroad project that would connect Iran to Afghanistan, Tajikistan, Kyrgyzstan and China was signed by all involved sides in October 2010. According to this agreement, which was signed among five countries of China, Kyrgyzstan, Tajikistan, Afghanistan, and Iran, a transit rail route will be constructed from China to Iran. The route will be 2,100 kilometers long and a large part of it, that is, 1,148 km will cross Afghanistan. 2.3.2.1 Afghanistan Segment The Afghan portion of the rail line will be partially funded by the Asian Development Bank and help increase Afghanistan‘s access to the sea ports of Iran (Chabahar and Bandar Abbas), providing considerable opportunity for trade expansion. The Five Nations Railway Corridor would also connect China and the Commonwealth of Independent States countries to Europe through Iran and Turkey. Afghanistan is prepared to accrue significant economic, political, and social benefits at the center of this major new Eurasian rail transit corridor.  60% progress has been achieved in construction of the sub-segment between Chah-e-Sorkh (border with Iran) to Rozanak area of Herat province.

 The feasibility study for the sub-segment between Faryab and Mazare-Sharif is supported by ADB.  The remaining sub-segments, namely, between Rozanak- Herat, Kunduz- Mazare-Sharif and Herat-Faryab, still require conducting feasibility studies and construction accordingly.

Map 2.6 Scheme of the project proposals for construction of Iran- Afghanistan- Tajikistan- Kyrgyzstan- China Railway

Map 2.7 Satellite map of Chah-e-Sorkh Bala

2.3.2.2 Tajikistan Segment  The feasibility study of the Tajik segment has been undertaken.

Map 2.8 En-route countries of Iran- Afghanistan- Tajikistan- Kyrgyzstan- China Corridor

2.3.2.3 Kyrgyzstan Segment  The feasibility study and construction along this segment require financial supports. The proposed Railway Corridor aims to facilitate and enhance regional business relations and promote regional stability. It would connect China with Iran and, in doing so, would also traverse—over a total distance of 2,100 kilometers—the countries of the Kyrgyz Republic, Tajikistan, and Afghanistan. An estimated 1,148 kilometers of the proposed rail corridor will pass through the Afghan provinces of Kunduz, Balkh, Jawozjan, Faryab, Badghis, and Herat. Economic Internal Rates of Return on similar railway projects in Afghanistan and the region range from 14% to 25% or more. The wider economic impact on trade and transit would, however, be considerable, as would opportunities to invest in ancillary and spinoff projects. 2.3.3 Current Status The Railway Corridor was discussed at the 25th meeting of the ECO Regional Planning Council (RPC) held in Tehran, Iran from 1-5 March 2015, and high authorities met regarding Construction of the China-Kyrgyz Republic-Tajikistan-Afghanistan to Iran railway line in Dushanbe, Tajikistan from 8-9 December 2014. Though progress overall is slow, the project‘s feasibility study, including a preliminary design for a 654 kilometer segment passing through Afghanistan, is ongoing, and negotiations on financing are also moving forward. The Five Nations Railway Corridor is poised to help advance Afghan Government‘s Infrastructure and Connectivity Development National Priority Program.

2.3.4 Positive outcomes of the rail project 2.3.4.1 Political and economic interests of all members in building a new rail corridor This railroad can not only boost transportation capacity of the involved countries, but also energize the growth of their national economies, expand their trade exchanges and promote tourism ties, while helping them develop their national economies. In addition, the railroad will reduce the distance for commercial transport between the East (from China to Iran) and the West (toward Western Europe) and help connect member countries to the free waters of the Persian Gulf through the Iranian soil. In addition, transit of cargo among regional countries will be facilitated and due to shortening of distance and time, the costs of shipping cargo along this route will decrease while transit role of involved countries will grow. On the other hand, the railroad connecting Iran to Afghanistan, Tajikistan, Kyrgyzstan, and China can help promote bilateral and multilateral relations among member countries and, in addition, create more economic dynamism in countries that are members of the North-South Corridor, which is made up of 14 countries. Of course, the railroad connecting the city of Tejen in Turkmenistan to Iranian cities of Sarakhs, Mashhad, and Bafq, has already reduced the cost of rail access by the Central Asian countries to the Persian Gulf and India. However, note must be taken that the new rail corridor between Iran and China, which will extend up to the city of Kashghar in China – by crossing Afghanistan, Tajikistan and Kyrgyzstan – will decrease the distance over rail for the access of China, Afghanistan, Tajikistan, and Kyrgyzstan to Iran, Europe and the Middle East. This is while this railroad is the missing link in the standard international railroad and the most important part of the eastern railroad, which has not been finished yet. So, if this project is realized, it would be of great help to boosting political and regional convergence. This is true as the expansion of any kind of cooperation among regional countries would help regulation of common interests among these countries and reduce the extent of the existing threat. On the other hand, when their interests are tied together, they would naturally pose less threat to one another, and will offer more help for the establishment of sustainable stability and security in the region. 2.3.4.2 Positive political and economic benefits for individual members 2.3.4.2.1 Benefits for China In line with a plan to revive the historical Silk Road, China launched 9,000 kilometers of new railroad in 2015. Of course, the Chinese have been working on another rail route which runs through China, Kazakhstan, the Caspian Sea, and the Republic of Azerbaijan to reach Georgia in Europe. However, the railroad running through China, Kyrgyzstan, Tajikistan, Afghanistan, and Turkmenistan is also in line with their national interests because due to high volume of their economic exchanges, the Chinese need to take advantage of diverse routes to connect to trade markets and energy resources. Therefore, establishing rail and road connection from China‘s western regions to West Asia, the Persian Gulf and Europe is of high importance to Beijing. The new railroad will further shorten the existing route that connects China to West Asian countries, and the Middle East in order to export and import goods and also to take oil products from the Persian Gulf region. Rail transport is an important mode of long-distance transportation in the People‘s Republic of China. Almost all rail operations are handled by the China Railway Corporation, a state-owned company created in March 2013 from dissolution of the Ministry of Railways. China‘s railways are among the busiest in the world.

2.3.4.2.2 Benefits for Iran Although the railways of Iran and China have been already connected through the Central Asian countries – by crossing through Kazakhstan, Uzbekistan, and Turkmenistan –, on a national scale, the new rail corridor can first of all boost Iran‘s economic exchanges with all other members. In later stages and on a regional scale and due to Iranian government‘s plans to develop Makran region and the southeastern Chabahar port, Iran can facilitate the access to the regional transport hub. In the meantime, the new railroad can be extremely effective in easing transit and help increase the volume of trade between Iran and other regional countries. From political and geopolitical viewpoints, in view of the advantages that Iran has in terms of transit security and for transit of major shipments through its soil, the policy of everything without Iran and efforts made to bypass Iran when implementing important economic and geopolitical projects will be rendered ineffective. 2.3.4.2.3 Benefits for Tajikistan Establishment of a land transport corridor and construction of railroad through Afghanistan‘s soil is much more important for Tajikistan. This railroad can connect Tajikistan directly to Afghanistan and indirectly to Iran, as two Persian-speaking countries, and reduce the country‘s political reliance on Uzbekistan and Russia. 2.3.4.2.4 Benefits for Kyrgyzstan During recent years, Kyrgyzstan has been mulling construction of rail routes to Kazakhstan, and China, and now to Afghanistan and Tajikistan in order to diversify its export routes. The new railroad practically circumvents Uzbekistan and reduces the leverage it currently has for putting pressure on its neighbors, also reducing Kyrgyzstan‘s need to rely on Uzbekistan‘s railroad. 2.3.4.2.5 Benefits for Afghanistan Afghanistan lacked any form of railroad until 2011, while this country is in dire need of rail transportation. The new railroad will increase Afghanistan‘s access to the Central Asian and European rail networks. Launching this railroad will lead to prosperity and development of central and northern provinces of Afghanistan, and since the new railroad crosses through northern parts of Afghanistan (where the Taliban group does not sway much control), the possibility of security challenges being posed by the Taliban group will also decrease. On the other hand, construction of this rail corridor can provide an opportunity for the export of minerals from Afghanistan‘s vast mines. Apart from all these issues, demand for transport by member countries through this corridor is sure to be very high and can help the country earn an annual amount of USD 200 million to USD 300 million in transit duties. This reason is enough to make Afghan officials lend their full support to this project, noting that it will play an important role in helping growth of the country‘s national economy. The former Soviet countries and the small amount of railway in Afghanistan use 1520 mm broad gauge, but Iran and China both use standard gauge. The presidents of Tajikistan and China met and discussed ―the prospects of construction of railway China – Tajikistan – Afghanistan – Iran - Persian Gulf, and the Ministry of Finance of Tajikistan and Export-Import Bank of China signed an agreement on preferential credit for construction of the 40.7 km Vahdat - Yovon section of the Dushanbe – Qurghonteppa line by 2016.

2.3.5 A Glance to the export and import of the en-route countries of Iran- Afghanistan- Tajikistan- Kyrgyzstan- China Corridor (New Silk Road)

Some of the Main Export Items (Iran to Afghanistan), 2015

No. Export Export value Percent

1. Peat $695M 68% 2. Curbstones $57.5M 5.6% 3. Stone Processing Machines $51.9M 5.1% 4. Utility Meters $50.4M 4.9% 5. Chocolate $36.1M 3.5%

Some of the Main Import Items (Afghanistan to Iran), 2015

No. Import Import value Percent

1. Other Oily Seeds $14.5M 57% 2. Other Nuts $3.89M 15% 3. Vegetable Saps $2.45M 9.6% 4. Maté $1.87M 7.3% 5. Marble, Travertine and $1.24M 4.8%

Alabaster 6. Tungsten Ore $638k 2.5% 7. Grapes $602k 2.4%

Some of the Main Export Destinations of Afghanistan, 2016

No. Country Export value Percent

1. India $220M 46% 2. Pakistan $200M 41% 3. Iran $15.1M 3.1% 4. Iraq $10.1M 2.1% 5. Turkey $9.15M 1.9% 6. United Arab Emirates $8.03M 1.7% 7. Kazakhstan $3.89M 0.81% 8. China $1.13M 0.23%

10 Main Importing Countries to Afghanistan, 2016

No. Country Import value Percent

1. Iran $840M 22% 2. Pakistan $653M 17% 3. China $526M 14% 4. Kazakhstan $499M 13% 5. Turkmenistan $289M 7.7% 6. Malaysia $252M 6.7% 7. Uzbekistan $127M 3.4% 8. United Arab Emirates $106M 2.8% 9. India $73.6M 2.0% 10. Japan $72.5M 1.9%

10 Main Export Items (Afghanistan to Tajikistan), 2016

No. Export Export value Percent

1. Spice Seeds $112k 32% 2. Tomatoes $74.5k 21% 3. Grapes $50.1k 14% 4. Marble, Travertine and $33k 9.4% Alabaster 5. Cabbages $27.4k 7.8% 6. Sowing Seeds $16.5k 4.7% 7. Sheep and Goats $10k 2.8% 8. Tropical Fruits $8.24k 2.3% 9. Trunks and Cases $7.63k 2.2% 10. Pitted Fruits $6.2k 1.8%

Some of the Main Import Items (Tajikistan to Afghanistan), 2016

No. Import Import value Percent

1. Curbstones $9.07M 70% 2. Chocolate $2.02M 16% 3. Other Vegetables $931k 7.2% 4. Padlocks $262k 2.0% 5. Salt $204k 1.6% 6. Aluminium Pipe Fittings $200k 1.5%

Some of the Main Export Destinations of Tajikistan, 2015

No. Country Export value Percent

1. Turkey $198M 23% 2. Kazakhstan $156M 18% 3. Switzerland $141M 17% 4. Algeria $54.5M 6.4% 5. Afghanistan $50.6M 6.0% 6. Italy $48.3M 5.7% 7. China $48.2M 5.7% 8. Russia $44M 5.2% 9. United States $32.1M 3.8%

Some of the Main Importing Countries to Tajikistan, 2015

No. Country Import value Percent

1. China $1.8B 51% 2. Russia $759M 21% 3. Kazakhstan $418M 12% 4. Turkey $163M 4.6% 5. Switzerland $42.5M 1.2% 6. Germany $41.6M 1.2%

Some of the Main Export Items (Tajikistan to Kyrgyzstan), 2015

No. Export Export value Percent

1. Electricity $3.18M 42% 2. Grapes $1.51M 20% 3. Raw Silk $890k 12% 4. Other Fruits $370k 4.9% 5. Silk Waste $274k 3.6% 6. Citrus $114k 1.5% 7. Large Construction Vehicles $112k 1.5%

10 Main Import Items (Kyrgyzstan to Tajikistan), 2015

No. Import Import value Percent

1. Refined Petroleum $8.56M 35% 2. Float Glass $2.96M 12% 3. Tractors $1.74M 7.2% 4. Cement $1.67M 6.9% 5. Plastic Lids $1.16M 4.8% 6. Pasta $966k 4.0% 7. Iron Structures $894k 3.7% 8. Malt Extract $832k 3.4% 9. Bovine $658k 2.7% 10. Coal Briquettes $339k 1.4%

Some of the Main Export Destinations of Kyrgyzstan, 2016

No. Country Export value Percent

1. Switzerland $648M 46% 2. Kazakhstan $151M 11% 3. Russia $145M 10% 4. Uzbekistan $125M 8.8% 5. Turkey $90M 6.3% 6. China $79.7M 5.6% 7. United Arab Emirates $36.4M 2.6% 8. United Kingdom $32M 2.3% 9. Tajikistan $21.8M 1.5%

Some of the Main Importing Countries to Kyrgyzstan, 2016

No. Country Import value Percent

1. China $1.46B 38% 2. Russia $800M 21% 3. Kazakhstan $636M 17% 4. Turkey $191M 5.0% 5. United States $154M 4.0% 6. Uzbekistan $69.8M 1.8% 7. Germany $62.4M 1.6% 8. Ukraine $39.8M 1.0%

Some of the Main Export Items (Kyrgyzstan to China), 2016

No. Export Export value Percent

1. Precious Metal Ore $42.4M 53% 2. Rolled Tobacco $9.86M 12% 3. Tanned Equine and Bovine $5.93M 7.4%

Hides 4. Refined Petroleum $5.57M 7.0% 5. Plastic Coated Textile Fabric $1.84M 2.3% 6. Specialized Vehicles $1.33M 1.7% 7. Coal Briquettes $841k 1.1%

Some of the Main Import Items (China to Kyrgyzstan), 2016

No. Import Import value Percent

1. Rubber Footwear $199M 14% 2. Other Synthetic Fabrics $109M 7.4% 3. Telephones $32.9M 2.2% 4. Steam Turbines $29.8M 2.0% 5. Trunks and Cases $29.6M 2.0% 6. Stone Processing Machines $27.8M 1.9% 7. Broadcasting Equipment $26.3M 1.8% 8. Artificial Filament Yarn Woven Fabric $25.8M 1.8% 9. Other Knit Garments $23.4M 1.6%

10 Main Export Destinations of China, 2016

No. Country Export value Percent

1. United States $386B 19% 2. Hong Kong $287B 14% 3. Japan $129B 6.3% 4. South Korea $93.7B 4.6% 5. Germany $65.2B 3.2% 6. Vietnam $61.1B 3.0% 7. India $58.4B 2.8% 8. Netherlands $57.4B 2.8% 9. United Kingdom $55.7B 2.7% 10 Malaysia $37.7B 1.8%

10 Main Importing Countries to China, 2016

No. Country Import value Percent

1. South Korea $159B 12% 2. Japan $146B 11% 3. United States $135B 10% 4. Germany $86.1B 6.5% 5. Australia $70.9B 5.4% 6. Malaysia $49.3B 3.7% 7. Brazil $45.9B 3.5% 8. Switzerland $39.9B 3.0% 9. Thailand $38.5B 2.9% 10. Vietnam $37.2B 2.8%

Some of the Main Export Items (Iran to China), 2015

No. Export Export value Percent

1. Crude Petroleum $9.58B 66% 2. Ethylene Polymers $1.94B 13% 3. Acyclic Alcohols $732M 5.1% 4. Iron Ore $581M 4.0% 5. Cyclic Hydrocarbons $433M 3.0% 6. Copper Ore $269M 1.9% 7. Refined Petroleum $211M 1.5% 8. Sulphur $172M 1.2%

10 Main Import Items (China to Iran), 2016 No. Import Import value Percent

1. Cars $922M 5.2% 2. Flat Flat-Rolled Steel $409M 2.3% 3. Telephones $407M 2.3% 4. Vehicle Parts $382M 2.1% 5. Light Fixtures $368M 2.1% 6. Air Pumps $344M 1.9% 7. Synthetic Filament Yarn Woven Fabric $333M 1.9% 8. Air Conditioners $278M 1.6% 9. Iron Pipes $256M 1.4% 10. Coated Flat-Rolled Iron $216M 1.2%

2.4 GCC (Gulf Cooperation Council) Railway route

Important project of the Persian Gulf Cooperation Council (GCC) is one of the significant projects of the region connecting six countries of Saudi Arabia, Emirates, Qatar, Bahrain, Kuwait and Oman. The project is around 2000 km. The network of SRO gets connected to the GCC member states

SRO RAil Projects 1765KM

SRO Rail Projects 915KM

450 Km

115 KM

Figure 2.4 Infrastructure projects of Saudi Arabian Railways

Through the operation of its North – South railway, Saudi Arabia also intends to enhance its rail connections with the other member states of the Persian Gulf Cooperation Council (GCC) by involvement of the local and foreign companies. For this goal, until now some contracts have been concluded with the local and foreign companies including French, Chinese and American companies in order to fulfill the software and hardware systems of this big rail project. Two Chinese and American companies shall supply locomotives and wagons needed for the project. To build a harbor in "Ras Al Zur" along the Persian Gulf a contract has been concluded with a Chinese company. It is planned that Ras Al Zur industrial factories along the Persian Gulf to be launched at the same time as North-South rail projects becomes operational.

Map 2.9 GCC Railway route 66

2.5 Islamabad (Pakistan) -Tehran (Iran) – Istanbul (Turkey) Corridor (ITI)

2.5.1 General Information En-route countries: Pakistan, Iran, and Turkey towards Europe Origin of the corridor: Islamabad Missing Links: Lake Van by ferry boat Length of the route: 6543 km Transit time via sea route: 45 days

Figure 2.5 Share of length of routes of ITI Corridor in each country

The Islamabad - Tehran - Istanbul demonstration train was launched after completion of the Bam-Zahedan route on August 14, 2009 (Until August 23, 2009). The length of this rail route is close to 6,543 kilometers, 2,603 kilometers of which are in Iran, 1950 kilometers in Turkey and about 1990 kilometers in Pakistan. To increase the capacity of this route, it is necessary to construct the second line and open some other rail routes. 2.5.2 Benefits There are numerous advantages of the Istanbul-Tehran-Islamabad rail route. It opens the way to the Indian market, providing much shorter deliver y times to Europe, and helps strengthen the positions of transit countries as bridges between Asia and Europe. The development of commercial, social and cultural relations among the countries is beneficial for the whole region and the potential for development is huge. As well as the Pakistan– Iran– Turkey route could potentially be extended both to east and west. It also provides access to the region of Central Asia, which is now developing and becoming increasingly important, and to India.

Map 2.10 Rail service and door to door delivery in ITI corridor

The information available on international rail transport in India is poor, but in order to develop this connection, Pakistan, whose network is linked to the network of India using the same gauge, has to work on improving cooperation. With the inauguration of the Marmaray tunnel under the Bosporus in Istanbul in 2013, one of the most important discontinuities in the logistics chain to Europe was eliminated and opened up new possibilities for international passenger and freight transport by rail. The implementation of the project reflects Turkey‘s hope that trade by rail between Europe and Asia and as far as China will be boosted. The tunnel has also strategic importance, it is an alternative way to reach Europe from Asia without passing through Russia. 2.5.3 Problems and bottlenecks the corridor encounters There are some problems to be addressed. The cost of railway transport is higher than maritime transport and the different gauges between Pakistan and Turkey/Iran constitute an additional problem. The level of bureaucracy is high and the chances of delay and opportunities to demand bribes are immense.

The problems result in the loss of large volumes of rail freight in connections between Turkey and Iran and serious concerns on the part of customers and railways concerning the future prospects of rail traffic to and from Turkey. 2.5.4 Sea vs. Railway Although the shipping time between Europe and Asia ranges between 28 and 40 days, maritime container transport is the cheapest and most preferred o p t i o n . Cheaper tariffs: International shipping companies with an extensive and cost-efficient fleet at their disposal can keep their charges and freight rates low. In many cases, shipping cost is the main consideration for consignors as they strive to minimize the transport component of the price of commodities in order to keep them competitive in the destination country. However, this appears to be true only for east-west transit. For north-south traffic, which is the other main direction for transit in Eurasia, overland transport costs can compete with sea freight. Customer service and compliance with international quality standards. Shipping companies offer a high standard of service, including cargo tracking, sophisticated logistics networks and guarantees of on-time and service delivery. They use state-of-the-art technology, offer discounts to regular customers, etc. However, overland transit has an important competitive advantage – it reduces delivery times. The shortest cargo delivery time from eastern China and other South- East Asian countries to Western Europe by railway is 2 to 2.5 times shorter than sea shipments via the Suez Canal with an extensive and cost-efficient fleet at their disposal can keep their charges and freight rates low. In many cases, shipping cost is the main consideration for consignors as they strive to minimize the transport component of the price of commodities in order to keep them competitive in the destination country. The tariffs charged by shipping companies will remain much more competitive than situation in Iran and Pakistan: The Middle East is well placed to act as a connection between Asia, Europe and even Africa. The main rail routes to Europe pass through Iran and Turkey. The rail route connecting the capitals of Pakistan, Iran and Turkey, all of which are OTIF Member States, has potential extensions in both directions: west to Europe, and east to Central Asia and China. But simple calculations alone are not sufficient to demonstrate the advantages of overland transit. Shorter delivery time is a critical factor for certain cargoes (perishable goods or urgent door-to-door shipments). In addition, faster delivery means quicker receipt of cash from the bank, shortening transaction times. In certain cases, each day that payment is delayed is critical, and consignors prefer shorter delivery times to lower shipping costs. Expending delivery releases considerable financial resources, which are effectively frozen throughout the cargo‘s journey time. The time factor is an unquestionable competitive advantage that overland routes can offer for certain commodities, customers and even regions. In order to compete seriously with maritime transit services, the transit countries need to improve their transport infrastructure and provide more effective cross- regional transport connections, creating a single intermodal Euro-Asian supply chain across Central Asia. This requires a comprehensive approach to national and regional infrastructure development, particularly in the railway sector, which holds enormous potential for freight and passenger transport.

2.5.5 Transshipment between Iran/ Pakistan The capacity of Pakistan‘s railways is limited. The infrastructure is decapitalized and there is an acute f u n d i n g deficit for improving the network and rolling stock. However, in terms of trade facilitation, the country has made notable progress and further developments are expected. Pakistan has signed the Revised Kyoto Convention for all General Conditions and four out of eleven Special Conventions. Moreover, Pakistan is going to take charge of the ECO Chamber of Commerce and Industry (CCI), one of the active regional trade bodies, for the next three years. ECO CCI emphasizes the promotion of bilateral trade and the strengthening of economic relations among the ECO states. According to the Ministry of Railways, there are some studies on the viability of delegating rolling stock m a n a g e m e n t to the private sector.

Map 2.11 Satellite map of ITI corridor

The strategic geographical location of Iran contributes to the development of the transport corridors in various directions. The railway network of Iran is well developed; many kilometers of new lines are under construction and investments in new freight wagons are foreseen. Iran has an ambitious growth strategy and expects almost to double t h e volume of freight carried and to reach 70 million tons by the end of 2018. The broad gauge connection to Pakistan‘s network (Pakistan‘s rail network uses the broad Indian 1676 mm gauge) is of a poor standard and needs to be modernized or rebuilt if an effective corridor is to be developed. The same problem occurs on the Pakistan side with the Quetta - Taftan section, which is 559 km long. Because of the old infrastructure, the journey through this section takes 18-36 hours. The old infrastructure here needs to be renovated. The Iranian border crossing with Pakistan at Mirjaveh operates on a 24 hour basis. Iran‘s primary link to Europe runs through the Razi border crossing into Turkey in the north-west. The railway connection between Turkey and Iran was built in the 1970s with a train ferry across Lake Van between the cities Tatvan and Van, rather than building a 70

railway line around the rugged shoreline. Transfer operations limit the total carrying capacity and Turkey is currently looking at various options for a rail bypass. To support and promote the route, a Memorandum of Understanding was signed by the governments of Turkey, Iran and Pakistan in 2012. In September 2014, it was decided to establish a commercial working group to activate and market the Istanbul-Tehran- Islamabad and Kazakhstan, Turkmenistan, Afghanistan and Iran (KTAI) train projects. 2.5.6 Connection with Europe and China The Pakistan – Iran – Turkey route could potentially be extended both to east and west. It also provides access to the region of Central Asia, which is now developing and becoming increasingly important, and to India. The information available on international rail transport in India is poor, but in order to develop this connection, Pakistan, whose network is linked to the network of India using the same gauge, has to work on improving cooperation.

2.5.7 Tariff and charges for ECO Container Train on ITIT Route Unit: Euro

Country Total Tariff for loaded container Tariff for empty container Distance (km) For 20 ft For 40 ft For 20 ft For 40 ft

Per Total Per Total Per Total Per Total km km km km

Iran 2603 0.22 572 0.28 728.8 0.11 286.3 0.14 364.4

Pakistan 1990 0.22 437.8 0.27 537.3 0.11 218.9 0.16 318.4

Turkey 1850 0.22 407 0.28 518 0.11 204 0.14 259

Total 6443 1416.8 1784.1 709.2 941.8

Table 2.2 Revised tariffs and charges for the ECO Container Train on Islamabad-Tehran- Istanbul Route

a. Additional charges are anticipated for transshipment and other services by the Islamic Republic of Iran. b. Additional charges anticipated by the Republic of Turkey: 1. Van Lake Ferry Transport: For loaded containers: 12,00 euro/17 USD per net-tones, minimum charge will be based on 14 tons per wagon.

For empty containers: 12,00 euro/17 USD per net-tones, minimum charge will be based on 7 tons per wagon. 2. Customs Formality charges: Export per Wagon: 10,00 euro/wagon/14 USD/wagon Import per Wagon: 20,00 euro/wagon/28 USD/wagon 3. Container handling charges: For loaded containers: 30,00 euro/container-42 USD/container For empty containers: 10,00 euro/container-14 USD/container

2.5.8 Tariff rate in the route of Pakistan

From to Distance Freight rate in Euro Per km/TEU Rate in Euro per KM/FEU (kms) Loaded Empty Loaded Empty

Per Total Per Total Per Total Per Total km km km km

Islamabad 1990 0.27 546 0.14 273 0.47 936 0.24 468 Via Taftan to 0.27 546 0.14 273 0.47 936 0.24 468 Islamabad

Table 2.3 Tariff rates for ECO Container Train

 Train will run in two portions between Ahedwal-Kishingi with train engine.  Train will run in four portions between KLR-ABG and will work with two locomotives.  Train will run in two portions between ABG-SIB with two locomotives.  Train will run in two portions between LLM-RWP with two locomotives.

2.5.9 A Glance to the export and import of the en-route countries of ITI International

Transport Corridor

10 Main Export Items (Pakistan to Iran), 2016

No. Export Export value Percent

1. Cellulose Fibers Paper $19M 53% 2. Rice $8.49M 24% 3. Awnings, Tents, and Sails $2.16M 6.1% 4. Raw Plastic Sheeting $1.01M 2.9% 5. Medical Instruments $917k 2.6% 6. Blankets $802k 2.3% 7. Other Cloth Articles $764k 2.1%

8. Plastic Lids $511k 1.4% 9. Raw Bones $407k 1.1% 10. Unspecified $215k 0.61%

10 Main Import Items (Pakistan from Iran), 2016

No. Import Import value Percent

1. Electricity $102M 31% 2. Petroleum Coke $40.6M 13% 3. Petroleum Gas $32M 9.9% 4. Refined Petroleum $17.8M 5.5% 5. Glazed Ceramics $14.6M 4.5% 6. Scrap Vessels $14.6M 4.5% 7. Sheep Hides $12.7M 3.9% 8. Cement $10.9M 3.4% 9. Scrap Iron $9.3M 2.9% 10. Dried Legumes $8.07M 2.5%

10 Main Export Destinations of Pakistan, 2016

No. Country Export value Percent

1. United States $3.43B 17% 2. China $1.59B 7.8% 3. United Kingdom $1.56B 7.6% 4. Afghanistan $1.37B 6.7% 5. Germany $1.19B 5.8% 6. Spain $837M 4.1% 7. United Arab Emirates $785M 3.8% 8. Italy $667M 3.3% 9. Netherlands $651M 3.2% 10. Bangladesh $656M 3.2%

10 Main Importing Countries to Pakistan, 2016

No. Country Import value Percent

1. China $13.7B 30% 2. United Arab Emirates $6.2B 13% 3. Indonesia $2.09B 4.5% 4. United States $2.01B 4.4% 5. Japan $1.96B 4.3% 6. Saudi Arabia $1.84B 4.0% 7. India $1.64B 3.6% 8. Kuwait $1.27B 2.8% 9. Germany $996M 2.2% 10. Malaysia $945M 2.1%

10 Main Export Items (Iran to Turkey), 2015

No. Export Export value Percent

1. Ethylene Polymers $259M 20% 2. Refined Copper $163M 13% 3. Propylene Polymers $158M 12% 4. Electricity $97.3M 7.5% 5. Nitrogenous Fertilizers $91M 7.0% 6. Raw Zinc $85.3M 6.6% 7. Acyclic Alcohols $75.8M 5.9% 8. Raw Aluminum $44M 3.4% 9. Petroleum Jelly $24.3M 1.9% 10. Alkylbenzenes and $12.4M 0.96%

Alkylnaphthalenes

10 Main Import Items (Iran from Turkey), 2015 No. Import Import value Percent

1. Jewelry $858M 24% 2. Wood Fiberboard $113M 3.1% 3. Toilet Paper $85.5M 2.4% 4. Vehicle Parts $83.9M 2.3% 5. Rolled Tobacco $78.7M 2.2% 6. Processed Tobacco $54.6M 1.5% 7. Valves $47.5M 1.3% 8. Low-Voltage Protection $44.7M 1.2% 9. Glues $41.4M 1.1% 10. Cellulose Fibers Paper $38.8M 1.1%

Some of the Main Export Destinations of Iran, 2015

No. Country Export value Percent

1 China $14.5B 45% 2 India $5.66B 18% 3 Japan $2.89B 9.1% 4 South Korea $2.11B 6.6% 5 Turkey $1.3B 4.1% 6 Afghanistan $1.03B 3.2% 7 Italy $482M 1.5% 8 Hong Kong $376M 1.2%

10 Main Importing Countries to Iran, 2015

No. Country Import value Percent

1. China $17.8B 41% 2. South Korea $3.76B 8.6% 3. Turkey $3.62B 8.2% 4. India $3.13B 7.1% 5. Germany $2.19B 5.0% 6. Brazil $1.67B 3.8% 7. Russia $1.02B 2.3% 8. Switzerland $937M 2.1% 9. France $614M 1.4% 10. Kazakhstan $566M 1.3%

2.6 Trans-Caspian Internatıonal Transport Route (TITR)

The Trans-Caspian International Transport Route starts from Southeast Asia and China, runs through Kazakhstan, the Caspian sea, Azerbaijan, Georgia and further to European countries ... Trans-Caspian International Transport Route (Middle Corridor) launched a new regular feeder container service at the Caspian Sea. November 7, 2013 As part of the II International Transport and Logistics Business Forum "New Silk Road" in Astana, the leaders of JSC "National Company" Kazakhstan Temir Zholy", CJSC" Azerbaijan Railways ", JSC" Georgian Railway " signed Agreement on the establishment of Coordination Committee for the development of the Trans-Caspian International Transport Route. In order to increase the flow of goods to the Trans-Caspian International Transport Route(Middle Corridor) in February 2014, the Coordination Committee for the Development of the Trans-Caspian International Transport Route (hereinafter - TITR) was established with the initial membership of: The results of the coordinated work of the Coordination Committee members were:  Adoption of effective complex rates for container transportation, preferential tariffs for transportation of fuel oil, gasoil, grain;

 the technology of interaction between transport companies for the passage of container trains by the China-Kazakhstan-Azerbaijan-Georgia-Turkey communication was approved with the participation of rail and sea transport in a direct international rail-ferry service;  created «Nomad Express" container service;  three pilot container trains "Nomad Express" were organized: (Demonstration trains are launched: 28.07.2015. Shihezi (China) - Kishli (Azerbaijan); 29.11.2015. Lianyungang (China), Istanbul (Turkey); 01/15/2016 Ilyichevsk (Ukraine) - Dostyk (Kazakhstan);  new members were added to the Coordination Committee;  The International Trans-Caspian Transport Consortium was established;  held image events and road shows.

In December 2016, the participants of the Coordinating Committee for the Development of the Trans-Caspian International Transport Route - Kazakhstan, Azerbaijan, Georgia - decided to establish the International Association "Trans-Caspian International Transport Route". Since February 2017, the International Association "Trans-Caspian International Transport Route" has started its activities. On April 12, 2016 in Baku, Azerbaijan, an Agreement was signed on the establishment of the International Trans-Caspian Transport Consortium, which included: The key task of the Consortium is:  Development of logistics products with a high degree of customer orientation;  Search for customers for the organization of transport in both the western and eastern directions in order to increase the efficiency of rolling stock use;  Organization and monitoring of container transportation by TITR;  Establishing cooperation with foreign partners in the main trading countries;  Attraction of cargo traffic on TMTM.

Map 2.12 Development of the Trans-Caspian International Transport Route 83

Container transport Distance, Laden. Empty. Laden. Empty. Rates on Container shipments km $/20 ft. $/20 ft. $/40 ft. $/40 ft. Altynkol st. - Istanbul st. (From Batumi - by trucks) 5714 3642 1202 5361 2101 Altynkol st. - Istanbul st. (BTK) 6409 2252 - 3474 - Altynkol st. - Slavkow st. 6893 3582 1974 5949 3288 Altynkol st. - Vadul Siret/Mastiska st. 6333 3414 1880 5755 3105 Altynkol st. - Chop st. 6569 3538 1907 5845 3153 Altynkol st. - Uzhgorod st. 6597 3454 1825 5762 3021 Batumi st. - Sary Agach st. 3509 1539 - 2487 - Kokshetau st. Kars st 4878 1818 - 2634 -  Wagon transport SPS SPS Distance, MPS Rates on Wagon shipments laden. empty. km $/ton $/ton $/ton Batumi port - Aktau port (Ferrous metals) 1351 79.45 61.48 27.74 Kostanay st. - Aktau port - Batumi port (Crops and oil 3178 54.27 54.27 17.05 seeds) Kostanay st. - Dina Nurpeisova st. - Batumi port (Crops 3382 - 58.56 8.51 and oil seeds) Kulsary st. - Aktau port - Batumi port (Silphur) 1950 70.51 57.93 26.19 Kulsary st. - Dina Nurpeisova st. - Batumi port 2335 75.60 57.99 15.46 (Silphur) Zashita st. - Aktau port - Batumi port (Non-ferrous 4628 108.49 80.13 28.91 metals) Zashita st. - Dina Nurpeisova st. - Batumi port (Non- 4988 112.73 86.84 16.86 ferrous metals) Batumi port - Kuryk st. (Raw sugar from Brazilia) 1792 - 49.14 - Tekesu st. - Aktau port - Batumi port (Oil products) 3394 - 53.03 19.04 Tetesu st. - Dina Nurpeisova st - Batumi port (Oil 4057 - 47.34 11.88 products)

2.7 Istanbul - Almaty Corridor

2.7.1 General information Origin: Turkey Destination: Kazakhstan En-route Countries Turkey, Iran, Turkmenistan, Uzbekistan, Kyrgyzstan, Kazakhstan

2500

2000

1500

1000

500

Figure 2.6 Share of length of routes of Istanbul- Almaty Corridor in each country

2.7.2 Current Status Launching Istanbul- Almaty Container Train throughout the entire Asia-Pacific rail corridor has always been one of the most important transport projects in Middle East. With the efforts undertaken by the involved countries and ECO, the operation of the first container train on this route took place on January 20, 2002. This corridor starts from Istanbul, passes through Iran, Turkmenistan, Uzbekistan, Kyrgyzstan, and ends in Kazakhstan. Length of the route is 6109 km; 1950 km of which is located in the territory of Turkey, 2016 km in Iran, 449 km in Turkmenistan, 732 km in Uzbekistan, 6 km in Kyrgyzstan, and 956 km in the territory of Kazakhstan. However, because of the lack of coordination in the tariff structures and the remaining physical and technical barriers, the said project was not fully implemented and, finally, its systematic and scheduled movement was stopped.

Map 2.13 Route and length of routes in ECO Istanbul-Almaty Corridor

2.7.3 Problems and bottlenecks in Istanbul- Almaty Corridor Due to the lack of smooth communications among the concerned railways, it is not easy to adhere to the schedule of coupling wagons from different countries on designated days or even departure places and the number of containers, border crossing times etc. Other issues include the lack of flexibility in pricing and the speed of the container train, and comparatively higher tariff. The railways take empty containers as a source of income unlike shipping lines. European companies are no longer willing to take their containers to the region due to non-secured speedy return. The traffic can increase if measures are taken to ensure:  Reliable availability of containers and the rolling stock as well as early secured return of containers;  Return freight for containers;  Satisfactory tracking information by using modern technology (ACIS type);  Upgradation of the infrastructure (step by step) to enhance speed;  Uninformed competitive rail tariffs with reliable insurance cover;  Harmonizing technical specifications for future rail infrastructure development;  Streamlining border procedures for the railways and border agencies to avoid delays and increase safety. The organization of passenger trains is expected to encounter more difficulties. ECO has not been able to run a scheduled passenger train on the same route as of the demonstration containers‘ train after a trial dry run in 2001. The factors which have hindered the start of the passenger train chiefly related to fading mutual trust on perceived security threats, exorbitant visa fees and complicated immigration procedures. 86

The following points were seen in Almaty- Istanbul route:  Long stopover, 37 times; wasted time for trains would be 75 hours or 3 days and 3 hours. The train was taken unused during the route. This was long for a block train. Removing these three days can be a strong competitive profit in rail services.  Train speed (km/h) was as the following:  Kazakhstan: 36 km/h  Uzbekistan: 22 km/h  Turkmenistan: 10 km/h  Iran: 25.76 km/h  Turkey: 24.35 km/h

Average speed was 23 km/h.

Table 2.4 Example of a timetable of Container Train on Istanbul- Almaty Route

Table 2.5 Analysis of travel time in Almaty- Istanbul

Total travel time for both directions would be 251 hours and 48 min (10 days, 11 hours, 48 min)

Figure 2.7 Travel time, Almaty- Istanbul

2.7.4 A Glance to the export and import of the en-route countries of Istanbul- Almaty Corridor

Some of the Main Export Items (Turkey to Iran), 2016

No. Export Export value Percent

1. Gold $1.31B 26% 2. Jewelry $397M 8.0% 3. Vehicle Parts $140M 2.8% 4. Wood Fiberboard $113M 2.3% 5. Processed Tobacco $108M 2.2% 6. Spark-Ignition Engines $85.7M 1.7% 7. Non-Retail Synthetic Staple $71.8M 1.4%

Fibers Yarn 8. Toilet Paper $61.8M 1.2%

10 Main Import Items (Iran to Turkey), 2015

No. Import Import value Percent

10 Main Export Destinations of Turkey, 2016

No. Country Export value Percent

1. Germany $14B 10% 2. United Kingdom $11.7B 8.4% 3. Iraq $7.64B 5.5% 4. Italy $7.58B 5.4% 5. United States $6.62B 4.7% 6. France $6.03B 4.3% 7. United Arab Emirates $5.41B 3.9% 8. Spain $4.99B 3.6% 9. Iran $4.97B 3.6% 10. Netherlands $3.59B 2.6%

10 Main Importing Countries to Turkey, 2016

No. Country Import value Percent

1. China $25.4B 13% 2. Germany $21.5B 11% 3. Russia $15.2B 8.0% 4. United States $10.9B 5.8% 5. Italy $10.2B 5.4% 6. France $7.36B 3.9% 7. South Korea $6.38B 3.4% 8. India $5.76B 3.0% 9. Spain $5.68B 3.0% 10. United Kingdom $5.32B 2.8%

2.8 Germany-Czech-Austria-Slovakia-Hungary-Serbia-Bulgaria-Turkey-Iran Corridor (towards China)

2.8.1 History As trade ties between Middle East and Europe are strengthening, plans are underway to shift part of the shipment of commercial exchanges to railroads to launch multiple rail corridors to Europe to take advantage of growing trade relations. German firms DHL, DB Cargo and DB Schenekr are among the companies involved. Several multilateral meetings were held among Iran, Turkey and these companies to discuss rail corridors using existing infrastructures. DB Cargo, a subsidiary of DB Schenker, is a German railroad cargo carrier operating across Europe, as well as in Central Eastern Asia. DB Cargo has already specified a route via Hungary, Romania, the Black Sea, Georgia and Azerbaijan. Iran is also considering other routes via Azerbaijan as well, including one through Russia. All the routes passing through Azerbaijan will depend on the completion of railroads from the Iranian-Azeri border to the city of Qazvin. These rail infrastructures will need a few years to become fully operational. But Iran is keen to activate the planned corridors through a road-rail multimodal network. Efforts to launch rail corridors between Middle East and Europe as a two-way trade are on an exponential growth path. Iran‘s trade with the European Union stood at €5.3 billion in the first quarter of 2017, rising 163% over the similar period of a year before. Iran exported €2.77 billion to EU, registering a sixfold rise year-on-year. Italy was the biggest importer from Iran among all the European states, as it bought €807.4 million worth of Iranian goods during the period. France, the Netherlands, Spain and Greece with €614.6 million, €356.3 million, €329.6 million and €320 million worth of imports respectively came next.

Map 2.14 Route of Germany-Czech-Austria-Slovakia-Hungary-Serbia-Bulgaria-Turkey-Iran Corridor (towards China) 95

Map 2.15 European en-route countries position of Germany-Czech-Austria-Slovakia-Hungary- Romania-Bulgaria-Turkey-Iran Corridor (towards China)

Iran imported €2.52 billion worth of commodities from the European Union during the first quarter of 2017, recording a %56 YOY (year over year) rise. Germany topped the list of exporters to Iran, shipping €694.4 million worth of goods to the Islamic Republic. France came second with €461 million and Italy followed with €418.6 million. There are five corridors crossing the German network, as currently defined:  Rhine-Alpine corridor, along its section between the Dutch border, Cologne, Frankfurt am Main and the Swiss border.  Scandinavian-Mediterranean corridor, crossing Germany from north to south, from the Danish border and Bremerhaven, Nuremberg, Munich to the Austrian border.  North Sea-Baltic corridor, from west to east, from the Dutch and Belgian borders, Düsseldorf, Hannover, Berlin to the Polish border at Frankfurt an der Oder.  Rhine-Danube corridor crosses Germany from west to east as well, but along the southern half of the country; from the French border at Strasbourg, Stuttgart, Wurzburg, Nuremberg, Passau to the Czech and Austrian borders.

2.8.2 A Glance to the export and import of the en-route countries of Germany-Czech- Austria-Slovakia-Hungary-Romania-Bulgaria-Turkey-Iran Corridor 10 Main Export Items (Germany to Iran), 2016

No. Export Export value Percent

1. Human or Animal Blood $145M 4.8% 2. Air Pumps $138M 4.5% 3. Wheat $130M 4.3% 4. Cars $127M 4.2% 5. Washing and Bottling Machines $83.1M 2.7% 6. Packaged Medicaments $81.2M 2.7% 7. Medical Instruments $74.7M 2.5% 8. Orthopedic Appliances $52.7M 1.7% 9. Gas Turbines $51.9M 1.7% 10. Machinery Having Individual $51.3M 1.7% Functions

Some of the Main Import Items (Iran to Germany), 2016

No. Import Import value Percent

1. Other Nuts $62.7M 24% 2. Animal Organs $37.4M 14% 3. Human or Animal Blood $37.3M 14% 4. Knotted Carpets $29M 11% 5. Vegetable Saps $17.6M 6.7% 6. Hot-Rolled Iron $7.95M 3.1% 7. Insect Resins $7.92M 3.0% 8. Tropical Fruits $4.15M 1.6%

Some of the Main Export Items (Germany to the Czech Republic), 2016

No. Export Export value Percent

1. Vehicle Parts $3.2B 7.5% 2. Cars $1.49B 3.5% 3. Computers $956M 2.2% 4. Reaction and Catalytic Products $875M 2.0% 5. Low-Voltage Protection $771M 1.8% Equipment

Some of the Main Export Items (the Czech Republic to Germany), 2016

No. Export Export value Percent

1. Vehicle Parts $6.1B 12%

2. Cars $4.62B 8.8%

3. Computers $2.9B 5.5% 4. Seats $1.73B 3.3% 5. Insulated Wire $1.35B 2.6%

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Some of the Main Export Items (the Czech Republic to Austria), 2016

No. Export Export value Percent

1. Cars $640M 9.4% 2. Computers $243M 3.6% 3. Rough Wood $243M 3.6%

4. Insulated Wire $181M 2.7% 5. Vehicle Parts $180M 2.6%

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Some of the Main Export Items (Austria to the Czech Republic), 2015

No. Export Export value Percent

1. Refined Petroleum $177M 4.1% 2. Vehicle Parts $141M 3.3% 3. Insulated Wire $128M 3.0% 4. Packaged Medicaments $101M 2.3% 5. Cars $86.6M 2.0%

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Some of the Main Export Items (Austria to Slovakia), 2015

No. Export Export value Percent

1. Vehicle Parts $261M 11% 2. Refined Petroleum $208M 8.9% 3. Broadcasting Equipment $136M 5.8% 4. Cars $56.1M 2.4%

5. Electrical Lighting and Signalling $54.6M 2.3% Equipment

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Some of the Main Export Items (Slovakia to Austria), 2016

No. Export Export value Percent

1. Cars $572M 13%

2. Broadcasting Equipment $469M 11% 3. Refined Petroleum $332M 7.5% 4. Raw Copper $224M 5.0% 5. Video Displays $175M 3.9%

6. Semi-Finished Iron $162M 3.6%

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Some of the Main Export Items (Slovakia to Hungary), 2016

No. Export Export value Percent

1. Refined Petroleum $386M 8.9%

2. Vehicle Parts $227M 5.2% 3. Broadcasting Equipment $197M 4.6% 4. Cars $119M 2.7% 5. Coated Flat-Rolled Iron $114M 2.6%

6. Video Displays $101M 2.3%

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Some of the Main Export Items (Hungary to Slovakia), 2016

No. Export Export value Percent

1. Video Displays $611M 12%

2. Vehicle Parts $318M 6.3% 3. Combustion Engines $301M 5.9%

4. Spark-Ignition Engines $265M 5.2% 5. Cars $219M 4.3%

6. Packaged Medicaments $139M 2.7%

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Some of the Main Export Items (Hungary to Romania), 2016

No. Export Export value Percent

1. Packaged Medicaments $361M 6.0%

2. Refined Petroleum $201M 3.3% 3. Insulated Wire $185M 3.1% 4. Wheat $184M 3.1%

5. Broadcasting Equipment $134M 2.2%

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Some of the Main Export Items (Romania to Hungary), 2016

No. Export Export value Percent

1. Insulated Wire $407M 11%

2. Vehicle Parts $404M 11% 3. Rubber Tires $209M 5.8% 4. Electricity $122M 3.4%

5. Refined Petroleum $120M 3.3%

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Some of the Main Export Items (Romania to Bulgaria), 2016

No. Export Export value Percent

1. Refined Petroleum $253M 11%

2. Electricity $68.3M 3% 3. Petroleum Gas $59.8M 2.6%

4. Cars $59.4M 2.6%

5. Rubber Tires $57.5M 2.5%

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Some of the Main Export Items (Bulgaria to Romania), 2016

No. Export Export value Percent

1. Tractors $126M 4.5%

2. Raw Iron Bars $118M 4.2% 3. Wheat $112M 4.0%

4. Harvesting Machinery $85.3M 3.0%

5. Nitrogenous Fertilizers $85.3M 3.0%

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Some of the Main Export Items (Bulgaria to Turkey), 2016

No. Export Export value Percent

1. Refined Petroleum $521M 25%

2. Refined Copper $215M 10% 3. Insulated Wire $206M 9.9%

4. Raw Lead $81.4M 3.9% 5. Raw Zinc $53.9M 2.6%

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Some of the Main Export Items (Turkey to Bulgaria), 2016

No. Export Export value Percent

1. Light Rubberized Knitted Fabric $234M 9.8% 2. Synthetic Filament Yarn Woven $77.2M 3.2% Fabric 3. Cars $69.8M 2.9% 4. Other Rubber Products $60.1M 2.5%

5. Copper Ore $50M 2.1%

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2.9 Iran-Iraq-Syria-Mediterranean Sea International Transport Corridor

2.9.1 General information

2.9.1.1 Origin of the corridor Iran ( Inceh Bouron, Bandar Abbas or Imam Khomeini Port) 2.9.1.2 Corridor destination Al Ladhigiah port in Syria connected to the Mediterranean Sea 2.9.1.3 Missing Links Kermanshah-Khosravi, 263 km (in Iran) and Khanaqin- Baghdad 188 km (in Iraq). At the southern border of Shalamcheh- Basra 35 km, these railroad routes are under construction.

Map 2.16 Route of Iran-Iraq-Syria-Mediterranean Sea International Transport Corridor

In this corridor, freights in Iran can be transported through Iraq to the country via Khosravi and Shalamche border. The advantage of Khosravi-Khanaqin border over Shalamche-Basra border, is the lack of necessity to carry freights whole length of Iraq territory to reach Syria, so the rail distance is shorter and the economic transit of goods looks more cost effective. But unfortunately, this route still has some missing links in which the construction of their rail infrastructure is underway. About Malayer-Kermanshah line, it should be noted that 197 km is completed and just the step of its superstructure is left. Kermanshah-Khosravi route is 263 km (in Iran) and Khanaqin-Baghdad 188 km (in Iraq) which are under construction. In Syria, from the Abu Kamal border to Dayr Al az Zawr, approximately is

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116 km under construction. Of course, it can also enter Syria from the Rabyia border and then go to Al Ladhigiah port, where these lines are connected to each other. Since freight transit in this corridor has not yet been operational, transit points may be later displaced. As a result, the exact length of the entire corridor cannot be mentioned. The starting point can be one of the major ports in Iran such as Incheh Bouron, Bandar Abbas or Imam Khomeini, and the final point is the Mediterranean Sea. It should be noted that the Iraqi rail network has four main lines, the width of its lines is standard and its two lines can be international, its northern line from Basra or Baghdad to Rabiyama in Syria or its western direction from Baghdad to Qa'im and hence Move to Syria The specifications of these lines are as follows: 1- The north line consists of a track that runs between Baghdad, Baiji, Mosil and Rabia'a, it is 524 km in the length, the technical specifications of the line are as follows:

Details Baghdad-Mosil Mosil-Rabia’a

Stations 23 4

Length (km) 412 112

Speed (km/h) 60 – 70 40

Rail BS 90 BS 75

Joints Jointed Jointed

Axel load (ton) 20 18

2- The west line runs from Baghdad to Ramadi, Haqlaniya, Qaim and Akashat, it is 520 km in length.

Map 2.17 Iran-Iraq-Syria-Mediterranean Sea International Transport Corridor

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The technical specifications of the line are as follows:

Details Baghdad-Husaba Qaim - Akashat

Stations 23 5

Length (km) 376 144

Speed (km/h) 100 100

Rail UIC 60 UIC 60

Joints Welded Welded

Axel load (ton) 25 25

Iran_ Iraq_ Jordan International Corridor

This ccorridor is currently understudy.

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2.10 International North South Transport Corridor (INSTC)

2.10.1 History Russia, Iran and India signed the agreement for the NSTC project on the 16th of May 2002. All three countries are founding member states on the project. Other important member states include Azerbaijan, Russia, Kazakhstan, Finland and Belarus with other states having varying levels of involvement. Azerbaijan is heavily involved in the project currently building new rail lines and roads to complete missing links in the NSTC. The International North–South Transport Corridor (INSTC) is a multi-mode network of ship, rail, and road route for moving freight between India, Iran, Azerbaijan, Russia, Europe and Central Asia. The route primarily involves moving freight from India, Iran, Azerbaijan and Russia via ship, rail and road. The objective of the corridor is to increase trade connectivity between major cities of the En-route countries. 2 dry runs of two routes were conducted in 2014 & 2016, the first was Mumbai to Baku via Bandar Abbas and the second was Mumbai to Astrakhan via Bandar Abbas, Tehran and Bandar Anzali. The objective of the study was to identify and address key bottlenecks. The results showed transport costs were reduced by "$2,500 per 15 tons of cargo". Other routes under consideration include via Kazakhstan and Turkmenistan. This will also synchronize with the Ashgabat agreement, a Multimodal transport agreement signed by India, Oman, Iran, Turkmenistan, Uzbekistan and Kazakhstan, for creating an international transport and transit corridor facilitating transportation of goods between Central Asia and the Persian Gulf.

The length of route per kilometer ( from Azerbaijan route) ˷

ROUTE 1 Finland - Russia 893 km (Helsinki to Moscow) Russia to Azerbaijan 2.483 km Finland,Russia,Azerbaijan,Iran,India (Moscow to Baku) Azerbaijan to Iran 230 km (Baku- Astara) Astara-Bandar Abbas 1.841 km Bandar Abbas-Mumbai 1.987 km Total length of the route from Helsinki to Mumbai: ˷ 7. 434 km Belarus to Russia 751 km ROUTE 2 (Minsk to Moscow) Russia to Azerbaijan 2.483 km (Moscow to Baku) Belarus,Russia,Azerbaijan,Iran,India Azerbaijan to Iran 230 km (Baku- Astara) (Atara – Bandar Abbas) 1.841 km Bandar Abbas - Mumbai 1.987 Km

Total length of the route from Belarus to Mumbai: ˷ 7. 292 km Table 2.6 length of routes in INSTC

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Origin of the corridor North of Europe (Finland/Belarus) Corridor destination South of the Persian Gulf, the countries of the Indian Ocean and Southeast Asia Sailing Duration: 45 days Gauge: Helsinki-Moscow route (1520 mm), Moscow - Astarakhan port route (1520 mm), Astarakhan port - Baku route (1520 mm), Baku – Astara in Azarbaijan (1520 mm), Astara (Iran) - Tehran - Bandar Abbas (1435 mm)

Map 2.18 INSTC route and standard route

2.10.2 The corridor advantages The primary objective of the NSTC project is to reduce costs in terms of time and money over the traditional route currently being used. Analysts predict by having improved transport connectivity between Russia, Central Asia, Iran and India their respective bilateral trade volumes will increase. A study conducted by the Federation of Freight Forwarders‘ Associations in India (FFFAI) found the route is, "30% cheaper and 40% shorter than the current traditional route". Analysts predict the corridor is likely to increase trade connectivity between major cities such as Mumbai, Moscow, Tehran, Baku, Bandar Abbas, Astrakhan, and Bandar Anzali. Currently, the owners of goods in the countries of the Persian Gulf and the Indian Ocean are more likely to use offshore and high sea routes for the transit of their goods to the Central and Northern Europe and Russia. These goods are transported via Indian Ocean, Oman Sea, the territory of Iran (land transportation), Red Sea, Suez Canal, and the Mediterranean Sea and Russia. It is anticipated that, after completion of the North-South corridor, a dramatic reduction is made in the travel time of containers from India to Russia and Central Asia. At present, the travel time of vessels on this route is about 40 days from Mumbai to Moscow. 117

But after the launch of this corridor, their travel time will be reduced up to 40% and the costs will be decreased up to 30%. 2.10.3 Missing Links Up to this time the missing link was Qazvin-Rasht and Rasht-Astara. But fortunately Qazvin-Rasht railway is almost completed and will be inaugurated shortly. The railway of Astara (Iran) to Astara (Azerbaijan) was inaugurated by the presence of the two countries presidents on March 29, 2018. Currently 3 out of 7 lines are being under operation at the terminal. Rasht-Astara Project, 164 km, shall be constructed by investment of Azerbaijan Government. The agreement was signed by the two countries‘ presidents in Baku.

2.10.4 Problems and obstacles of the corridor in the territory of Iran before construction of Qazvin- Rasht-Astara (Current Status) Lack of uniform customs procedure at the en-route countries of the main route of the North- South Corridor, gauge differences at borders, different legal systems, non-competitive rates of rail transport fares compared with other modes of transport, time consuming procedure of container transfer from one train to another, the required expenses and other border controls, and lack of powerful , private shipping companies in transit commodities transport in the way of door-to- door services and also lack of international shipping and forwarding companies at Caspian sea domain are considered among the existing obstacles in putting the North-South Corridor into operation. 2.10.5 Non-tariff barriers: Change of gauge Change of rail gauge is another barrier worth mentioning in some detail. Like customs, this is also a hurdle being experienced by other cross-border railways. For instance, the standard rail gauge used by China is smaller than the broad gauge in use in the Commonwealth of Independent States and Russia. This means that freight moving from China westward has to be transferred from one rail track to another of varying width using cranes, which is more difficult with containers. Even as time to transport a container overland is cut by at least half of what it would take by sea despite different railway gauges across the journey, there is scope for improvement. To this end, China is planning an entirely separate, parallel route—the China-Europe Silk Road Railway—using the standard gauge preferred by China and Europe. The objective is to establish a seamless track for a high-speed all-standard gauge rail service, which will be cleared by customs just once and will arrive from one to the other in just 3.5 days. Coming to the INSTC, goods were to be originally transported by rail in Iran before being shipped cross the Caspian Sea to arrive at a fresh set of rail tracks in Russia. Now, railway linkages that connect to Central Asia and Russia are to be used, going through Baku, and perhaps eventually through other Central Asian options on the table. This means the INSTC, too, will face break of gauge problems, seeing as the railway gauge in Iran differs from what the former Soviet space has in place. It has been suggested that combined rail terminals with change of gauge facilities be constructed at international borders to ease transfer from one railway track to another.

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Map 2.19 Qazvin-Rasht-Astara-Astara Railway Project

2.10.6 The proposed measures and solutions for activating North-South Corridor For activating this route, it is proposed that trial measures to be taken from India to Russia by using the Persian Gulf- Astara route, the international network to be established and forwarders, ports and shipping partners to be identified, other beneficiary countries of the route including Estonia, Latvia, Lithuania, …to be activated to accelerate the activity of this corridor, international seminars to be held at en-route countries for promotion of the advantages of the corridor, transit cost and freight transport time and tariff compared with other parallel or competing routes to be decreased, border problems, cumbersome rules and regulations, the acceleration of customs procedures to be expressed in working groups, hubs (distribution centers) to be made as logistic chains (Moscow, Astara, Bandar Abbas, Mumbai), closer interaction with international railways and organizations to be made for updating the information related to the transit time, capacity, market situation analysis and investments. 2.10.7 Combined transport As far as the freight traffic on the North-South corridor is concerned, before the completion of Rasht-Astara railway, it has been agreed that the combined transport will take place in this route. Therefore, the cargo will be transported by rail to Rasht, Qazvin-Rasht is going to be opened, and then will be transported to Astara by truck and via the road. It takes 14 days for the combined transportation of cargo from southern ports to Moscow, and 17 days to Helsinki in Finland. RAI will be responsible for the combined transportation, and it has been agreed with Azerbaijan to reduce the customs duties for the entry of trucks traveling

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on the North-South corridor. In early June 2016, an agreement was signed between the Presidents of the railways of Iran, Russia and Azerbaijan in the city of Sochi. It was decided to create a tripartite task force to optimize tariffs, legal and customs conditions for the development of freight transport within the framework of the North-South International Corridor through the territory of the Republic of Azerbaijan.

Map 2.20 The new route versus the old one (INSTC)

2.10.8 Not a road to nowhere: Making the economic case for the INSTC INSTC countries must enforce policy measures such as financial support mechanisms and agreements to settle trade in national currencies to boost both investments for developing missing links, and exports.

Map 2.21 Duration comparison in rail freight versus maritime shipping

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Around 90 percent of current world trade passes through sea lanes of communication; transport corridors should therefore complement sea shipping, with the aim of keeping sufficient traffic on the roads and rail tracks to remain economically viable. In May 2016, the Global Times reported a supply glut in the global shipping industry, which has meant that companies have been forced to slow down their ships to cut costs. Longer periods spent at sea, in turn, have led to the maintenance of larger inventories, freezing up more assets and shortening the shelf-life of products. More recently, The Economist confirmed that the global shipping industry is seeing its worst slump in three decades due to oversupply and shrinking trade volumes. Even as overland transport routes offer more timely delivery with less inventory costs, any such comparative advantage is eroded by the cheaper rates shipping liners are offering in the face of a slump in demand. It is therefore still approximately five times cheaper to ship via oceans than by iron silk roads. It has been estimated that the entire Silk Road Economic Belt, with its network of transport corridors and rail routes, will only account for one to two percent of overall freight traffic; INSTC, as it stands at present, is only one particular workable route which will obviously move a significantly lower level of container trade. Available estimates peg the volume of container trade expected in the first phase of the INSTC at 4 to 10 million tons, which is likely to increase to 25-26 million tons per annum in the future. There is also a more conservative estimate of 5 million tons of cargo per year in the initial phase, increasing to a low 10 million tons ―with further expansion of transportation.‖ This volume of goods is nowhere near that being transported from South and Southeast Asia to Europe via the admittedly overloaded Suez Canal. Further analysis is necessary to examine what percentage of deflected volume from the Suez Canal will incentivize the use of the INSTC.

Table 2.7 Volume of goods from Southeast Asia/South Asia to Europe via Suez Canal

Recognizing this clear obstacle of a lack of volume will encourage the INSTC member states to look to other commercial justifications for the use of the corridor. It is worth discussing, for instance, the possibility of stimulating local industry and manufacturing along the way, and thus eventually transforming the transport corridor into a developmental corridor. Creating industrial parks, or special economic zones to develop sectors of mutual interest, such as pharmaceuticals and agriculture, will add commercial and substantive value to the INSTC. The development of local logistics hubs that will feed into the INSTC (such as Nagpur and Bhiwandi in the Indian state of Maharashtra, home to the Mumbai port) are a step in this direction.

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2.10.9 Type of goods Another point of consideration that can help justify using the INSTC is the kind of goods that are to be transported along the corridor. Railroads provide an optimal medium between slow and cheap, and quick and expensive. As officials running various train services from China bound westward recognize, there is an opportunity to become part of the ―modern supply chain… characterized by smaller orders, multiple dispatches and high-delivery frequencies.‖ Perishable goods are a good bet, which can be moved timely at lesser costs, and the first containers with perishable goods have already started making the journey across the Caspian Sea to the Astrakhan region. Given that the European Union (EU) is the destination of over 50 percent of India's total export basket of fruits and vegetables, it makes commercial sense to use the shorter INSTC route to transport such perishable items, as well as meats, seafood and food grains, from where the goods can be quickly sent along to the UK, Netherlands, Germany, Belgium (major export destinations) and the rest of the EU. Goods with inelastic demand, such as the coffee being sourced from Vietnam, processed in China and shipped to Europe, are also viable commodities to transport by railways. So are higher-value items like ATMs, industrial printers, 3D printers and robotic assembly arms, which no longer need to be waited upon to be transported in bulk. While China's development of westward-bound connectivity infrastructure is being strategically linked to the planned transition of its economy from low-end to high-end manufacturing, the same cannot be said of the INSTC and the involved stakeholders. Trade between India and both Russia and the CIS is still inclined towards primary commodities and lower-end manufactured products. Yet indicators such as the top Indian export commodity to Russia—pharmaceutical products—provide some existing platform for India to invest in a higher-end manufacturing industry such as pharmaceuticals at home. Furthermore, Russia's deteriorating relationship with the West already led the Indian commerce ministry in 2014 to identify items for export to Russia that the latter has traditionally imported from the US or the EU. These include higher value- added goods like vehicles, aircraft and spacecraft, optics and electrical machinery. An improvement in the quality of trade will galvanize the use of the INSTC. Even more interesting is the potential of expanding e-commerce delivery through rail. Even as global e-commerce remains a small percentage compared to domestic e- commerce, it is flourishing while global trade growth has been slow to pick up. International postal services as well as local companies that drum up international business electronically could therefore become viable sources to keep transport corridors financially healthy. With national priorities including a focus on domestic digitization (for instance, the Indian government‘s ‗Digital India‘ initiative) and plans to increase digital connectivity in and across regions, e-commerce as a good that is transported via the INSTC holds significant potential in the coming years. India will need to significantly scale up its logistics to become a consequential player. As of now, Aurangabad in Maharashtra has been identified as having the potential to emerge as a hub catering to e- commerce firms.

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Figure 2.8 Cross-border e-commerce is flying Energy as a transportable commodity can also be discussed. While energy infrastructure is not a part of the connectivity project, pipeline infrastructure that either runs along railway tracks or complements the multimodal transport corridor is not too difficult to imagine. Important to cite here are the proposed Iran-Oman-India pipeline and India's interest in importing crude oil from Kazakhstan. Shorter distances will strongly play into the calculations. So will the fact that it is generally twice or even three times cheaper to transport crude oil by pipeline than by railway, and that conversely, railways offer a significant speed, and thus time, advantage. As Iran's railway system is developed, and as negotiations progress for the undersea pipeline, some thought should be spent on recalibrating the overall economic worth of the INSTC venture, keeping in mind potential energy transports and an increasing energy demand in the Asia-Pacific region. 2.10.10 Financing and returns on investment Another key factor that will determine the economic rationale of the INSTC is the financing. Securing it will involve, among other things, keeping in mind what returns on investments to expect. The INSTC is currently a precise project in its scope. Different stretches of the transport corridor and other complementary routes are being funded by different stakeholders instead of being dependent principally on one actor. For instance, the crucial missing Rasht-Astara railway link that connects Iran to Azerbaijan is estimated to cost just over $1 billion; of this, $500 million will be provided through a loan from Azerbaijan. Iran and Azerbaijan are now looking to secure the rest of the money. Another actor is the Asian Development Bank, which is to provide a loan worth $200 million for the construction of the Baku-Yalama (in Russia) rail link. The ADB and the Islamic Development Bank have both contributed loans to the Kazakhstan-Turkmenistan-Iran railway link, which is otherwise being funded by the governments of the three countries. India will invest $500 million to develop the Chabahar port, as well as provide a line of credit to make berths at the port. Slow-moving funds could prove to be a real obstacle, however, despite the involvement of a number of countries and international institutions. This is a real worry given that the involved countries are looking for foreign investments themselves, and face the challenge of balancing several imperatives all at once. Importantly, Russia is still under sanctions— although it is debatable how much this has affected business in reality—and infrastructure

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involves significant investment that may not be readily forthcoming in an environment of global economic stagnation—ironically, the very constraint such transport corridors would like to alleviate. To provide some situational awareness, albeit loosely, given the larger scope of China's Belt and Road Initiative, Chinese officials have privately admitted that they expect to lose 80 percent of their investment in Pakistan, 50 percent in Myanmar and 30 percent in Asia, even though there are promises of long-term returns of six to eight percent on Belt and Road infrastructure. A more specific cautionary tale is that of the Chinese Wuhan province, where the local government has implemented a five-year subsidy program to cover the losses of a state-run enterprise operating a Wuhan-Xinjiang- Europe container route. 2.10.11 Conclusion The INSTC is an economic project worthwhile pursuing. There are, critically, security risks to be considered—whether in terms of a rise in militant activity in Afghanistan; domestic political situations; or trans-border crime, such as drug trafficking. These, incidentally, also weigh into the economics of the project, and thus its viability in the longer run. For India, the advantages of using the INSTC are clear: access to Central Asian markets and resources that frees it from being dependent on its immediate neighbor Pakistan, with whom India has a fractious relationship. The Chabahar agreement signed between India, Iran and Afghanistan, which will connect, by rail, Chabahar to Zahedan in Iran and further on to Zaranj and Delaram in Afghanistan, not only provides India with direct access to Afghanistan where it has significant economic and security interests, but, when linked to the INSTC, suggests gains vis-à-vis regional ambitions, balance and stability. Afghanistan is integrated into the region, which fosters its development and links it to an alternative connectivity network that decreases its dependence on not only Pakistan but also China. At the same time, it allows India to project its power via pursuing a project in the country that it can comfortably champion, with all its attendant costs. The Great Game in Mackinder's Heartland remains an open theory; in the coming years, it will be critical for Indian interests that any power vacuum in the area not be filled only by China. Geopolitical geometries that include China provide significant impetus for India to push forward its presence in the region via the INSTC. Given China's rise and regional aspirations and what they mean for the balance of power in Asia and globally, the vagaries of India-China ties, warming China-Iran relations and the up-and-running Gwadar port (which provides China access to the western Indian Ocean, as noted earlier), are warning signals for many. The Gwadar port is thus often pitted against the Chabahar port, and the INSTC against the China-Pakistan Economic Corridor and even China's broader Belt and Road Initiative. Pakistan Economic Corridor adds to the sense of competition. Thus the advocacy of pursuing the INSTC, linked to Chabahar port, as a geopolitical asset. Ambition and geopolitical reasoning, however, will not be the fuel on which the multimodal transport corridor runs. Firstly, for India to be a player in Afghanistan and in Central Asia, it must have more than a token presence. That means getting the commercial aspects of the INSTC correct, which neither New Delhi nor any of the other stakeholders have the luxury of ignoring. Indeed, all parties to the INSTC have recognized the need to drum up private business interest to export along the corridor, and to provide an environment in which private sector players can interact. Secondly, China's warming relationship with Iran need not be considered at the detriment of India-Iran ties. Some 124

degree of perspicacity to keep things in balance will of course be necessary on New Delhi's part, but not at the altar of zero-sum strategic reasoning. (Indeed, Iran calls Chabahar and Gwadar ―sister ports,‖ and is interested in connecting the two. It has invited both Pakistan and China to be a part of the ―not finished‖ Chabahar agreement. It would be wise to take another look at the extent Chabahar yields geopolitical benefit.) Likewise, the New Silk Road does not necessarily need to be at cross-purpose to the INSTC: it could effectively use some of the pathways that form part of the more expansive Chinese overland tranche. Taking advantage of the inevitable geographic complementarity makes both economic and logistical sense for India and other INSTC stakeholders (and may even advance a political détente between India and China). India, Iran and Russia coming together to develop the INSTC heralded a natural, common desire to take advantage of regional opportunity and multiply trade options and routes. Today, this venture faces politicking that calls into question what real leverage India stands to gain from being a stakeholder in the project.

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2.10.1 A Glance to the export and import of the en-route countries of INSTC International Transport Corridor

10 Main Export Items (Finland to Russia), 2016

No. Export Export value Percent

1. Kaolin Coated Paper $265M 8.2% 2. Refined Petroleum $164M 5.1% 3. Packaged Medicaments $160M 4.9% 4. Ethylene Polymers $115M 3.5% 5. Unspecified $101M 3.1% 6. Cellulose Fibers Paper $90.2M 2.8% 7. Computers $82.3M 2.5% 8. Delivery Trucks $61.9M 1.9% 9. Other Construction Vehicles $57.3M 1.8% 10. Other Agricultural Machinery $56.5M 1.7%

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10 Main Import Items (Finland from Russia), 2016

No. Import Import value Percent 1. Crude Petroleum $3.29B 49% 2. Refined Petroleum $678M 10% 3. Unspecified $597M 8.9% 4. Nickel Mattes $242M 3.6% 5. Rough Wood $224M 3.3% 6. Coal Briquettes $182M 2.7% 7. Acyclic Hydrocarbons $161M 2.4% 8. Electricity $158M 2.4% 9. Rubber Tires $122M 1.8% 10. Cyclic Hydrocarbons $97.5M 1.5%

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10 Main Export Destinations of Finland, 2016

No. Country Export value Percent

1. Germany $7.36B 13% 2. Sweden $6.08B 11% 3. United States $4.15B 7.5% 4. Netherlands $3.73B 6.8% 5. Russia $3.23B 5.9% 6. United Kingdom $2.58B 4.7% 7. Belgium $1.83B 3.3% 8. Norway $1.69B 3.1% 9. France $1.73B 3.1% 10. Estonia $1.64B 3.0%

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10 Main Importing Countries to Finland, 2016

No. Country Import value Percent

1. Germany $8.82B 15% 2. Russia $6.7B 12% 3. Sweden $6.74B 12% 4. China $4.46B 7.6% 5. Netherlands $3.03B 5.2% 6. France $2.41B 4.1% 7. United States $2.23B 3.8% 8. United Kingdom $1.82B 3.1% 9. Estonia $1.8B 3.1% 10. Denmark $1.74B 3.0%

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10 Main Export items (Belarus to Russia), 2016

No. Export Export value Percent

1 Cheese $677M 6.0% 2 Delivery Trucks $489M 4.3% 3 Concentrated Milk $426M 3.8% 4 Bovine Meat $377M 3.3% 5 Unspecified $327M 2.9% 6 Butter $322M 2.8% 7 Tractors $217M 1.9%

8 Poultry Meat $205M 1.8% 9 Cars $189M 1.7% 10 Milk $183M 1.6%

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10 Main Import items (Belarus from Russia), 2016

No. Import Import value Percent 1. Crude Petroleum $4.01B 23% 2. Unspecified $2.71B 16% 3. Petroleum Gas $2.44B 14% 4. Refined Petroleum $490M 2.8 5. Scrap Iron $275M 1.6% 6. Cars $282M 1.6% 7. Electricity $136M 0.78% 8. Propylene Polymers $95.3M 0.55% 9. Rubber Tires $92.1M 0.53% 10. Calcium Phosphates $70.8M 0.41%

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10 Main Export destinations of Belarus, 2016

No. Country Export value Percent

1 Russia $10.9B 48% 2 Ukraine $2.83B 12% 3 United Kingdom $1.08B 4.7% 4 Germany $936M 4.1%

5 Netherlands $927M 4.1% 6 Poland $814M 3.6% 7 Lithuania $764M 3.3% 8 Brazil $441M 1.9% 9 China $401M 1.8% 10 Kazakhstan $363M 1.6%

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10 Main Importing countries to Belarus, 2016

No. Country Import value Percent

1 Russia $15B 56%

2 China $2.12B 7.9%

3 Germany $1.32B 4.9%

4 Poland $1.18B 4.4%

5 Ukraine $977M 3.6%

6 Turkey $732M 2.7%

7 Italy $574M 2.1%

8 United States $382M 1.4%

9 Lithuania $264M 0.98%

10 France $241M 0.90%

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10 Main Export items (Russia to Azerbaijan), 2016

No. Export Export value Percent

1. Wheat $253M 13% 2. Unspecified $205M 11% 3. Passenger and Cargo Ships $127M 6.6% 4. Railway Freight Cars $105M 5.5% 5. Rolled Tobacco $93.2M 4.9% 6. Sawn Wood $61.6M 3.2% 7. Seed Oils $44.6M 2.3% 8. Refined Petroleum $36.5M 1.9% 9. Crude Petroleum $29.9M 1.6% 10. Plywood $23.9M 1.3%

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10 Main Import items (Russia from Azerbaijan), 2016

No. Import Import value Percent

1. Tomatoes $94M 21% 2. Other Fruits $76.5M 17% 3. Other Nuts $30.7M 6.8% 4. Pitted Fruits $28.9M 6.4% 5. Petroleum Coke $28.4M 6.3% 6. Apples and Pears $23.7M 5.3% 7. Potatoes $15.7M 3.5% 8. Aluminum Plating $14.2M 3.2% 9. Hard Liquor $13.3M 3.0% 10. Cucumbers $13.6M 3.0%

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10 Main Export Items (Russia to Iran), 2016

No. Export Export value Percent

1. Navigation Equipment $396M 21% 2. Hot-Rolled Iron $204M 11% 3. Wheat $128M 6.8% 4. Corn $120M 6.4% 5. Seed Oils $89.6M 4.8% 6. Sawn Wood $86.8M 4.6% 7. Trailers $75.3M 4.0% 8. Barley $63.6M 3.4% 9. Flat Flat-Rolled Steel $45.1M 2.4% 10. Nuclear Reactors $39.8M 2.1%

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10 Main Import Items (Russia from Iran), 2016

No. Import Import value Percent

1. Cucumbers $64.1M 21% 2. Other Fruits $46.1M 15% 3. Grapes $30.9M 10% 4. Other Nuts $17.7M 5.8% 5. Other Vegetables $13.6M 4.5% 6. Human or Animal Blood $8.9M 2.9% 7. Ethylene Polymers $8.02M 2.7% 8. Tropical Fruits $7.78M 2.6% 9. Jams $4.37M 1.4% 10. Gas Turbines $4.12M 1.4%

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10 Main Export Destinations of Russia, 2016

No. Country Export value Percent 1. Netherlands $29.3B 10% 2. China $28B 9.9% 3. Germany $21.3B 7.5% 4. Turkey $13.7B 4.8% 5. Italy $11.9B 4.2% 6. South Korea $10B 3.5% 7. United States $9.43B 3.3% 8. Japan $9.38B 3.3% 9. Kazakhstan $9.43B 3.3% 10. Poland $9.1B 3.2%

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10 Main Importing Countries to Russia, 2016

No. Country Import value Percent 1. China $38.1B 21% 2. Germany $19.4B 11% 3. United States $11.1B 6.1% 4. Belarus $9.41B 5.2% 5. France $8.49B 4.7% 6. Italy $7.84B 4.3% 7. Japan $6.68B 3.7% 8. South Korea $5.11B 2.8% 9. Poland $3.96B 2.2% 10. Ukraine $3.95B 2.2%

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10 Main Export Items (Iran to India), 2015

No. Export Export value Percent

1. Crude Petroleum $3.73B 66% 2. Nitrogenous Fertilizers $457M 8.1% 3. Acyclic Alcohols $404M 7.1% 4. Ammonia $282M 5.0% 5. Refined Petroleum $122M 2.1% 6. Other Nuts $93.9M 1.7% 7. Vinyl Chloride Polymers $83.5M 1.5% 8. Ethylene Polymers $65.8M 1.2% 9. Sodium or Potassium Peroxides $54.3M 0.96% 10. Alkyl benzenes and Alkyl naphthalene $54.5M 0.96%

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10 Main Import Items (Iran from India), 2015

No. Import Import value Percent 1. Rice $730M 23% 2. Hot-Rolled Iron $287M 9.2% 3. Tea $108M 3.5% 4. Iron Ore $58.2M 1.9% 5. Motorcycles $55.1M 1.8% 6. Other Organic Compounds $54.7M 1.8% 7. Flat Flat-Rolled Steel $50.4M 1.6% 8. Uncoated Paper I$51M 1.6% 9. Twine and Rope $49.8M 1.6% 10. Soybean Meal $45.9M 1.5%

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10 Main Export Destinations of Iran, 2015

No. Country Export value Percent

1. China $14.5B 45% 2. India $5.66B 18% 3. Japan $2.89B 9.1% 4. South Korea $2.11B 6.6% 5. Turkey $1.3B 4.1% 6. Afghanistan $1.03B 3.2% 7. Italy $482M 1.5% 8. Hong Kong $376M 1.2% 9. Oman $283M 0.89% 10. Germany $272M 0.86%

Note: Export & import destinations of Azerbaijan were mentioned on pages 217-218

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10 Main Importing Countries to Iran, 2015

No. Country Import value Percent

Note: Export & import statistics of Iran to Azerbaijan and vice-versa were mentioned on pages 211-212

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2.11 Bandar Abbas- Almaty Corridor

2.11.1 General information Bandar Abbas- Almaty Corridor is taken into consideration as one of the major international corridors in connecting Persian Gulf States and Southeast countries to the Central Asia. It starts from Bandar Abbas, passes through Turkmenistan and Uzbekistan, and ends in Kazakhstan. Length of the route is 3756 km; 1619 km of which is located in the territory of Iran, 449 km in Turkmenistan, 732 km in Uzbekistan, and 956 km in the territory of Kazakhstan. Transport capacity is approximately 2 million tons yearly. Travel time would be predicted approximately 6 days and half; 149 hours and 32 minutes. This period of time is considered as an appropriate one for transferring cargos to the Central Asia comparing with other current corridors. 2.11.2 En-route Countries Iran, Turkmenistan, Uzbekistan, Kazakhstan

Length of routes

1800

1600

1400

1200

1000

800

600

400

200

0 Iran Kazakhstan Uzbekistan Turkmenistan

Figure 2.9 Share of length of routes of Bandar Abbas- Almaty Corridor in each country

Of the advantages and opportunities of launching Bandar Abbas- Almaty train, the following items can be addressed:  Creating a new corridor for trading in Central Asia,  Having the benefit of support from ECO (Economic Cooperation Organization),  Enjoying port facilities,  Creating competitive rail services,  Possibility of exporting goods and services from Central Asia to Europe.

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Map 2.22 Bandar Abbas- Almaty corridor

2.11.3 Illustration of each country’s role for the region Railway transport provides the backbone for container and bulk cargo transport, connecting Central Asian republics with ports on the Baltic Sea, Black Sea, Mediterranean and Persian Gulf, as well the Pacific. With the break-up of the former Soviet Union, these countries have had to cope with the transition from an integrated system, which used to serve the transport needs of a vast, centrally controlled economy, to systems that serve national interests. At present, the railway networks are expanding to connect with additional routes, such as to Islamic Republic of Iran and China. According to some transport operators, exports of processed and manufactured goods from the Central Asian sub region have been increasing gradually, leading to a higher demand for empty containers for exports. This would reduce the transit transport costs of imports into the sub region, by reducing the frequency of empty returns. As a result, some shipping lines with representatives in the region are developing the logistics of access for republics in Central Asia and are beginning to sound out the market. Kazakhstan, Turkmenistan and Uzbekistan are all relatively small economies and need to promote trade and closely integrate into the international trading system to achieve sustainable economic development. A favorable export environment and prudent fiscal and monetary policies have driven strong economic performance for all mentioned countries in the last few years. But in the second half of 2008, the economy started slowing as international commodity prices retreated. Although the global financial crisis has hardly touched the domestic financial sector directly for the majority of them, the economic downturn has slowed exports and import, remittances and investment. Rising unemployment and inflation will hinder government efforts to stimulate demand, and successful implementation of anti crisis policies will require acceleration of structural reforms including transport and trade. Turkey and the Islamic Republic of Iran on the other hand are boosting economies where natural sources as petrol help to the economic development.

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2.11.3.1 Kazakhstan The Republic of Kazakhstan is a landlocked country, far from the sea, but in geographical terms is quite advantageous position, connecting the Asia-Pacific region with Europe, Russia and other CIS countries, Middle East and Persian Gulf/Indian Ocean. The transport complex is represented by rail, river, sea, air, road, and pipeline modes. The railway of Kazakhstan directly borders and co-operates with the railways of Russia, Uzbekistan, the Kyrgyz Republic, Azerbaijan and China that is one of its main advantages in the market of transport services.

Map 2.23 International railway transport corridors in the territory of Kazakhstan Kazakhstan takes the important place in international transport-communication system and represents territory through which there pass three main transit directions: - Europe - China (with Russia); - Europe - China (through the Economic Cooperation Organization, ECO) - Russia - Central Asia 2.11.3.2 Uzbekistan Uzbekistan is located in the center of Central Asia in the interstream area of Amu-Darya and Syr-Darya. The territory of the country from west to east is 1425 kilometers long, and from north to south – 930 kilometers. On the north-east it borders Kazakhstan, on the east and south-east - Kyrgyzstan and Tajikistan, on the west - Turkmenistan, on the south - Afghanistan. Uzbekistan‘s strategic location makes it an important transit route for freight traffic. This fact makes Uzbekistan very attractive and important for transit Eurasian transportations. For today the territory of Uzbekistan is crossed by 36 transit routes intended for transit of foreign road transporters. These are two essential corridors connecting north and south using the roads М39 to the direction of Afghanistan / Tajikistan or to Samarkand then М37 to the direction of Bukhara and Iran. More intense use of the main two corridors (a) Iran – Bandar Abbas port / Pakistan – Karachi port) would allow to radically change the geopolitical situation in the

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region, providing Uzbekistan with a role of a central link in trans-Asian and Eurasian transport-economic relations, reducing the traffic distance by 1.5-2 times. 2.11.3.3 Turkmenistan Turkmenistan is located in the western part of central Asia. On the north and the northeast, Turkmenistan has borders with Kazakhstan and Uzbekistan, on the south and the southeast - with the Islamic republics of Iran and Afghanistan, from the western part it washes by waters of Caspian Sea and has borders with Azerbaijan and Russia. Transportation routes to Turkmenistan are limited due to the country‘s geographic location. One of the main entry points is the port of Turkmenbashy on the Caspian Sea, located 270 kilometers east of and across the Caspian Sea from Baku, Azerbaijan. Turkmenbashy is an important gateway to Central Asia and is an import and export center for a variety of products. The port has a cargo ferry terminal (there is a ferry service to and from Baku) and a port facility. Large volumes of commercial cargo are shipped by truck via Iran. 2.11.3.4 Iran Iran is strategically located, with all cargo from CIS Countries passing through Sarakhs, in order to avoid the Caspian sea, exported through the harbour of Iran, Bandar Abbas. Trade with Iraq, Pakistan and Afghanistan however, is limited. Iran‘s trade routes go via its harbour, via Turkey (to Europe) and via Turkmenistan (to the countries of the former Soviet Union). This country has an important role to play not only as an international cargo transit country, where actually real income is limited, but mainly as a transshipment location with value added services for transit cargo (logistics, repackaging services, labelling services, etc.). The latter role can be hugely profitable for the economy of Iran.

2.11.4 Time Schedules Review Bandar Abbas-Almaty time schedule review Below are some observations:  too many stopovers, 37 stopovers with total idle time of the train 4.503 minutes (!) or 75 hours or 3 days and 3 hours !! the train was idle during its trip. This is a long time for a block train to stay idle and the elimination of these three days could be a very strong competitive advantage to our rail service,  the speed of the train (km/hr) was as follows:  Kazakhstan: 36 km/hr  Uzbekistan: 22 km/hr  Turkmenistan: 10 km/hr  Iran: 25,76 km /hr  Turkey: 24,35 km /hr  The average speed of the train is 23 km/h which is considered a middle to low speed for a block train.

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IRAN Bandar Abbas – Almaty Almaty – Bandar Abbas travelling arrival stopover departure stations arrival stopover departure travelling time time 19:45 Bandar 22:10 10:20 Abbas 12:30 08:15 120 10:15 Sirjan 10:20 90 11:50 09:30 07:30 17:45 20 18:05 Mobarake 00:30 20 00:50 08:30 h 09:25 03:30 90 05:00 Tabas 14:30 90 16:00 07:30 08:30 13:30 90 15:00 Torbat 05:30 90 07:00 10:00 Heydarich 12:45 03:45 Sarakhs 19:30

50:40 320 290 45:50 56 hours 50 hours & 40 minutes

TURKMENISTAN Bandar Abbas – Almaty Almaty – Bandar Abbas travelling arrival stopover departure stations arrival stopover departure travelling time time 80 07:05 Sarakhs 20:10 80 01:10 08:15 735 20:30 Sarakhs 07:00 720 19:00 01:10 Turk 06:00 02:30 120 04:30 Mary 23:00 90 00:30 06:30 06:30 11:00 110 12:50 Turkmena 14:10 110 16:00 07:00 bat 00:40 13:30 180 16:30 Farap 10:30 180 13:30 00:40 14:20 1225 1180 15:20 33 hours 45 minutes 35 hours & 10 minutes

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UZBEKISTAN Bandar Abbas – Almaty Almaty – Bandar Abbas travelling arrival stopover departure stations arrival stopover departure travelling time time 16:30 Farap 13:30 01:57 00:30 17:00 105 18:45 Khodzhada 15:27 175 18:22 06:10 vlet 01:51 20:36 113 22:29 Bukhara 00:32 98 02:10 05:39 06:01 04:30 142 06:52 Marokand 07:49 139 10:08 02:12 06:35 13:27 124 15:29 Havast 12:20 95 13:55 01:20 02:32 18:01 60 19:01 Uzbekistan 15:15 60 16:15 07:45 01:18 20:19 180 23:19 Sary Agash 00:00 724 33 hours & 39 minutes 42 hours & 41 minutes

KAZAKHSTAN Bandar Abbas-Almaty Almaty – Bandar Abbas travelling arrival stopover departure stations arrival stopover departure travelling time time 13:38 Almaty 81 00:00 04:21 17:59 39 18:38 Otar 37 00:00 03:16 21:54 34 22:28 Shu 36 00:00 04:35 03:03 40 03:43 Taraz 40 05:04 02:21 06:04 42 06:46 Tulkubas 17:56 60 18:56 06:13 03:27 10:13 47 11:00 Arys 11:10 33 11:43 02:31 02:26 13:26 180 16:26 Sary Agash 05:39 180 08:39 20:26 382 467 13:48 26 hours & 48 minutes

The following observations can be done:  too many stopovers, 22 stopovers with total idle time of the train 2.651 minutes or 44 hours and 11 minutes or 1 days and 22 hours and 11 minutes the train was idle during its trip. We strongly believe that there is still room for improvement.  the speed of the train (km/h) was as follows:  Kazakhstan: 36 km/h  Uzbekistan: 22 km/h  Turkmenistan: 10 km/h  Iran: 27,7 km /h  The average speed of the train is 24 km/h which is considered a middle to low speed for a block train.

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The total time for both directions is as follows:

Route Total time Bandar Abbas - Almaty 145 hours & 24 minutes (6 days, 1hours & 24 minutes)?? Almaty – Bandar Abbas

2.11.5 Tariff structure for Bandar Abbas-Almaty route The proposed tariffs as have been presented by the state rail organizations are the following:

Table 2.8 Tariffs structure for Bandar Abbas – Almaty (vv) route – full containers

20'' 40'' States per km km per cntr per km km per cntr Bandar Abbas – Almaty Iran $0,43 1619 $696,2 $0,62 1619 $1003,7 Turkmenistan $1,54 449 $692 $2,79 449 $1252,71 Uzbekistan $0,64 732 $468,5 $1,4 732 $1024,8 Kazakhstan $0,47 956 $449,3 $0,75 956 $717 TOTAL $2306 TOTAL $3998,21 Almaty – Bandar Abbas Kazakhstan $0,47 956 $449,3 $0,75 956 $717 Uzbekistan $0,64 732 $468,5 $1,40 732 $1024,8 Turkmenistan $1,54 449 $692 $2,79 449 $1252,71 Iran $0,47 1619 $760,9 $0,69 1619 $1117,11 TOTAL $2371 TOTAL $4111,62

Table 2.9 Tariffs structure for Bandar Abbas – Almaty (vv) route – empty containers

20'' 40'' States per km km per cntr per km km per cntr Bandar Abbas – Almaty Iran $0,215 1619 $348 $0,31 1619 $502 Turkmenistan $ 449 $ $ 449 $ Uzbekistan $0,38 732 $278 $0,67 732 $490 Kazakhstan $0,31 956 $296 $0,48 956 $459 TOTAL $ TOTAL $ Almaty – Bandar Abbas Kazakhstan $0,31 956 $296 $0,48 956 $459 Uzbekistan 0,38$ 732 $278 $0,67 732 $490

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Turkmenistan $ 449 $ $ 449 $ Iran $0,235 1619 $380 $0,345 1619 $559 TOTAL $ TOTAL $

Lake Van Ferry Transport: For Loaded Containers: 10,00 EURO per net-tonnes, minimum charge will be based on 10 tonnes per wagon. For empty Containers: 10,00 EURO per net-tonnes, minimum charge will be based on 5 tonnes per wagon. Customs Formality Charges: Export Per Wagon: 10,00 EURO/wagon Import Per Wagon: 7,00 EURO/wagon Container Handling Charge: For Loaded Containers: 25,00 EURO/Container For Empty Containers: 5,00 EURO/Container

2.11.6 Strengths and weaknesses of Bandar Abbas- Almaty train

Strengths Weaknesses

 New rail service  Different working regimes  Consensus of the participating  Poor infrastructure state rail organizations  Need for great effort to ensure a compromise  Non-availability of a competitor on the on tariffs and time schedules same route  New corridor management mechanism which  Availability of a facilitator – greatly differs from the usual way of working ECO Secretariat – that and of the region's culture encourages urgent  Many economic interests in the region that implementation of the service would not let the rail service operate or  There is cargo that could use this attract cargo route in increasing volumes  The service's future depends on the  There are no impervious cultural/ competitiveness of Bandar Abbas port, time / social disputes or difficulties in the cost wise, compared to other ports, mainly region Shanghai  There is a port / gate to the rest of the world– a short distance from the service  Many economic benefits for the countries involved

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Opportunities Threats

 To create a more competitive and reliable rail  The NVOCCs that operate in Shanghai port service and have many economic interests in  To concentrate all the cargo of this area on continuing operations in the region could this service make Bandar Abbas port even more expensive and therefore ―kill this rail service  To create a new, leading and famous corridor  for all trade in Central Asia The rail service connecting Almaty with Shanghai port to be more competitive than  To transform the disadvantage of eight our service could ever be, and thus no re- countries of Central Asia, being landlocked, directing of cargo to an advantage of having reliable, efficient  and effective routes that connect them with The cultural and social factors might prove to the rest of the world be so strong as to never let cargo markets really use the service  To create a case study and a benchmark for  the new Corridor Management Mechanism The consensus of the state rail organizations that is being promoted for the area on the realization of the service would not be practically implementable with no agreement  To create a consortium from the state rail on better and more competitive tariffs organizations of the area that will operate  under the same efficient mechanism, The new corridor management mechanism exchange information with state of the art would not be adopted in practice by the state rail organizations and the service will stay technologies and formulate a network of reliable rail services for Asia and Europe without management  To make Central Asia the producer of Europe and bring economic development and prosperity to these countries

2.11.7 Problems and bottlenecks in Bandar Abbas- Almaty Corridor There are three rivals in this route:  rail transport from Almaty to Shanghai port;  Shanghai port due to its lower cost and running time in comparison with Bandar Abbas; and  road transport from Almaty to Bandar Abbas. It is deemed necessary to standardize the transport rates; services and time, using the common working rules so that minimize the delivery time and make services more efficient. In this regard, integration the IT system of railway organizations would be a profitable achievement.

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2.11.8 A Glance to the export and import of the en-route countries of Bandar Abbas- Almaty Corridor

10 Main Export Items (Iran to Turkmenistan), 2011

No. Export Export value Percent

1. Cement $55.1M 12% 2. Petroleum Coke $31.2M 6.5% 3. Other small iron pipes $28.3M 5.9% 4. Potatoes $26.7M 5.6% 5. Hand-woven rugs $26.2M 5.5% 6. Plastic pipes $22.1M 4.6% 7. Nonaqueous paints $19.8M 4.1% 8. Apples and pears $16.5M 3.5% 9. Iron blocks $11.8M 2.5% 10. Cleaning products $11.2M 2.4%

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Some of the Main Import Items (Turkmenistan to Iran), 2011

No. Import Import value Percent

1 Refined petroleum $30.8M 56% 2 Other vegetable residues $16M 29% 3 Halogens $1.85M 3.4% 4 Other vegetable products $1.82M 3.3% 5 Non-retail pure cotton yarn $1.21M 2.2% 6 Fat and oil residues $817K 1.5% 7 Stearic acid $794K 1.5% 8 Large construction vehicles $522K 0.95%

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Some of the Main Export Destinations of Iran, 2015

No. Country Export value Percent

1 China $14.5B 45% 2 India $5.66B 18% 3 Japan $2.89B 9.1% 4 South Korea $2.11B 6.6% 5 Turkey $1.3B 4.1% 6 Afghanistan $1.03B 3.2% 7 Italy $482M 1.5% 8 Hong Kong $376M 1.2%

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10 Main Importing Countries to Iran, 2015

No. Country Import value Percent

1 China $17.8B 41% 2 South Korea $3.76B 8.6% 3 Turkey $3.62B 8.2% 4 India $3.13B 7.1% 5 Germany $2.19B 5.0% 6 Brazil $1.67B 3.8% 7 Russia $1.02B 2.3% 8 Switzerland $937M 2.1% 9 France $614M 1.4% 10 Kazakhstan $566M 1.3%

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10 Main Export Destinations of Turkmenistan, 2015

No. Country Export value Percent

1. China $7B 78% 2. Afghanistan $550M 6.1% 3. Turkey $542M 6.1% 4. Italy $170M 1.9% 5. Georgia $112M 1.3% 6. Romania $83.4M 0.93% 7. Russia $68.5M 0.77% 8. Spain $55.9M 0.63% 9. United States $55M 0.62% 10. United Kingdom $54M 0.60%

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10 Main Importing Countries to Turkmenistan, 2015

No. Country Import value Percent

1. Turkey $1.85B 33% 2. Russia $844M 15% 3. China $814M 15% 4. Germany $330M 6.0% 5. South Korea $182M 3.3% 6. Ukraine $170M 3.1% 7. Italy $137M 2.5% 8. Kazakhstan $114M 2.1% 9. Belarus $81.9M 1.5% 10. India $80.4M 1.5%

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10 Main Export Items (Uzbekistan to Kazakhstan), 2015

No. Export Export value Percent

1. Petroleum Gas $233M 34% 2. Grapes $78.3M 11% 3. Pitted Fruits $39.6M 5.7% 4. Tomatoes $33.1M 4.8% 5. Dried Fruits $25.3M 3.7% 6. Other Vegetables $24.4M 3.5% 7. Other Large Iron Pipes $18.4M 2.7% 8. Nitrogenous Fertilizers $17.1M 2.5% 9. Other Fruits $13.6M 2.0% 10. Knit T-Shirts $10.6M 1.5%

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10 Main Import Items (Kazakhstan to Uzbekistan), 2015

No. Import Import value Percent

1. Wheat $207M 22% 2. Wheat Flours $194M 21% 3. Semi-Finished Iron $80.4M 8.5% 4. Zinc Ore $39.6M 4.2% 5. Raw Aluminum $38.9M 4.1% 6. Steam Boilers $28.7M 3.1% 7. Lignite $27.8M 3.0% 8. Sunflower Seeds $26.5M 2.8% 9. Electric Motor Parts $25.2M 2.7% 10. Planes, Helicopters, and/or $25M 2.7%

Spacecraft

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Some of the Main Export Destinations of Uzbekistan, 2015

No. Country Export value Percent

1. Switzerland $1.88B 32% 2. China $1.21B 21% 3. Turkey $704M 12% 4. Kazakhstan $691M 12% 5. Russia $570M 9.7% 6. Afghanistan $191M 3.3% 7. France $177M 3.0% 8. Kyrgyzstan $56.7M 0.97%

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Some of the Main Importing Countries to Uzbekistan, 2015

No. Country Import value Percent

1. China $2.24B 22% 2. Russia $2.22B 22% 3. South Korea $1.28B 13% 4. Kazakhstan $941M 9.4% 5. Turkey $487M 4.9% 6. Germany $429M 4.3% 7. Japan $248M 2.5%

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10 Main Export Destinations of Kazakhstan, 2016

No. Country Export value Percent

1. Italy $7.47B 20% 2. China $4.21B 11% 3. Russia $3.51B 9.5% 4. Netherlands $3.26B 8.9% 5. Switzerland $2.69B 7.3% 6. France $1.8B 4.9% 7. Spain $992M 2.7% 8. Uzbekistan $923M 2.5% 9. Ukraine $911M 2.5% 10. United Kingdom $891M 2.4%

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10 Main Importing Countries to Kazakhstan, 2015

No. Country Import value Percent

1. Russia $9.13B 36% 2. China $3.67B 15% 3. Germany $1.44B 5.7% 4. United States $1.28B 5.1% 5. Italy $834M 3.3% 6. France $661M 2.6% 7. Turkey $618M 2.5% 8. Uzbekistan $588M 2.3% 9. Japan $553M 2.2% 10. South Korea $453M 1.8%

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Some of the Main Export Items (Turkmenistan to Kazakhstan), 2015

No. Export Export value Percent

1. Petroleum Gas $48.1M 82% 2. Other sea vessels $2.42M 4.1% 3. Valves $990K 1.7% 4. Tomatoes $824K 1.6% 5. Liquid pumps $733K 1.3%

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2.12 Kazakhstan_Turkmenistan_Iran Rail Corridor (KTI)

2.12.1 General information Origin: Kazakhstan Destination: Iran En-route countries: Kazakhstan-Turkmenistan-Iran The route approximate length: 928 km

Length of routes

1000

500 km

0 Iran Kazakhstan Turkmenistan Series 1 82 142 700

Figure 2.10 Share of length of routes in Kazakhstan-Turkmenistan-Iran Rail Corridor

2.12.2 History In December 2014, a long-awaited inter-regional connectivity aspiration of ―bridging North- South Corridor missing link‖ became a reality with the inauguration of rail route linking Kazakhstan, Turkmenistan, and Iran. This route, known as trans-Caspian railway, is also a key segment of the so-called Silk Railway facilitating transport of goods from China via Kazakhstan, Turkmenistan and Iran all the way to Middle East in the South and via Turkey to Europe in the West. The Turkmen segment was partially funded by MDBs notably IsDB and AsDB. IsDB granted a loan of $371 million for financing the Barakat-Atrak segment and ADB provided $125 million for financing Gyzylgaya-Barakat section.

Map 2.24 Kazakhstan-Turkmenistan-Iran Railway project

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2.12.3 Alternative and competing corridors This route is a new alternative to ECO‘s operational railway routes along the Almaty-Istanbul and Almaty-Bandar Abbas Rail corridors connecting Kazakhstan to Bandar Abbas and Turkey. The new route shortens the distance and reduces the time and cost of transportation along the North South corridor. KTI is an alternative corridor to the North-South corridor too and The Baku-Tbilisi-Kars Rail route is the competing corridors of the North-South Corridor.

Map 2.25 International transport corridors in Kazakhstan

2.12.4 Latest status of freight traffic along the route The route is operational, and trains run along the corridor whenever cargo is available, but no train runs on a regular basis along the corridor. 2.12.5 Technical Points The standard gauge tracks at both sides of Iran and Turkmenistan are linked to each other and trains run along it. The broad gauge tracks exist at both sides of Iran and Turkmenistan, but not linked to each other (in one territory the broad gauge has been constructed at the right side and in other territory at the left side). A solution is seeking to solve it e.g. construction of a switch to interlink the two tracks). Bogie changing site exist at the border of Turkmenistan (it is not constructed in Iran. Its construction depends on the volume of the cargo in future). 2.12.6 Movement of regular train Requirements for having regular running of trains:  Enough freight  An integrated train schedule (timetable)  A uniform tariff rate (facilitator)  A uniform traffic regulations (the three railways are member of OSJD and subject to SMGS and PGW).

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2.12.7 The efforts of international organizations to activate the Kazakhstan- Turkmenistan-Iran International Rail Corridor Corridors are a global issue in global macroeconomics. For this reason, most international organizations working in the field of transport have placed the issue of the development of international corridors as one of their priorities. Meanwhile, the issue of the construction of the Kazakhstan-Turkmenistan-Iran corridor was initially on the agenda of the Organization for Economic Cooperation (ECO), and, on the proposal and approval of the organization and the Islamic Development Bank, $ 370 million to complete the project in Turkmenistan and about 125 million dollar has been blessed with a donation to the Gezel Gaya-Bereket section. The issue of commercialization of the KTI corridor is now on the agenda of the Organization for Economic Cooperation (ECO), the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and the Islamic Development Bank (IDB). 2.12.8 The objectives of the KTI route project

The purpose of the project is to enable en-route MCs (member countries) commercialize the operation of the new railway connecting Kazakhstan, Turkmenistan and Iran, and would study the possibility of its extension to China in the East, Turkey and Europe in the West and the Middle East in South and South West. The IsDB and ECO will work closely with MCs and railway administrations, shippers and trading companies and other relevant stakeholders on making Silk Rail Road operational by supporting:  The development of new rail transport services along the corridor;  The systematic removal of the remaining non-physical barriers along this corridor through capacity-building and implementation of international conventions and agreements;  Identification of transport needs of shippers through cooperation with important shippers/traders that are currently using rail transport for their transport needs from Central Asia to Middle East;  Analysis of the trade flows and major tradable commodities along the corridor with the objective to identify possible alternative modes of transport (road and maritime);  Fact finding and experimental run of a block train along the corridor in order to identify existing problems and to examine the impediments along the corridor in a practical manner;  The development of marketing tools for further promoting the results of the project work including, among others, a dedicated website with web tools where users could perform comparison analysis between transport modes, find information on tariffs and time schedules of the new rail services, the organization of an international conference and others.

2.12.9 Deliverables/outputs of the project

The study project will come up with individual country reports including railway policy, operations and infrastructure analysis and propose a national level investment plan including specific projects for enhancing the capacity of the route. It will also provide a comprehensive report including solutions/recommendations for enhancing the competitiveness of the corridor. The report may, inter-alia, include the followings:  Market/economic analysis of the en-route MCs (member countries), analysis of types and volume of rail freight transportation, cargo ―sources‖, expected freight volumes through

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alternative transit routes and a value and cost analysis of freight by the route in comparison with road and maritime transport.  Analysis of infrastructure, logistic services/terminals, bogie changing and transhipment facilities and technological needs/gaps with a view to enhancing the capacity of the route to the expected level. This will include identification of investment projects for modernization and capacity enhancement of the corridor and preparation of pipeline projects and with brief profiles for the selected projects on basis of ECO/IDB project templates.  Recommending institutional/functional structure of a possible transnational corridor management mechanism with participation of all stakeholders particularly the business community at regional level (based on the best practices available).  Recommendations on the tariffs structure and other charges with a view to meeting customer‘s minimum service performance thresholds and making the route attractive for users and the train services competitive with other alternative routes/modes;  Propose specific passenger services along the route. 2.12.10 Implementation mechanism The activities of this project will be carried out through active involvement of the railway authorities of the en-route MCs (member countries) and close cooperation and contribution of IsDB and ECO Secretariat. A Project Management Unit (PMU) will be established in the ECO Secretariat to support and monitor the implementation of the project during its execution period. The PMU, composed of one local expert (project coordinator) will be responsible for coordination among the national focal points/consultants (one for each en-route country) and international consultant that will form the Study Team. The PMU will function under the direct supervision of the Director, Transport and Communications of the ECO Secretariat. It will ensure that all activities of this project are implemented in time and at the necessary quality level throughout the duration of project. The TORs of the international and national consultants as well as project coordinator will be drafted by ECO Secretariat and finalized in consultation with IsDB. 2.12.11 Conclusion The international freight transportation of Kazakhstan-Turkmenistan-Iran railways was approved and launched in light of the high advantages offered by the three countries. The corridor has even been supported by the presidents of these countries. But, as expected, the launch of the corridor did not meet expectations, and the amount of freight expected to be transferred from the corridor has not even come to fruition. In response to the priorities that were initially proposed to avoid prosperity, after examining the export volumes of the countries of Kazakhstan and Turkmenistan as well as the volume of trade exchanges between the two countries and Iran, and other components that were surveyed, it can be said that firstly, there is no accurate and scientific evidence of the amount of cargoes in the corridor, and all estimates are based on available status or forecasts based on some data and current flows that existed in the past. Still, road and maritime transport are preferable to rail transport, due to lower tariffs and easier transportation, especially road transport, bringing goods to the final destination. One of the problems is that some owners of the goods, like to carry their goods to the factory gate but railway carry their goods to the railway station and therefore, they will have to talk with truckers in that country in order to bring the cargoes from the railway to the final destination.

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The lack of facilities and infrastructure at the Inche Bouron station, as well as some of the northern axis constraints, give the incentive for the owners of the goods to carry this route. It seems that there is a strong and planned marketing, as well as advertising suitable for attracting buyers of goods and cargoes for the transit of their goods from this route. Negotiating with China and attempting to facilitate the transfer of China's cargo and launching trains of China's plans on this route should be on the agenda of the serious railways of Iran. In this regard, the use of active diplomacy and strong international connections and the use of the capacities of Iranian embassies in Turkmenistan, Kazakhstan, China and Russia will be in place. Setting up a corridor management entity for this corridor is necessary. The office of this corridor can be located in one en-route countries of this corridor and it can have some branches in the other member countries. Associated experts with this corridor should be designated and, at certain times, they should report on their efforts. 2.12.12 Offers for the activation of the Kazakhstan-Turkmenistan-Iran Corridor (KTI) 1- Identifying existing capacities of import and export that can be transported from this route. 2- Attempting to launch freight trains from China to Iran and to Europe through an active diplomacy and the use of all possible capacities. 3- Trying to attract India's cargoes to Central Asia and use this route 4. Establishing KTI management entity in order to set up a professional marketing team for promoting this route; providing regular reports and team efforts to win international interest in this route. This can be done even at the level of the Ministry and on the agenda of the negotiations of the transport ministers of the three member countries. 5. Attempting to increase the trade capacity between the KTI en-route countries by formation a professional team for studying this route. This team can introduce and expand more commercial opportunities between countries and improve the export markets, especially for traders and exporters of countries. 6. Assisting to establish a joint logistic company between the three countries of Kazakhstan, Turkmenistan and Iran, similar to those for transit routes between China and Russia to Europe or Russia, Belarus and Kazakhstan, or the assignment of a specific operator or vendor for this route. This company or operator can offer door-to-door services to enhance the attractiveness and efficiency of the route. 7- Trying to remove the bottlenecks. 8- Investing on Inche Bouron Station and building the infrastructure required at this station with private and financial investment. 9) Negotiate with large shipping companies in Iran, including MSC, MERSK, Yang Ming Line, Emirates Shipping Lines, COSCO and other lines, including Indian shipping lines to carry their container cargoes from the port of Bandar Abbas to the countries of CIS destination. 10. Negotiating with some main logistic companies in South Korea, such as SJL, as well as logistic companies in China and Japan, which bring large amount of goods to Bandar Abbas and from there to CIS countries.

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2.12.13 A Glance to the export and import of the en-route countries of KTI transport Corridor

10 Main Export Items (Kazakhstan to Turkmenistan), 2016

No. Export Export value Percent

1. Barium Sulphate $13.7M 20% 2. Wheat Flours $11.3M 16% 3. Malt Extract $7.13M 10% 4. Calcium Phosphates $4.23M 6.1% 5. Railway Freight Cars $2.81M 4.1% 6. Plastic Lids $2.17M 3.1% 7. Coffee and Tea Extracts $2.01M 2.9% 8. Excavation Machinery $1.52M 2.2% 9. Rice $1.51M 2.2% 10. Onions $1.38M 2.0%

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Some of the Main Import Items (Kazakhstan from Turkmenistan), 2016

No. Import Import value Percent

1. Petroleum Gas $192M 90% 2. Sea Vessels $5.06M 2.4% 3. Large Iron Pipes $4.47M 2.1% 4. Large Iron Pipes $4.47M 2.1% 5. Engines $2.2M 1.0% 6. Tomatoes $1.01M 0.47% 7. Excavation Machinery $978k 0.46%

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10 Main Export Destinations of Kazakhstan, 2016

No. Country Export value Percent

1. Italy $7.47B 20% 2. China $4.21B 11% 3. Russia $3.51B 9.5% 4. Netherlands $3.26B 8.9% 5. Switzerland $2.69B 7.3% 6. France $1.8B 4.9% 7. Spain $992M 2.7% 8. Ukraine $911M 2.5% 9. Uzbekistan $923M 2.5% 10. Greece $873M 2.4%

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10 Main Importing Countries to Kazakhstan, 2016

No. Country Import value Percent

1 Russia $9.13B 36% 2 China $3.67B 15% 3 Germany $1.44B 5.7% 4 United States $1.28B 5.1% 5 Italy $834M 3.3% 6 France $661M 2.6% 7 Turkey $618M 2.5% 8 Uzbekistan $588M 2.3% 9 Japan $553M 2.2% 10 South Korea $453M 1.8%

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10 Main Export Items (Iran to Turkmenistan), 2011

No. Export Export value Percent

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Some of the Main Import Items (Turkmenistan to Iran), 2011

No. Import Import value Percent

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Some of the Main Export Destinations of Iran, 2015

No. Country Export value Percent

1 China $14.5B 45% 2 India $5.66B 18% 3 Japan $2.89B 9.1% 4 South Korea $2.11B 6.6% 5 Turkey $1.3B 4.1% 6 Afghanistan $1.03B 3.2% 7 Italy $482M 1.5% 8 Hong Kong $376M 1.2%

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10 Main Importing Countries to Iran, 2015

No. Country Import value Percent

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10 Main Export Destinations of Turkmenistan, 2015

No. Country Export value Percent

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10 Main Importing Countries to Turkmenistan, 2015

No. Country Import value Percent

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2.13 Kazakhstan – Uzbekistan– Turkmenistan– Iran– Oman International Transport and Transit Corridor

Map 2.26 En-route countries of Kazakhstan – Uzbekistan– Turkmenistan– Iran– Oman International Transport and Transit Corridor

2.13.1 General information Origin: Uzbekistan (Kazakhstan is located above the Uzbekistan and has been discussed to be added to this corridor) Destination: Oman (Qatar withdrew the project in 2013) A signing ceremony of an International Agreement on establishing a new international transport and transit corridor ―Uzbekistan – Turkmenistan – Iran – Oman – Qatar was held in Ashgabat on 25th of April, 2011. This agreement is known as “Ashgabat Agreement”. The legal document will allow the member-countries to create the shortest trade route between Central Asian countries and Persian Gulf‘s and Oman‘s sea ports. According to the project, after building the links connecting railways of Uzbekistan and Turkmenistan with southern ports of Iran, participants of the agreement will be able to establish an optimal transport route to the Persian and Oman gulfs‘ports in short-term perspective. The first part of this transport and transit corridor will pass through the railway lines in Uzbekistan, Turkmenistan and Iran. The second part will pass through shipping routes, which connect Bandar Abbas and Chabahar ports of Iran to the Sultanate of Oman. According to the experts, implementation of this international project will both give a powerful impetus to the economic development and increase the volume of transited goods. The idea to establish a new international transport and transit corridor Uzbekistan – Turkmenistan – Iran – Oman – Qatar and other Arab states of the Persian Gulf was initiated by President of Uzbekistan Islam Karimov at the official meeting held in Ashgabat on 19th of October, 2010. President of Turkmenistan Gurbanguly 181

Berdimuhamedov approved this idea and charged Foreign Affairs and Transport Ministers of government to do researches on the political and technical aspects of the project. After the short period of time, the delegations of Uzbekistan, Turkmenistan, Iran and Oman met on 10th November, 2010 in Tehran (Iran) and discussed the problems of co- investing the project, decreasing the transportation and transit costs, cooperating in the trade and transit developments between the countries. At this meeting, the participants created the working group of Agreement on preparing transit, custom, transport and investment. At this meeting the ministers of member countries decided to meet to sign the Agreement of an International transport and transit corridor in Ashgabat in March, 2011 as well. Thus the participants signed ―Ashgabat Agreement on 25th of April, 2011 in Ashgabat. After signing the Agreement, the project has been ratified in the member countries. Iranian government approved the ―Ashgabat Agreement ―with the view to expanding trade with countries in the regional on 12th of May, 2011; Turkmenistan ratified the project in May, 2011; Uzbekistan approved the project on 13th of June 2011. Foreign ministers of Uzbekistan, Turkmenistan, Iran and Oman signed the Memorandum of Understanding (MoU) for the Establishment of the transport corridor Uzbekistan – Turkmenistan – Iran – Oman – Qatar on 6th of August, 2011, in Muscat, Oman. However, in 2013 Qatar withdrew the project and the MoU automatically transformed into quadruple agreement. Due to Qatar‘s withdrawal, it became impossible to put the project into force in 2013 as it was planned. Therefore, Uzbekistan, Turkmenistan, Iran and Oman had to reconsider the Agreement making some corrections and only after that the parties proceeded the implementation of the project. The first session of Coordination Council Meeting of the participants of ―Ashgabat Agreement was held in Tehran on 15th of February, 2015. 2.13.2 Accession of Kazakhstan to “Ashgabat Agreement” At the session representatives of ―Ashgabat Agreement member countries approved accession of Kazakhstan to the Agreement on an International transport and transit corridor Uzbekistan – Turkmenistan – Iran – Oman. Kazakhstan will join the agreement as a new member after passing all legal processes. Since the project was put into operation, the member countries could see some positive results. 2.13.3 Volume of railway transportation between Ashgabat Agreement members The volume of railway transportation between Ashgabat Agreement members in 2014 increased by 10% comparing to 2013 and reached 25 million tons of cargos. At the same time, among the total amount of transported cargo about 41% of good were from Kazakhstan. It is expected that the volume of transported goods between Kazakhstan and Ashgabat Agreement member countries can reach up to 40 million tons per year by 2020. The Ashgabat Agreement has an international and regional significance as it is expecting to promote and enhance international trade for the members of Agreement. The transit corridor running through Uzbekistan, Turkmenistan, Kazakhstan and Iran, which would connect Central Asia with Persian Gulf and Sea of Oman, is one of the potential prospect for trade, economics, investment and transit cooperation as well as for regional development, welfare and stability. The establishment of this corridor is expected to connect Eastern, Western, Central and Southern Asia together.

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2.13.4 Length of the Corridor Kazakhstan (Almaty): 956 km Uzbekistan (Tashkent): 732 km Turkmenistan (Mary): 449 km Iran (Sarakhs- Bandar Abbas): 1619 km Oman: (Main route)

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2.13.5 A Glance to the en-route countries of (Kazakhstan)-Uzbekistan- Turkmenistan- Iran- Oman International Transport and Transit Corridor

10 Main Exported Items of Kazakhstan, 2016

No. Export Export value Percent

1. Crude Petroleum $19.4B 53% 2. Refine copper $1.82B 5.0% 3. Radioactive Chemicals $1.77B 4.8% 4. Petroleum Gas $1.74B 4.7% 5. Ferroalloys $1.4B 3.8% 6. Refined Petroleum $813M 2.2% 7. Wheat $685M 1.9% 8. Silver $585M 1.6% 9. Raw Zinc $552M 1.5% 10. Wheat flours $505 M 1.4%

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10 Main Imported Items to Kazakhstan, 2016

No. Import Import value Percent

1. Refined Petroleum $777M 3.1% 2. Packaged Medicaments $695M 2.8% 3. Other Large Iron Pipes $526M 2.1% 4. Valves $483M 1.9% 5. Broadcasting Equipment $395M 1.6% 6. Air Pumps $335M 1.3% 7. Iron Pipes $313M 1.2% 8. Computers $306M 1.2% 9. Rubber Tires $250M 0.99% 10. Vehicle Parts $200M 0.79%

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10 Main Export Destinations of Kazakhstan, 2016

Destination No. Value Percent

1. Italy $7.47B 20% 2. Russia $3.51B 9.5% 3. Netherlands $3.26B 8.9% 4. Switzerland $2.69B 7.3% 5. France $1.8 B 4.9% 6. Spain $ 992M 2.7% 7. Ukraine $911M 2.5% 8. United Kingdom $891M 2.4% 9. Greece $873M 2.4% 10. Romania $724M 2%

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10 Main Import Origins to Kazakhstan, 2016

Import Origins No. Value Percent

1. Russia $9.13B 36% 2. China $3.67B 15% 3. Germany $1.44B 5.7% 4. Italy $834M 3.3% 5. France $661M 2.6% 6. Turkey $618M 2.5% 7. Uzbekistan $588M 2.3% 8. Japan $553M 2.2% 9. South Korea $453M 1.8% 10 Ukraine $435M 1.7%

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10 Main Exported Items of Turkmenistan, 2015

No. Export Export value Percent

1. Petroleum Gas $7.17B 80% 2. Refined Petroleum $447M 5.0% 3. Peat $252M 2.8% 4. Crude Petroleum $243M 2.7% 5. Raw Cotton $236 M 2.6% 6. Non-Retail Pure Cotton Yarn $171M 1.9% 7. House Linens $39.1M 0.44% 8. Propylene Polymer $22.6M 0.25% 9. Halogens $16.1 M 0.18% 10. Vegetable saps $10.6M 0.12%

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10 Main Imported Items to Turkmenistan, 2015

No. Import Import value Percent

1. Iron Structures $352M 6.4% 2. Raw Iron Bars $175M 3.2% 3. Insulated Wire $174M 3.1% 4. Delivery Trucks $129M 2.3% 5. Other Construction Vehicles $125M 2.3% 6. Electrical Control Boards $122M 2.2% 7. Packaged Medicaments $102M 1.8% 8. Valves $99.9M 1.8% 9. Telephones $75.8M 1.4% 10. Electric Generating Set $71.9M 1.3%

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10 Main Export Destinations of Turkmenistan, 2015

Export destinations No. value Percent

1. China $7B 78% 2. Afghanistan $550M 6.1% 3. Turkey $542M 6.1% 4. Italy $170M 1.9 5. Georgia $112M 1.3% 6. Romania $83.4 M 0.93% 7. Russia $ 68.5M 0.77% 8. Spain $55.9M 0.63% 9. United Kingdom $54M 0.60% 10. Greece $32.3M 0.36%

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10 Main Import Origins to Turkmenistan, 2015

No. Origins Import value Percent

1. Turkey $1.85B 33% 2. Russia $844M 15% 3. China $814M 15% 4. Germany $330M 6.0% 5. Ukraine $170M 3.1% 6. Italy $137M 2.5% 7. France $99.4M 1.8% 8. Belarus $81.9M 1.5% 9. Netherlands $72.1M 1.3% 10. Austria $54.7M 0.99%

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10 Main Exported Items (Iran to Oman), 2015

No. Export Export value Percent

1. Asphalt $ 95.8 M 34% 2. Refined Petroleum $ 57 M 20% 3. Refined Copper $ 20.4 M 7.2% 4. Hot-Rolled Iron $ 16.8 M 6.0% 5. Sheep and Goats $ 16.8M 5.9% 6. Excavation Machinery $ 9.67M 3.4% 7. Barley $ 5.64 M 2.0% 8. Wheat $ 4.11 M 1.5% 9. Malt Extract $ 3.68 M 1.3% 10 Melon $ 2.05 M 0.73%

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10 Main Imported Items (Oman to Iran), 2015

No. Import Import value Percent

1. Rolled Tobacco $ 161 M 71% 2. Video Displays $ 19.3 M 8.5% 3. Tug Boats $ 10.4 M 4.6% 4. Broadcasting Equipment $ 6.29 M 2.8% 5. Garments of Impregnated Fabric $ 3.84 M 1.7% 6. Concentrated Milk $ 3.78M 1.7% 7. Leather footwear $ 2.91M 1.3% 8. Air conditioners $1.5M 0.65% 9. Alkylbenzenes and Alkylnaphtales $ 541 K 0.24% 10. Flavored Water $ 250K 0.11%

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10 Main Export Destinations of Oman, 2016

No. Country Export value Percent

1 China $10.7B 51% 2 United Arab Emirates $1.84B 8.7% 3 India $924M 4.4% 4 United States $ 812M 3.9% 5 Iraq $759M 3.6% 6 Saudi Arabia $710M 3.4% 7 Japan $608M 2.9% 8 South Korea $560M 2.7% 9 Yemen $518M 2.5% 10 Pakistan $331M 1.6%

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10 Main Importing Countries to Oman, 2016

No. Country Import value Percent

1 United Arab Emirates $10.5B 51% 2 China $1.13B 5.5% 3 India $1.12B 5.4% 4 Saudi Arabia $813M 3.9% 5 Iran $642M 3.1% 6 Japan $506M 2.5% 7 Singapore $356M 1.7% 8 Belgium $340M 1.7% 9 Germany $293M 1.4% 10 Yemen $297M 1.4%

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Some of the Main Export Items (China to Kazakhstan), 2016

No. Export Export value Percent

1. Rubber Footwear $1.03B 12% 2. House Linens $354M 4.3% 3. Trunks and Cases $298M 3.6% 4. Vehicle Parts $262M 3.2% 5. Valves $153M 1.8%

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Some of the Main Import Items (Kazakhstan to China), 2016

No. Export Import value Percent

1. Radioactive Chemicals $1.13B 24% 2. Refined Copper $1B 21% 3. Crude Petroleum $833M 17% 4. Ferroalloys $704M 15% 5. Copper Ore $381M 7.9% 6. Raw Zinc $198M 4.1% 7. Petroleum Gas $125M 2.6% 8. Wheat $53.8M 1.1%

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10 Main Export Items (Iran to Iraq), 2014

No. Export Export value Percent

1. Cement $177M 31% 2. Tomatoes $59.9M 11% 3. Melons $48.7M 8.6% 4. Building Stone $34.9M 6.2% 5. Fermented Milk Products $26.4M 4.7% 6. Cars $25.4M 4.5% 7. Poultry Meat $16.1M 2.8% 8. Non-Fillet Frozen Fish $11.8M 2.1% 9. Other Vegetables $10.3M 1.8% 10. Glazed Ceramics $8.98M 1.6%

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Some of the Main Import Items (Iraq to Iran), 2015

No. Export Import value Percent

1. Sheep Hides $89.1k 56% 2. Locust Beans, Seaweed, Sugar $36.3k 23%

Beet, Cane, for Food 3. Scrap Plastic $35k 22%

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Some of the Main Export Items (Iraq to Syria), 2015

No. Export Export value Percent

1. Sheep Hides $5.98M 87% 2. Tropical Fruits $586k 8.6% 3. Animal Organs $192k 2.8% 4. Prepared Wool or Animal Hair $30k 0.44% 5. Fruit Juice $22k 0.32%

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10 Main Import Items (Syria to Iraq), 2014

No. Export Import value Percent

1. Soybean Meal $9.96M 14% 2. Other Fruits $7.4M 11% 3. Citrus $5.18M 7.5% 4. Cleaning Products $4.93M 7.1% 5. Sowing Seeds $3.89M 5.6% 6. Other Iron Bars $2.91M 4.2% 7. Onions $2.83M 4.1% 8. Eggs $2.83M 4.1% 9. Plastic Building Materials $2.39M 3.4% 10. Ice Cream $2.21M 3.2%

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Some of the Main Export Destinations of Iraq, 2016

No. Country Export value Percent

1. Singapore $79.3M 88% 2. United Arab Emirates $5.24M 5.8% 3. Lebanon $1.41M 1.6%

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Some of the Main Importing Countries to Iraq, 2015

No. Country Import value Percent

1. Turkey $8.55B 27% 2. China $7.92B 25% 3. United States $1.55B 4.9% 4. South Korea $1.43B 4.5% 5. India $1.14B 3.6% 6. Germany $1.01B 3.2% 7. Italy $1.01B 3.2% 8. Jordan $750M 2.4% 9. Japan $500M 1.6%

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10 Main Export Destinations of Syria, 2015

No. Country Export value Percent

1. Egypt $154M 25% 2. Jordan $100M 16% 3. Saudi Arabia $82.5M 13% 4. India $33.5M 5.5% 5. Turkey $25.4M 4.1% 6. Italy $23.7M 3.9% 7. Algeria $17.4M 2.8% 8. Kuwait $14.4M 2.3% 9. Belarus $14.3M 2.3% 10 Germany $13.7M 2.2%

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10 Main Importing Countries to Syria, 2015

No. Country Import value Percent

1. Turkey $1.38B 30% 2. China $1.02B 22% 3. Egypt $238M 5.1% 4. South Korea $209M 4.5% 5. Russia $187M 4.0% 6. Italy $154M 3.3% 7. Argentina $144M 3.1% 8. India $138M 3.0% 9. Jordan $138M 2.9% 10. Ukraine $133M 2.8%

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2.14 South –West International Transport Corridor

2.14.1 General information This corridor starts from India & Persian Gulf, passes through Iran, Azerbaijan, Georgia, Ukraine and ends in Poland

Chornomorsk South- West International Transport Corridor

Map 2.27 South-West International Transport Corridor 2.14.2 Objectives The objectives of the corridor are to create a united tariff system to better control the cargo transit, to optimize the cargo transportation, and to increase the transit capacity. 2.14.3 Introduction In September 2017, the president and high - ranking officials of the Iranian railways signed an MoU between Iran, Azerbaijan, Georgia, Ukraine and Poland. This event is one of the main developments in the international arena. The parties discussed on the creation of the meeting of South –West International Transport Corridor and agreed with the general framework of the cooperation, as well as the general principles of the corridor.

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Map 2.28 South-West Corridor

2.14.4 Poland as the European Transit hub Transport & logistics is a $56.9 billion industry in Poland in 2015. Not only does this make it the biggest market in Central and Eastern Europe, Poland‘s transportation sector is the seventh largest in the EU. Data from 2015, the most up-to-date statistics available at the time of writing, showed Polish and international companies working in the country carried 1.8 billion tons of cargo across multiple transport modes that year. Rail freight tends to offer cheaper rates than trucking in Poland. Despite this, road cargoes still massively outweigh railway freight volumes as seen above. Total tonnage came to 224.3 million in 2015, which was actually a drop compared with 2014‘s volumes of 227.8 million. However, Polish rail freight could enjoy a major renaissance in the near future. Domestic firms PKP Cargo and CTL Logistics are looking to expand their international operations, for example.

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Map 2.29 Map of Poland situation

Moreover, the EU‘s Fourth Railway Package proposes all EU member states must open their railways to their fellow Union members – meaning lots more cargo could be travelling on Polish tracks very soon. Poland‘s two major ports are Szczecin and Gdansk, both located on the Baltic coast. Cargo volumes at these two facilities rose in 2016, however, so the maritime trade could very well gain more importance in the coming years. Gdansk posted record container volumes in 2016, hitting 37.3 million tons. Similarly, Szczecin‘s cargo traffic rose 4.1%, reaching a total of 24 million tons. 2.14.5 South –West International Transport Corridor, an alternative to the North - South corridor This route from Mumbai to Astara in Azerbaijan is Similar to the North - South route. It also leads to the Georgian and Ukrainian countries and finally ends in Poland. However, Iran will not have the Russian route problems in the north - south corridor. The South- West International Transport Corridor is a suitable route to replace the North - South corridor; Regardless of evidence, South-West International Transport Corridor (Persian Gulf-Black Sea Corridor) is a safe path and has acceptable political stability.

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2.14.6 Kaliningrad, Russian Business Opportunities Kaliningrad in Russia is a separate part of this country that neighbors Poland and Lithuania, and is also connected to the Baltic Sea.

Map 2.30 Kaliningrad situation

In 1996, the Russian government set up a special trade zone of Yantar in Kaliningrad to allow imported goods from Europe without taxes and customs duties and through the Lithuanian port of St. Petersburg and the Lithuanian railway route. The economic growth of the region was partly announced in 2007, about 10 percent in the year 2007. Also one of the positive characteristics of the Kaliningrad, is having the standard gages with 1435 mm, that makes the goods to be transported easily through Poland to Kaliningrad without changing bogies. Iran has no joint trade zone with Russia as a strategic partner and according to the transit of export cargoes from Iran to Poland, Iran could benefit from the advantages this opportunity and by using Malaszovich freight terminal, that is located near to the Belarus border, a new trade route with Russia will be accessed through the free trade zone in Kaliningrad. 2.14.7 Access to Scandinavia and Britain from north of Poland Another potential benefit in transit with Poland is the ability to exchange goods with Scandinavian countries through the commercial ports in the north of Poland, Szczecin and Gdansk. Due to the appropriate economic situation of the Scandinavian countries such as 209

Sweden, Norway and Finland, as well as major dependence of Iran on the heavy industries of these countries, Iran will persuade its development by trade with the mentioned countries. UK is one of the ancient countries that involved in international trade with Iran. Due to the new business opportunity that is gained post JCPOA, Iran can count on this UK markets. 2.14.8 Access to the Mediterranean Sea and South Europe One of the priorities of transit for every countries is the access to the Mediterranean Sea and southern Europe. Because the access to open water is always one of the important advantages of countries in foreign policy principles and from the determinants of their economic relations. The other benefit is access to the North African markets, which will open a special account even in Russia and America. 2.14.9 Current status On 1st November 2017, heads of Georgian, Iranian and Azerbaijani railways agreed to create a working group to coordinate joint work. The new corridor envisages transportation from the Persian Gulf and India to Europe. Participants of the meeting also decided to organize the movement of container trains on the Poti/Batumi – Astara, and in the future on the route Gazvin – Tehran/Bandar-Abbas. It was also decided to launch negotiations with sea freight carriers in order to optimize the prices for cargo transportation on the sea section of the route. 2.14.10 The advantages of using Poti port to access Mediterranean Sea The black sea waters security, because it has followed the international water laws and therefore the transit cargo shipped directly to the destination country Non-stop in other countries. As a result, it will greatly reduce the taxes paid to the existing countries. One of other positive points of the corridor is using the international transit route of Poland as the European Transit hub, that has logistic position.

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2.14.10 A Glance to the export and import of the en-route countries of South –West International Transport Corridor:

10 Main Export Items (Iran to Azerbaijan), 2016

No. Export Export value Percent

1. Cement $ 6.45 M 7.5% 2. Brown Glass $ 5.74 M 6.7% 3. Ethylene Polymers $ 5.47 M 6.4% 4. Propylene Polymers $ 5.31M 6.2% 5. Facial Tissue $ 5.14 M 6.0% 6. Potatoes $ 3.52 M 4.1% 7. Cucumbers $ 3.2 M 3.7% 8. Nitrogenous Fertilizers $ 2.47 M 2.9% 9. Phosphate Fertilizers $ 2.27 M 2.6% 10. Carbonates $ 1.56 M 1.8%

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10 Main Import Items (Iran from Azerbaijan), 2016

No. Import Import value Percent

1 Petroleum $ 114 M 82% 2 Semi-Finished Iron $ 15.6 M 11% 3 Tea $ 2.18 M 1.6% 4 Other vegetable Residues $ 1.51 M 1.1% 5 Holgent $ 982 K 0.71 % 6 Other Pure vegetable oil $ 873 K 0.63% 7 Acyclic Alcohols $ 834 K 0.60% 8 Silk Fabrics $ 490 K 0.35%

9 Propylene Polymers $ 96 K 0.21% 10 Other Pure Vegetable $191 K 0.14%

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Some of the Main Export Destinations of Iran, 2015

No. Country Export value Percent

1 China $14.5B 45%

2 India $5.66B 18% 3 Japan $2.89B 9.1% 4 South Korea $2.11B 6.6% 5 Turkey $1.3B 4.1% 6 Afghanistan $1.03B 3.2% 7 Italy $482M 1.5% 8 Hong Kong $376M 1.2%

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10 Main Importing Countries to Iran, 2015

No. Country Import value Percent

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10 Main Export Items (Azerbaijan to Georgia), 2016

No. Export Export value Percent

1. Refined Petroleum $140M 42% 2. Petroleum Gas $91.1M 27% 3. Margarine $16.3M 4.9% 4. Gypsum $11.5M 3.5% 5. Electrical Control Boards $7.33M 2.2% 6. Copper Ore $6.62M 2.0% 7. Cement $4.2M 1.3% 8. Gas Turbines $2.41M 0.73% 9. Tea $2.35M 0.71% 10. Raw Iron Bars $516k 0.16%

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10 Main Import Items (Azerbaijan from Georgia), 2016

No. Import Import value Percent

1 Cars $63.6M 25% 2 Packaged Medicaments $23.3M 9.4% 3 Raw Iron Bars $20.7M 8.3% 4 Bovine $15.9M 6.4% 5 Electric Locomotives $14.6M 5.9% 6 Flavored Water $8.38M 3.4% 7 Rubber Tires $7.3M 2.9% 8 Hard Liquor $4.49M 1.8% 9 Delivery Trucks $4.46M 1.8%

10 Ferroalloys $4.05M 1.6

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Some of the Main Export Destinations of Azerbaijan, 2015

No. Country Export value Percent

1. Italy $4.22B 25% 2. Germany $1.68B 10%

3. France $1.13B 6.7%

4. France $1.13B 6.7% 5. Indonesia $1.07B 6.3%

6. Czech Republic $929M 5.5%

7. Spain $694M 4.1% 8. Norway $674M 4.0% 9. India $609M 3.6%

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10 Main Importing Countries to Azerbaijan, 2015

No. Country Import value Percent

1. Russia $1.69B 15% 2. Turkey $1.69B 15% 3. United Kingdom $875M 7.9% 4. Germany $838M 7.6% 5. Italy $730M 6.6% 6. China $532M 4.8% 7. Japan $526M 4.7% 8. United States $405M 3.6% 9. Ukraine $338M 3.0% 10. Georgia $249M 2.2%

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10 Main Export Items (Ukraine to Poland), 2015

No. Export Export value Percent

1. Insulated Wire $244M 12% 2. Iron Ore $216M 11% 3. Hot-Rolled Iron $184M 9.3% 4. Other Vegetable Residues $82.9M 4.2% 5. Fruit Juice $71.1M 3.6% 6. Seats $57.3M 2.9% 7. Other Vegetable Products $55.6M 2.8% 8. Particle Board $52.7M 2.7% 9. Semi-Finished Iron $46.6M 2.4% 10. Ferroalloys $40.5M 2.1%

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10 Main Export Items (Georgia to Ukraine), 2016

No. Export Export value Percent

1. Hard Liquor $17.4M 24% 2. Water $13.9M 19% 3. Wine $12.4M 17% 4. Cars $7.51M 10% 5. Electric Locomotives $3.79M 5.2% 6. Citrus $3.22M 4.4% 7. Other Nuts $1.72M 2.4% 8. Other Fruits $1.08M 1.5% 9. Spices $1.13M 1.5% 10. Other Vegetables $1.1M 1.5%

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10 Main Import Items (Georgia from Ukraine), 2016

No. Import Import value Percent

1. Rolled Tobacco $61M 15% 2. Raw Sugar $23.1M 5.5% 3. Soybean Meal $13.7M 3.3% 4. Chocolate $11.7M 2.8% 5. Coke $11.6M 2.8% 6. Packaged Medicaments $9.81M 2.4% 7. Packaged Medicaments $9.81M 2.4% 8. Poultry Meat $9.54M 2.3% 9. Seed Oils $9.1M 2.2% 10. Baked Goods $8.19M 2%

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10 Main Export Destinations of Georgia, 2016

No. Country Export value Percent

1. Russia $206M 9.8% 2. Turkey $174M 8.2% 3. China $170M 8.0% 4. Bulgaria $167M 7.9% 5. Azerbaijan $153M 7.3% 6. Armenia $151M 7.1% 7. Germany $85.3M 4.0% 8. Switzerland $81.8M 3.9% 9. Ukraine $73.3M 3.5% 10. Uzbekistan $71.3M 3.4%

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10 Main Importing Countries to Georgia, 2016

No. Country Import value Percent

1. Turkey $1.35B 19% 2. Russia $675M 9.3% 3. China $547M 7.6% 4. Azerbaijan $495M 6.9% 5. Ukraine $417M 5.8% 6. Germany $419M 5.8% 7. Italy $263M 3.6% 8. Netherlands $217M 3.0% 9. United States $214M 3.0% 10. Romania $190M 2.6%

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10 Main Import Items (Ukraine from Poland), 2015

No. Import Import value Percent

1. Refined Petroleum $295M 11%

2. Coke $138M 5.0% 3. Insulated Wire $133M 4.8% 4. Planes, Helicopters,and/or Spacecraft $104M 3.8% 5. Toilet Paper $60.3M 2.2%

6. Tanned Equine and Bovine Hides $43.5M 1.6%

7. Cars $35.4M 1.3% 8. Packaged Medicaments $36.4M 1.3% 9. Cleaning Products $31.1M 1.1%

10. Beauty Products $29.7M 1.1%

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10 Main Export Destinations of Ukraine, 2015

No. Country Export value Percent

1. Russia $4.99B 12% 2. Egypt $3.34B 8.0% 3. Turkey $2.89B 6.9% 4. China $2.48B 5.9% 5. Poland $1.97B 4.7% 6. India $1.54B 3.7% 7. Germany $1.48B 3.6% 8. Netherlands $914M 2.2% 9. Belarus $888M 2.1% 10. Saudi Arabia $802M 1.9%

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10 Main Importing Countries to Ukraine, 2015

No. Country Import value Percent

1. Russia $8.1B 21% 2. Germany $4.07B 10% 3. China $3.77B 9.5% 4. Poland $2.77B 7.0% 5. Belarus $2.53B 6.4% 6. Hungary $1.52B 3.8% 7. United States $1.33B 3.4% 8. Kazakhstan $1.18B 3.0% 9. Italy $1.01B 2.6% 10. France $820M 2.1%

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3 Corridors defined by International Organizations

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Corridors defined by International Organizations

3.1 ECO 3.1.1 ECO Railway Network Development Plan The development of a reliable and efficient railway transport network in the ECO region is of high priority, and, hence, ECO has promoted intra-regional transport connections through the promotion of cost effective rail transport corridors. The ―ECO Railway Network Development Plan” constitutes part of the ―ECO Priority Road and Rail Routes and Infrastructure Projects‖ Study. 3.1.2 ECO Rail Routes In total, five priority Rail Routes were identified in the region. The ECO Rail Route 1 illustrates the initiative-success story by the ECO secretariat regarding the development of a block train service along this route. It starts at the eastern borders of Turkey with Bulgaria and Greece, crosses Turkey through Istanbul, Ankara, as well as through the Lake Van by rail-ferry. It continues through the border crossing of Kapikoy onto Iran, crossing the Iranian territory through Aprin (near Tehran) and ending up at the border crossing with Pakistan (Mirjaveh). Finally, it follows a north-eastern direction through the Pakistani territory ending up in Islamabad. The route has six extensions connecting the route with Iraq through Hamedan and Arak in Iran, and to India through Khokhropar, Armuka, and Wagah in Pakistan. A missing link is considered as an additional extension to the route, that is, the Rawalpindi-Havelian towards the border with China onto Khanjurab. The route has the following nine branches:  Three in Turkey, connecting the route with Samsun, Mersin, and Izmir ports.  Two in Iran, connecting the route with Bandar Abbas and Chabahar ports.  Four in Pakistan, connecting the route with the cities of Jalal Abad and Kandahar in Afghanistan, as well as the two Pakistani ports Gwadar (missing link) and Karachi. The route serves the connection of the ECO Member States Turkey, Iran, and Pakistan with extensions towards India, Iraq and China. It is also connected to key maritime ports in the ECO region, in Turkey, Iran and Pakistan. The ECO Rail Route 2A illustrates the first initiative of the ECO Secretariat in the development of block train services and was initiated in 2002. The ECO rail route 2A is similar to Rail Route 1 up to the city of Aprin (near Tehran, Iran), following then a north eastern direction through Turkmenistan (Mary), Uzbekistan (Navoi, Tashkent) and ending up at the borders of Kazakhstan with China, after having passed the city of Almaty. The route has the following eight branches:  Three in Turkey, connecting the route with Samsun, Mersin, and Izmir ports.  Three in Iran, the two connecting the route with the Bandar Abbas and Chabahar ports, and one connecting it to Herat of Afghanistan.  One connecting Turkmenabad in Turkmenistan with Mazar-e-Sharif in Afghanistan.

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 One connecting Samarkand in Uzbekistan with Mazar Sharif in Afghanistan. The route serves the connection of the ECO Member States Turkey, Iran, Turkmenistan, Uzbekistan and Kazakhstan. It is also connected to maritime ports in the ECO region, in Turkey and Iran. The ECO Rail Route 2B is similar to Rail Route 2A up to the city of Neyshabur in Iran, continuing on an eastern direction onto Afghanistan through Herat. Then it follows on the missing link Heart-Mazar e Sharif- Nijniy Pyanj (border with Tajikistan), followed by the missing link Nijniy Pyanj -Kurgan Tube in Tajikistan. Finally, the route ends with the missing link Karamyk-Irkhestam through Kyrgyzstan towards China. The route has the following five branches:  Three in Turkey, connecting the route with Samsun, Mersin, and Izmir ports.  Two in Iran, connecting the route with the Bandar Abbas and Chabahar ports. The route serves the connection of the ECO Member States Turkey, Iran, Afghanistan, Tajikistan and Kyrgyzstan. It is also connected with maritime ports in the ECO region, in Turkey and Iran. The ECO Rail Route 3 constitutes the ―left side route‖ of the Caspian Sea. It follows a southern direction, originating at the border crossing of Afghanistan with the Russian Federation, crossing on a southern direction the two ECO Member States, Azerbaijan and Iran, ending up at the Bandar Abbas port in Iran. In this particular route, a key link is under construction, this of Astara, which involves a bridge connecting the railway of the two countries. The route has the following five branches:  Three maritime links within the Caspian Sea, connecting Qazvin with Baku in Azerbaijan (missing link), Turkmenbashi in Turkmenistan, and Aktau in Kazakhstan(missing link).  Two within the territory of Iran, connecting the route with the ports of Bandar-e- Emam Khomeini and Chabahar ports. The route serves the connection of the ECO Member States Afghanistan, Azerbaijan and Iran. It is also connected with key maritime ports in the ECO region, in Turkey and Iran. The ECO Rail Route 4 constitutes the ―right side route‖ of the Caspian Sea. It starts in Kazakhstan at the border crossing with the Russian Federation (Zhaisan), continuing on a south-western direction to Aktau, continuing then south onto Turkmenistan (Bereket), to the border with Iran, crossing the Iranian territory through Neyshabur and ending up in Bandar Abbas port. There is a major link under construction at the borders of Turkmenistan with Kazakhstan. This route constitutes the main alternative to the North-South corridor that currently connects the Russian Federation with the port of Bandar Abbas in Iran. The route has one branch, connecting it with the Chabahar port in Iran. The route serves the connection of the ECO Member Kazakhstan, Turkmenistan and Iran. The ECO Rail Route 5 originates in the borders with the Russian Federation (Mamlyutka or Bulaevo), crossing Kazakhstan on a southern direction through Shymkent, crossing onto Uzbekistan through Tashkent and Bukhara to the border with Turkmenistan. It then continues on a south-western direction through Turkmenistan, crossing over to Iran and ending up at the Bandar Abbas port.

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The route has two proposed extensions, one connecting the route with the Russian Federation through Zhaisan in Kazakhstan, and another one connecting the route with China through Turugart in Kyrgyzstan. The route has also the following two branches:  One in Iran, connecting the route with Chabahar port.  One connecting Lugovaya in Kazakhstan with Astara. The route serves the connection of the ECO Member Kazakhstan, Uzbekistan, Turkmenistan and Iran, with extensions towards China and the Russian Federation. It is also connected with key maritime ports in Iran.

Table 3.1 ECO Rail Route 1

ROUTE Number From-To

Turkey

(Bulgaria border)-Kapikule/(Greece border)-Uzunkopru-Istanbul (European side)-Ferry link (tunnel under construction)-Istanbul (Asian side)-Izmit-Bilecik-Eskisehir-Ankara-Kayseri-Bostankaya-Malatya- Elazig-Mus-Tatvan-Ferry Lake Van (new alignment planned)-Van- Kapikoy-(border with Iran)

Iran

(border with Turkey)-Razi-Sufiyan- Tabriz-(Maraqeh)-Miyaneh (under construction)-Zanjan-Qazvin – Aprin (near Tehran)-Mohammadiyeh-

Kashan-Yazd-Bafq-Kerman-Bam-Zahedan-(gauge change to 1676 mm)-Mirjaveh-(border with Pakistan) ROUTE 1 Pakistan

(border with Iran)-Taftan – Nok Kundi-Dalbandin-Ahmad Wal-Spezand- Kolpur-Abi Gum-Sibi-Jacob Abad-Rohri-Samasatta-Multan-Khanewal- Faisal Abad-Wazirabad-Lalamusa-Rawalpindi-Islamabad

ECO-RAIL 1-E-B Tehran-Arak-Ahvaz-Khorram Shahr-(under construction:border with Iraq)-(existing line) towards Basrah (IRAN)

ECO-RAIL 1-E-C Rohri-Padidan-Hyderabad-Pithoro-Khokhropar-(border with India) towards Munabao (PAKISTAN)

(gauge 1676)

230

ECO-RAIL 1-E-D Samasatta-Armuka-(border with India) towards Bhathinda

(PAKISTAN)

(gauge 1676)

ECO-RAIL 1-E-E Wazirabad-Lahore-Wagah-(border with India) towards Amritsar

(PAKISTAN)

(gauge 1676)

ECO RAIL 1-E-F Rawalpindi-Havelian-new line until border with China towards Khanjurab (PAKISTAN)

(gauge 1676)

231

ROUTE Number From-To

Extensions

ECO-RAIL 1-E-A [Tehran-Hamedan-Malayer under construction]-Khosravi-(planned new line until border with Iraq)-(existing line) towards Khanaqin (IRAN)

Branches

ECO-RAIL 1-B-A Bostankaya-Sivas-Amamsya-Samsun

(TURKEY)

ECO-RAIL 1-B-B Malatya-Adana-Mersin

(TURKEY)

ECO-RAIL 1-B-C Eskisehir-Alayunt-Balikesir-Manisa-Izmir

(TURKEY)

ECO-RAIL 1-B-D Bafq-Sirjan-Bandar Abbas

(IRAN)

ECO RAIL 1-B-E Zahedan-Chabahar

(IRAN) (under construction)

ECO RAIL 1-B-F Rawalpindi-Peshawar-Landi Kotal-(border with Afghanistan)-new line until Jalal Abad (PAKISTAN)

(gauge 1676)

ECO RAIL 1-B-G Rohri-Padidan-Hyderabad-Drigh Colony-Karachi

(PAKISTAN)

(gauge 1676)

ECO RAIL 1-B-H Spezand-Chaman-(under construction until border with Afghanistan- Spin Boldak)-new line to Kandahar (PAKISTAN)

(gauge 1676)

ECO RAIL 1-B-I New line Mastung-Gwadar

(PAKISTAN)

(gauge 1676)

232

Table 3.2 ECO Rail Route 2A

ROUTE Number From-To

Turkey

Iran

(border with Turkey)-Razi-Sufiyan- Tabriz-(Maraqeh)-Miyaneh (under construction)-Zanjan-Qazvin-Aprin (near Tehran)-Semnan-Neyshabur- Sarakhs-(border with Turkmenistan)

Turkmenistan

(border with Iran)-(gauge change to 1520mm)-Serakhs-Yoloten-Mary- Turkmenabad-Farab- (border with Uzbekistan)

Uzbekistan

ROUTE 2A (border with Turkmenistan)-Khojadavlet-(Bukhara)-Navoi-Samarkand- Jizzakh-Khavast-Tashkent-(border with Kazakhstan)

Kazakhstan

(border with Uzbekistan)-Saryagash-Arys-Shymkent-Lugovaya-Birlik- Almaty-Aktogai-Dostyk-(border with China) towards Alashankou/Urumchi

Branches

ECO-RAIL 2A-B-A Bostankaya-Sivas-Amasya-Samsun

(TURKEY)

ECO-RAIL 2A-B-B Malatya-Adana-Mersin

(TURKEY)

ECO-RAIL 2A-B-C Eskisehir-Alayunt-Balikesir-Manisa-Izmir

(TURKEY)

233

ROUTE Number From-To

ECO-RAIL 2A-B-D Neyshabur-Bafq-Sirjan-Bandar Abbas

(IRAN)

ECO RAIL 2A-B-E Neyshabur-Bafq-Kerman-Zahedan-under construction-Chabahar

(IRAN)

ECO-RAIL 2A-B-F Neyshabur-Torbat e Heydariyeh- Ma’dan e Sagan- (under construction)-(border with Afghanistan)- Herat (Afghanistan) (IRAN, AFGHANISTAN)

ECO-RAIL 2A-B-G Turkmenabad-Kelif-(border with Uzbekistan)-PN161-Termez-(border with Afganistan)-Khairaton-(under construction)-Mazar e Sharif (TURKMENISTAN,

UZBEKISTAN,

AFGHANISTAN)

(gauge 1520)

ECO RAIL 2A-B-H Samarkand-Karshi-Guzar-(under construction)-Kumkurgan-Saryasiya- (border with Tajikistan)-Pahtaabad-Dushanbe-Vahdat-(under (UZBEKISTAN, construction)-Yavan-[new railway line: Kulyab-Kurgan Tube-Kalkhaz Abad]-[under construction: (border with Afghanistan)-Shirkhan Bandar- TAJIKISTAN, Kunduz-Mazar e Sharif AFGHANISTAN)

(gauge 1520)

ECO RAIL 2A-B-I Bukhara-Karshi-(under construction)-Kumkurgan-Dushanbe-Vahdat- Karamyk-(border with Kyrgyzstan) (new line) (UZBEKISTAN,

TAJIKISTAN)

Table 3.3 ECO Rail Route 2B

ROUTE Number From-To

Turkey

(Bulgaria border)-Kapikule/(Greece border)-Uzunkopru-Istanbul (European side)-Ferry link (tunnel under construction)-Istanbul (Asian side)-Izmit-Bilecik-Eskisehir-Ankara-Kayseri-Bostankaya- Malatya-Elazig-Mus-Tatvan-Ferry Lake Van (new alignment

234

ROUTE Number From-To

planned)-Van-Kapikoy-(border with Iran)

Iran

(border with Turkey)-Razi-Sufiyan- Tabriz-(Maraqeh)-Miyaneh (under construction)-Zanjan-Qazvin-Aprin (near Tehran)-Semnan- Neyshabur-Sarakhs-(border with Turkmenistan)-Ma’dan e Sangan- (under construction until border with Afghanistan)

Afghanistan

(border with Iran)-under construction until Herat-[new line: Kusk- Kalainau-Meymaneh-Andkhoi-Sheberghan-Mazar e Sharif]-[under construction: Baghlan-Kunduz-Shirkhan Bandar- (border with Tajikistan)] ROUTE 2B

Tajikistan (Standard gauge track) [under construction: (border with Afghanistan)-Nijniy Pyanj-Dusti- Kalkhaz Abad]-Kurgan Tube-Kulyab-(new line)-Yavan-(under construction)-Vahdat-(new line)-Karamyk-(border with Kyrgyzstan)

Kyrgyzstan

New line: (border with Tajikistan)-Sary Tash-Irkeshtam-(border with China) towards Kashgar (Kashi)

Branches

ECO-RAIL 2B-B-A Bostankaya-Sivas-Amasya-Samsun

(TURKEY)

ECO-RAIL 2B-B-B Malatya-Adana-Mersin

(TURKEY)

ECO-RAIL 2B-B-C Eskisehir-Alayunt-Balikesir-Manisa-Izmir

(TURKEY)

ECO-RAIL 2B-B-D Neyshabur-Bafq-Sirjan-Bandar Abbas

(IRAN)

ECO RAIL 2B-B-E Neyshabur-Bafq-Kerman-Zahedan-(under construction) Chabahar

(IRAN)

235

Table 3.4 ECO Rail Route 3

ROUTE Number From-To

Azerbaijan

[railway gauge 1520mm] (border with Russia)-[standard gauge]- Yalama-Sumqayit-Baku-Astara-(border with Iran) ROUTE 3 Iran

(border with Azerbaijan)-Astara-(under construction)-Qazvin-Karaj- Tehran-Qom-Yazd-Bafq-Sirjan-Bandar Abbas

Branches

ECO-RAIL 3-B-A [under construction: Qazvin-Rasht-Bandar Anzali]-ferry link to Baku (Azerbaijan) (CASPIAN SEA,

AZERBAIJAN, IRAN)

ECO-RAIL 3-B-B [under construction: Qazvin-Rasht-Bandar Anzali]-missing ferry link to Aktau (Kazakhstan) (CASPIAN SEA,

KAZAKHSTAN,

IRAN)

ECO-RAIL 3-B-C [under construction: Qazvin-Rasht-Bandar Anzali]-ferry link to Turkmenbashi (Turkmenistan) (CASPIAN SEA,

TURKMENISTAN,

IRAN)

ECO-RAIL 3-B-D Qom-Arak-Ahvaz-Bandar Emam Khomeini

(IRAN)

ECO-RAIL 3-B-E Bafq-Kerman-Zahedan-(under construction) Chabahar

(IRAN)

236

Table 3.5 ECO Rail Route 4

ROUTE Number From-To

Kazakhstan

(border with Russia)-Zhaisan-Aktobe-Kandagach-(under construction)- Makat-Beineu-Aktau-Uzen (under construction)-(border with Turkmenistan)

Turkmenistan

ROUTE 4 Under construction: (border with Kazakhstan)-Bereket-Godurolum- (border with Iran)

Iran

(under construction)-(border with Turkmenistan)- [railway gauge 1536mm]-new line to Inchehbrun-Gorgan-new line Shahrud- Neyshabur-Torbat e Heydariyeh-Bafq-Sirjan-Bandar Abbas

Branches

ECO-RAIL 4-B-A Bafq-Kerman-Zahedan-(under construction) Chabahar

(IRAN)

Table 3.6 ECO Rail Route 5

ROUTE Number From-To

Kazakhstan

[railway gauge 1520mm] (border with Russia)-Mamlyutka or Bulaevo- Petropavlosk-Kokshetau-Astana-Karaganda- Birlik-Lugovaya-Taraz-Arys- Saryagash-(border with Uzbekistan)

Uzbekistan

(border with Kazakhstan)-Tashkent-Gulistan-Jizzakh-Samarkand-Navoi- Kagan-(Bukhara)-Khojadavlet- (border with Turkmenistan) ROUTE 5 Turkmenistan

(border with Uzbekistan)-Farab-Turkmenabad-Mary-Yoloten-Serakhs- (border with Iran)

237

ROUTE Number From-To

Iran

[gauge change to 1435mm] (border with Turkmenistan)-Sarakhs-Fariman- Torbat e Heydariyeh-Bafq-Sirjan-Bandar Abbas

Extensions

ECO RAIL 5-E-A Arys-Kyzylorda-Aktobe-Zhaisan-(border with Russia)

(KAZAKHSTAN)

(gauge 1520)

ECO-RAIL 5-E-B Tashkent-Angren-(under construction)-Namangan-Andizhan-Khanabad- (border with Kyrgyzstan)-Jalal Abad-Kok Yangankg-[new line: Turugart- (UZBEKISTAN, (border with China) towards Kashgar(Kashi)]

KYRGYZSTAN)

(gauge 1520)

Branches

ECO-RAIL 5-B-A Bafq-Kerman-Zahedan-(under construction) Chabahar

(IRAN)

ECO RAIL 5-B-B Lugovaya-Merke- (border with Kyrgyzstan)-Kara Balta-Bishkek-Rybachiye- [new railway line Kochkorka-Kora Keche-Arpa] (KAZAKHSTAN,

KYRGYZSTAN)

3.1.3 The Euro-Asian Transport Links (EATL) project EATL Project The Euro-Asian Transport Links (EATL) project started with Phase I (2002-07) as a joint undertaking between the United Nations Economic Commission for Europe (UNECE) and the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP). In close cooperation with designated national focal points in the Euro-Asian region, the EATL project has identified main Euro-Asian road and rail routes for priority development and cooperation. UNECE coordinated Phase II of the EATL project (2008-13). The Expert Group identified nine rail and nine road corridors that link the two continents. There are 311 proposed projects by the participating countries of total cost of $215 billion. Administrative impediments to transport and trade were also identified. UNECE also created and made freely available these corridors in the Geographical Information System (GIS) application. The Second EATL Ministerial Meeting (26 February 2013) endorsed the Phase II final report and supported to the next phase of the project in its Joint Declaration. 238

Phase III of the EATL project (2013-17), coordinated by the UNECE, aims at making the EATL overland links operational. It is focused at both coordination and facilitation of financing of infrastructural projects, as well as facilitating and removing physical and administrative bottlenecks when crossing borders in overland transport between Europe and Asia.

3.2.1 OSJD Railway Transport Corridors In 2009 within the framework of the OSJD Commission on Transport Policy and Development Strategy the development of the subject ―Map of OSJD Railway Transport Corridors and their parameters‖ was completed. The experts and representatives of the following OSJD member countries took part in the development process: Azerbaijan, Belarus, Bulgaria, Hungary, Vietnam, Georgia, Iran, Kazakhstan, China, DPRK1, Kyrgyzstan, Latvia, Lithuania, Moldova, Mongolia, Poland, Romania, Russia, Slovakia, Tajikistan, Turkmenistan, Uzbekistan, Ukraine, Czech Republic, Estonia, as well as representatives of UNESCAP, SNCF and DB AG.

Used in elaborating the Map of OSJD Railway Transport Corridors were the materials of the European transport corridors, adopted in Helsinki, Crete and St. Petersburg, memoranda on OSJD corridors 3 and 5, materials on the TRACECA corridor, Trans-Asian Railway, developed by the UNESCAP.

While elaborating the corridor transport network the following specifications were taken into account: Railway Transport Corridor is a set of ground railway lines and rail-water crossings with modern equipment, designed to concentrate in them international transit traffic with minimum time for delivering cargos and passengers, high operational and economical performances. The corridors are subdivided into three categories:  latitudinal direction (East – West);  meridional direction (North – South);  those, occupying intermediate position between the corridors of latitudinal and meridional directions.

Basic requirements for corridors: . corridor is to pass through the main trunk railway, on which a large volume of international freight and passengers is or will be concentrated in the future, . the corridors are to meet the international technical specifications or to be modernized according to the requirements of the Agreement on the Main International Railway Lines (AGC), . corridor is to pass through several states, . corridor is to proceed along the shortest route between the points of cargo origin and destination.

13 OSJD Railway Transport Corridors have been adopted.

1 Democratic People‘s Republic of Korea 239

Map 3.1 OSJD Railway Transport Corridors

Corridor 1 Passes through the territory of Poland, Latvia, Lithuania, Estonia, Belarus, Russia, Kazakhstan, Uzbekistan, China, Mongolia and DPRK. Kunovice – Warsaw – Brest – Minsk – Moscow – Nizhni Novgorod – Kotelnich – Perm – Yekaterinburg – Omsk – Novosibirsk – Krasnoyarsk – Irkutsk – Zaudinski Zavod – Karymskaya – Volochaevka – Nakhodka/Vanino/Khasan.

Branches 1 а. Riga/Ventspils/Liepaja – Krustpils – Zilupe – Posin – Moscow 1 б. Saint Petersburg/Тара – Vologda – Kotelnich 1 в. Moscow – Ryazan – Syzran – Orenburg – Aktubinsk – Kandagach – Arys – Tashkent 1 г / Karymskaya – Harbin – Титеп – Namyan – Rajin 1 д / Harbin – Shenyang – Dalian 1 е. / Zaudinski Zavod – Ulan Bator – Erlian – Beijing – Tianjin 1 / Shenyang – Dandong – Xinzhu Shi – Kaesong 1 з/ Kaliningrad – Pagegiai – Radviliskis – Daugavpils – Rezekne 1 и. Khasan – Tumen – Wonsan – Geumgangsan 1 к Ventspils/Riga – Krustspils – Indra – Bigosovo – Vitebsk – Smolensk

Corridor 2 Passes through the territory of Russia, Kazakhstan, China and Vietnam. Moscow – Kazan – Yekaterinburg – Kurgan – Petropavlovsk – Astana – Dostyk – Alashanko – Urumqi – Zhengzhou – Xuzhou – Lianyungang.

Branches 2 а. Dema – Kartaly – Tobol – Astana 240

2 б. Zhengzhou – Hengyang – Kowloon 2 в. Xuzhou – Shanghai 2 г. Hengyang – Liuzhou – Nanning – Hanoi

Corridor 3 Passes through the territory of Poland, Ukraine and Russia. Zgorzelec – Wroclaw – Opole – Katowice – Krakow – Medyka – Mostiska – Lvov – Zhmerinka – Kiev – Zernovo – Suzemka – Moscow.

Corridor 4 Passes through the territory of Czechia, Slovakia, Hungary, Poland and Ukraine. Decin – Prague – Ceska Trebova – Prerov – Hranice na Morave – Zilina – Kosice – Chop Branches 4 а. Prerov – Breclav 4 б. Ceska Trebova – Brno – Breclav – Bratislava – Budapest 4 вHranice na Morave – Ostrava – Petrovice – Katowice 4 г. Cheb – Prague 4 д. Horni Dvoriste – Prague 4 е. Warsaw – Zwardon – Zilina 4 ж. / Puchov – Bratislava

Corridor 5 Passes through the territory of Hungary, Slovakia, Ukraine, Russia, Kazakhstan, Georgia, Azerbaijan, Moldova, China and Kyrgyzstan. Bajansenye/ Sopron/Hegyeshalom – Budapest – Zahony – Chop – Stryj – Lvov – Krasne – Zhmerinka – Fastov – Darnica – Grebjonka – Poltava – Kharkov – Topoli – Valujki – Penza – Kinel – Kurgan – Utjak – Presnogorkovskaya – Kokchetav – Aktogai – Dostyk – Alashanko – Urumqi – Lanzhou – Lianyungang.

Branches 5 а. Darnica – Konotop – Zernovo – Suzemka – Bryansk – Moscow r - Budapestلб. Murakeresztur/Gyékényes - Domb َ v 5 5 в. / Magyarboly – Dombovar 5 г. / Fastow – Znamenka – Dnepropetrovsk – Ilovaisk – Kvashino – Rostov – Samur – Yalama – Baku – Beyuk-Kyasik – Tbilisi – Poti/Batumi 5 Ungeny – Chisinau – Razdelnaya – Zhmerynka 5 е. Курган – Омск – далее по коридору № 1 / Kurgan – Omsk – further on along corridor No. 1 5 ж. Rtishchevo – Ozinki – Arys – Lugovaya/Bishkek –Rybachie/Almaty – Aktogai 5 з / Bratislava – Zilina – Kosice – Cierna nad Tissou – Chop

Corridor 6 Passes through the territory of Czechia, Slovakia, Hungary, Romania, Serbia, Bulgaria, Greece, Turkey, Iran and Turkmenistan-Decin – Prague – Bratislava – Budapest – Arad – Craiova – Calafat – Vidin – Sofia – Thessaloniki/Istanbul – Ankara – ferry across Lake Van – Tehran – Sarachs –Saparmurat Turkmenbashi – and further through corridors No. 10 and 2.

Branches 6 а. Arad – Bucharest – Constanta – further on along corridor No. 10 6 б. Budapest – Belgrade – Sofia 241

6 в. / Hegyeshalom/Sopron – Budapest 6 г. Sofia – Gorna Oryahovitsa – Varna 6 д. Tehran – Qom – Bandar Abbas 6 е. Qom – Bandar Khomeini 6 ж. Mashhad – Bafq

Corridor 7 Passes through the territory of Poland and Ukraine. Gdansk – Warsaw – Lublin – Dorokhusk – Yagodin – Zdolbunov – Kazatin – Zhmerinka – Razdelnaya – Odessa.

Corridor 8 Passes through the territory of Ukraine, Russia, Kazakhstan, Uzbekistan and Turkmenistan. Fastov – Znamenka – Nizhnedneprovsk Uzel – Krasnaya Moguila – Gukovo – Likhaya – Volgograd – Verhni Baskunchak – Aksaraiskaya – Makat – Beineu – Naimankul – Nukus – Uchkuduk – Navoyi.

Branches 8 а. Naymankul – Chardzhou 8 б. / Makat – Kandagach – Nickel-Tau – Kartaly

Corridor 9

Passes through the territory of Lithuania, Belarus and Russia. Klaipeda/Drauguiste – Siauliai – Kaisiadorys – Vilnius – Minsk.

Branch 9 а. Калининград – Нестеров – Каунас – Кайшядорис / Kaliningrad – Nesterov – Kaunas – Kaisiadorys

Corridor 10 (ТрАСЕКА / TrACECA) Passes through the territory of Ukraine, Bulgaria, Romania, Georgia, Azerbaijan, Uzbekistan, Turkmenistan, Kyrgyzstan, Kazakhstan and Tajikistan. Odessa/Iliechevsk /Constanta/Varna/Burgas – Poti – Tbilisi – Baku – Turkmenbashi – Saparmurat Turkmenbashi – Bukhara – Dzhizak – Khavast – Tashkent – Arys – Lugovaya – Aktogai – and further via corridor No. 2.

Branches 10 а. Baku – Aktau – Beineu – Makat – Kandagach – further on along corridor No. 5ж 10 а'. Ashgabad – Karakum – Ichoguz – Dashoguz 10 б. Lugovaya – Bishkek – Rubachie 10 в. / Khavast – Bekabad – Kanibadam – Kokand – Andijan – Karasu –Osh/Jalal-Abad 10 г. / Bukhara – Karshi –Tashguzar/Talimarjan – Boysun – Kumkurgan – Dushanbe/Termez – Galaba – Hairaton/Kurgan-Tube

Corridor 11 Passes through the territory of Russia, Azerbaijan and Iran.

242

Buslovskaya – Vyborg – St. Petersburg – Bologoye – Moscow – Kochetovka – Rtischevo – Saratov – Volgograd – Verhni Baskunchak – Astrakhan – Karlan Yurt –Makhachkala – Baku – Osmanly Novyie – Astara – Resht – Kazvin – Teheran – Bafk – Bander Abbas.

Branches 11 а. Kochetovka – Liski – Rostov-Main – Timoshevskaya – Novorossiysk 11 б. Rostov-Main – Armavir – Gudermes – Karlan Yurt 11 в. Timoshevskaya – Krasnodar – Krivenkovskaya – Adler

Corridor 12 Passes through the territory of Moldova, Romania and Bulgaria. Oknitsa – Ungueny – Yassy – Bucharest – Ruse – Varna/Dimitrovgrad.

Corridor 13 Passes through the territory of Russia, Estonia, Latvia, Lithuania and Poland. Tallinn/St. Petersburg – Tapa – Valga – Riga – Siauliai – Kaunas – Sestokai – Trakiškės – Suwalki – Białystok – Warsaw.

243

3.3 TER (Trans-European Railway) TER is a Project initiated by UNECE (United Nations Economic Commission for Europe) between the members of the European Agreement on Main International Railway Lines (AGC) in order to bring into the force the combined transport system in a broad area that reaches from North, West and Central Europe to the Middle East and Africa. This multinational transport Project is funded by the members according to the Trust Fund Agreement signed on 17th December 1992. There are 17 member countries: Armenia, Austria, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Georgia, Greece, Italy, Lithuania, Poland, Romania, Russian Federation, Serbia, Slovak Republic, Slovenia and Turkey. In addition, a number of observer countries participate in certain activities of the project: Belarus, Latvia, Moldova, Montenegro, The Former Yugoslav Republic of Macedonia and Ukraine. Azerbaijani membership is pending, awaiting signature for accession. 3.3.1 The main objectives are:  To improve the quality and efficiency of transport operations,  To assist the integration process of European transport infrastructure systems, and  To develop a coherent and efficient international railway and combined transport system in accordance with the UNECE Pan-European infrastructure agreements: European Agreement on Main International Railway Lines (AGC - May 1985) and European Agreement on Important International Combined Transport Lines and Related Installations (AGTC - Feb. 1991). Turkey is one of the founding members of the TER Project with Hungary and Romania and has a special and active role because of its geographical position. Turkey is a member of the Project since 1992.

244

Map 3.2 Turkey- TER line sections

245

3.4 UNESCAP TAR (Trans-Asian Railway) Project

The Trans-Asian Railway network now comprises 117,600 km of railway lines serving 28 member countries. The preparation of the Intergovernmental Agreement of Trans-Asian Railway Network was adopted during the 62nd Commission Session in Jakarta on April 6-12 2006 to support and develop the railway transport in Asia and neighboring countries; it opened for signature on November 10, 2006 during the Ministerial Conference on Transport in Busan, Republic of Korea and entered into force on 11th June 2009 in United Nations Headquarters in New York. So far 22 countries have signed the Agreement and 18 countries are parties to it.

Map 3.3 Trans-Asian railway Network

The responsibilities of the Parties within the scope of this Agreement are: - To adopt the railway lines of international importance as a coordinated plan for the development of railway lines, - The harmonization of the Trans-Asian Railway route with the guiding principles related to technical characteristics. The guiding principles are the principles (described in Annex II to the Agreement) which should be considered by member states while constructing new railway lines and rehabilitating or modernizing the existing lines.

TAR Network enables mostly the transport of the containers used by maritime shipping. For the enhancement of the effectiveness of the network, it is needed to consider the line capacity, harmonization of the rolling stock and the design of the intermodal interfaces.

246

Current status

22 signatories – 18 parties

Map 3.4 Length of TAR Route in km

In the Middle East, Iran & Turkey are part of TAR Network; more than 85% of the Iranian rail network is included in TAR.

The lines included to TAR Network in Turkey are:

Kapıkule – Kapıkoy (Bulgaria, Europe) Kapıkule (border station) Istanbul Eskisehir (junction) Alayunt – Balikesir – Izmir (border station) Ankara Kalın (junction) Samsun (maritime connection) Sivas Cetinkaya (junction) Kars (junction) – Doğukapı (border station and break-of gauge) – (Akhuryan, Armenia) [Kars (junction, border station and break-of-gauge) – (Akhalkalaki, Georgia)] Malatya (junction) Toprakkale (junction) – Adana – Mersin (maritime connection) Toprakkale (junction) – Iskenderun (maritime connection) Tatvan-Van (ferry crossing) Kapiköy (border station) (Razi, Islamic Republic of Iran)

247

3.5 TEN-T (Trans-European Network-Transportation)

The purpose of Trans-European Networks (TEN) policy is to ensure the integration and interoperability of the European infrastructure in the areas of Transport, Energy and Telecommunication. In this framework, technical standards and priority projects of common interest are identified and financing opportunities for those projects are developed.

The main purpose of TEN-Transport (TEN-T) intends to establish the physical infrastructure of ―Single European Transport Area‖ in order to facilitate the free movement of persons, goods and services among the Member States. In order to achieve this purpose, - Network approaches have been developed for infrastructure investments, -The establishment of nodes for intermodal connection of different types of transport has been planned, - Technical standards have been determined for existing and planned investments, - Maximum use of ITS1 has been adopted in order to increase efficiency and effectiveness of the infrastructure to be installed. 3.5.1 Current Status The new TEN-T guideline in the transport sector was laid down in the Regulation No. 1315/2013 which was published in the Official Journal of the European Union of 20 December 2013 and so new transport infrastructure policy (the new TEN-T Guide and CEF, Connecting Europe Facility) has been developed in order to ensure East-West and North- South connections. 9 corridors are being established by the Regulation which forms the Connecting Europe Facility (CEF), which has been developed for the new TEN-T guideline. This Regulation also includes the priority projects to which the CEF budget may be allocated between the years of 2014-2020 in order to improve those corridors. In this context, works on a plan which will show the existing infrastructure situation; a program for the removal of physical, technical, operational and administrative bottlenecks; and financial resources (EU, international, national, regional etc.) are going on. European Coordinator has been designed in order to monitor the developments in each corridor. The aforementioned 9 corridors are listed below. None of those corridors passes directly from Turkey.

1 Information Technology Solutions, Services 248

Map 3.5 Trans-European Transport Network (TEN-T)

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3.6 PAN-European Transport Network

In line with the requirements for the integration of the Central and Eastern European Countries into the EU, in the works carried out under the leadership of the European Union, a transport plan and policy covering all the Europe is developed and, in this framework, priority transport projects are identified and financial resources are allocated to those projects. As a result of the works which have been going on since 1991, 10 priority Pan-European Transport Corridors covering the roads and railways in this region have been identified Those corridors have been determined to complement the priority Trans-European Corridors (TEN-T) within the EU. Multi-modal approach is adopted on the Pan-European corridors on the basis of socio-economic and environmental analyses. Those determined projects are reconsidered when there is a participation in the Union. Accordingly, Pan-European corridors have been reconsidered with the multi-modal transportation needs assessment project of Turkey (TINA-TURKEY) within the framework of the arrangements of the TEN-T, European transport network, which is made as to include the new member states and the candidate states. 3.6.1 Corridors Corridor 1: Baltic Road: 445 km, Baltic Railway 550 km, road-railway. Helsinki (Finland), Tallinn (Estonia), Riga (Latvia), Kaunas - Klaipeda (Lithuania) Warsaw - Gdansk (Poland), Kaliningrad (Russia) Corridor 2: Parallel road and railway. Total length is 1.830 km. Berlin (Germany), Ponzan - Warsaw (Poland), Brest - Minsk (Belarus) Smolensk - Moscow - Nizhni Novgorod (Russia) Corridor 3: Parallel road and railway. Total length is 1.640 km. Berlin - Dresden (Germany), Wroclaw - Katowice - Krakow - (Poland), Lviv - Kiev (Ukraine) Corridor 4: Road and railway connect the Europe to the Southeast Europe by using the combined transportation systems of air and sea ports and the Danube River ferrylink. Total length is 3.258 km. The 4th Corridor, one of whose branches runs to Constanza and the other to Thessaloniki and Istanbul via the Berlin-Prague-Budapest road, has an importance in terms of being the only Pan-European Transport Corridor in which Turkey is on the route. Berlin - Dresden - Nurnberg (Germany), Prague - Brno (Czech Republic), Vienna (Railway) - (Austria), Bratislava - (Slovakia), Gyor - Budapest - (Hungary) Arad - Craiova - Bucharest - Constanza (Romania), Sofia – Plovdiv (Bulgaria), Thessaloniki (Greece), Istanbul (Turkey) Corridor 5: It consists of road and railway. Total length is 1.600km. Venice - Trieste (Italy), Koper - Ljubljana - Maribor (Slovenia), Hungary Border - Budapest - (Hungary), Uzgorod - Lviv - Kiev (Ukraine) Corridor 6: It consists of road and railway and it is planned for combined transport. It is connected with Corridor 5. Total length is 1.800 km. Gdansk - Katowice (Poland) - Zilina (Slovakia) Corridor 7: This way runs from Germany to the Black Sea through the Danube rail road and connected to the North Sea through the Rhine, the Main rail road.

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Germany, Austria, Bratislava (Slovakia), Györ-Gönyü (Hungary), Croatia, Serbia, Ruse-Lom (Bulgaria), Moldova, Ukraine,Constanza (Romania) Corridor 8: It is connected with road and railway. Combined transport between Bitola and Durres Port. Total length is 1.300 km. Durres - Tirana (Albania), Skopje - Bitola (Macedonia), Sofia - Plovdiv - Dimitrovgrad - Burgas - Varna (Bulgaria) Corridor 9: It consists of road and railway and has port connection. Total length is 6.500 km. Helsinki (Finland), Vyborg - St. Petersburg - Pskov - Moscow - Kaliningrad (Russia), Kiev - Ljubasevka (Ukraine) - Kishinev (Moldova) - Bucharest (Romania) - Dimitrovgrad (Bulgaria)- Alexandroupoli (Greece) Corridor 10: It consists of road and railway and has port connection. Total length is 2.360 km. Salzburg (Austria) - Villach - Ljubljana (Slovenia) - Zagreb - Belgrade - Nis - (Croatia) - Skopje (Macedonia) - Thessaloniki (Greece). The 4th Corridor, one of whose branches runs to Constanza and the other to Thessaloniki and Istanbul via the Berlin-Prague-Budapest road, has an importance in terms of being the only Pan-European Transport Corridor in which Turkey is on the route. In regard to the fact that Halkalı-Wels Ro-La Line, which has not been operated due to the cost problems, is still on the 4th Pan-European Corridor supported by the EU; and to the great support of the EU for the transport between the modals, it is important to provide financial support for the Halkalı-Wels Ro-La project in order to ensure that it will become operational again. Recently, the general coordination implemented by the European Union within the framework

Map 3.6 PAN-European Transport Network

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of transport corridors has mostly focused on reassessment of the Pan-European Transport Corridors, which considerably gained the characteristic of Trans-European Network (TEN-T) following the latest enlargement, and planning the TEN-T‘s connections with the neighbor countries and regions. Turkey also participated in these studies named as "Wider Europe for Transport" and carried out by a High Level Group. Five major international axes including one for sea motorways were specified within these studies. These are the Northern, Central, South Eastern and South Western axes. Substantially, the South Eastern axe was planned as running of the 8th and 10th Pan-European Corridors to the Middle East and Caucasus through Turkey by merging with the 4th Corridor and TRACECA. The South Eastern Axe specified within the process of "Wider Europe for Transport" essentially contains the 4, 8 and 10th Pan-European Corridors and Turkey‘s active participation and support for improving transport infrastructure and connections at the Balkans is quite important in terms of the future of the country.

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3.7 TRACECA (Transport Corridor Europe-Caucasus-Asia)

In brief, it is an East-West corridor being formalized and developed for multimodal transport in order to revitalize the Silk Road. ―Multilateral Agreement on International Transport for Development of the Europe-the Caucasus-Asia Corridor‖ (MLA) was signed by the Presidents and the Prime Ministers of 12 states in total with participation of Turkey, Ukraine, Moldova, Romania and Bulgaria on 8 September 1998 and this agreement constituted a basis for implementation of TRACECA Program. Although Turkmenistan is a member of TACIS- TRACECA, it is not a party for MLA. Iran signed MLA in 2009 as well and become a member of TRACECA. TRACECA Intergovernmental Commission (IGC) was established in 2000 and IGC TRACECA Permanent Secretariat (PS) which is operating as the executive body of IGC was established in Azerbaijan/ Baku in order to practice and complement the provisions of the Agreement (MLA). 3.7.1 Transport Corridor Europe-Caucasus-Asia (TRACECA) The fact that the TRACECA Project provides an alternative Transport line for the line from Asia to Europe and the strategic location of Turkey between these two continents indicates the importance of this project for the country. Putting the Baku-Tbilisi-Kars Railway with 838 km length into service in 30 October 2017, is quite important in order for Turkey to be able to receive a share from the railway Transport between Caucasus, Middle East, Far East and Europe. It has become possible to transport the load departing from China to Baku-Port of Alat via the Caspian Sea through Kazakhstan and Turkmenistan and to Georgia and Turkey afterwards, with the introduction of the line. In addition, studies for updating the TRACECA lines within Turkey are being sustained under the coordination of TRACECA National Secretariat and necessary contributions are being provided accordingly. 3.7.2 The Extent of the TRACECA Railway The rail gauge in Georgia, Romania and Turkey is 1435 mm (according to the EU standards) and the rail gauge of all other TRACECA member states is 1520 mm in terms of railway infrastructure. The railway projects within the TRACECA program aim to strengthen the local railway network as well. TRACECA member states adopt the following 3 objectives in order to receive a greater and more active role in multimode transport network of railways: - To put forward structural reforms for strengthening efficiency and financial condition of the railway systems, - To make minutely planned investments for improving potentials of the infrastructure of the railway systems within the multimodal network, - To encourage interoperability of railway systems for promoting efficiency of international railway services between the TRACECA member states and EU.

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Map 3.7 TRACECA routes

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Corridors Management and Commercializing

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Corridors Management and Commercializing

4.1 Market Access An important complement to interoperability is the ability of service providers from one country to compete in the provision of transport services in the other country. In order to have meaningful competition between countries, there must be a legal framework that gives transport operators access to the transport market throughout the corridor. Without this, an international corridor is merely a collection of interconnected domestic corridors. Improvements in market access increase the pool of transport operators, thereby offering more options in terms of the cost and quality of service. To the extent that transport operators have access to a larger market, there is also a potential for economies of scale. In order to improve market access, it is necessary to have an effective transit agreement and supporting agreements on standards and certification. In addition, it is necessary to allocate the liabilities so that transport operators can obtain the necessary insurance coverage. Finally, the government must guarantee a level playing field in which the transport operators can compete. 4.2 Allocation of Liabilities Effective allocation of liabilities is required to identify the parties responsible for various actions and to provide financial services that cover these liabilities for the complete movement through the corridor. A general problem for intermodal freight transport, and a special problem for cross-border trades, is the liability in the event that cargo is lost or damaged. This is addressed at a national level by requiring transport operators or shippers to provide insurance for the cargo. For efficient corridor operations, it is important to have a regional insurance program that covers both the transport units and their cargo while transiting the corridor. While some regions have a liberalized insurance market, it is more often the case that the transporters must obtain insurance from local companies when entering each country. This is not usually a problem for ocean and air transport as these modes have access to regional coverage but is a problem for truck and rail transport. It is anticipated that this problem will diminish with liberalization of domestic insurance markets as part of reforms associated the General Agreement on trade in Services. In addition to coverage for loss or damage of cargo, there is also a need for coverage of the liability, the goods are transported under a bond covering possible duties. The transporter carries a carnet that is presented to customs at each border crossing. Different arrangements are available for goods moving to an inland customs facility under a combined bill of lading or a marine bill of lading. The shipping lines and forwarders arrange for coverage through a customs bond or guarantee that is maintained to cover all shipments. 4.3 Cabotage After an agreement reached on standards and certification and on the elimination of restriction for transport units carrying cargo into and out of another country, there still remains the contentious issue of cabotage. Most countries enforce cabotage laws to protect domestic shipping, trucking and air services but some allow cross ownership of transport companies or other forms of participation that allow cross- border movement. In order for transport services to operate efficiently, they must have the opportunity to carry cargo on all legs of their journey. If the bilateral trade is balanced, this can be accomplished by transport services carrying only the country‘s import and export cargo. However, it is more common to have a dominant movement in one direction leading to a significant 256

proportion of empty backhauls. The result is higher transport costs. Savings in transport costs can be accomplished through an accommodation with neighboring countries to allow carriage of that country‘s domestic cargo in well-defined situations, e.g. while enroute to the border 4.4 Commercialization of Services Another opportunity for improving market access is commercialization of the operations at intermodal transfer points along the corridor and at the gateways at either end of the corridor. In most cases, the replacement of public sector monopolies with private sector management of seaports, airports, rail and road ICDs (Inland Container Depots) and other intermodal terminals has provided significant improvements in the time and cost of moving cargo. With commercial management, fixed tariffs can be replaced by negotiated prices and uniform standards of service can be replaced with services designed to meet specific needs of the transport operators and their cargo. Specifically, different levels of service can be provided for high- value time-sensitive cargoes and for low value, time-insensitive cargoes. This change in management allows the replacement of policies that discriminate between domestic and foreign transport operators with ones that discriminate between efficient and inefficient operators. It encourages the introduction of value-added services including automated document preparation and cargo tracking. The overall result is lower cost and fewer delays when transferring cargo at intermodal transfer facilities. 4.5 Competition Policy Assuming that market access has been improved for transport service providers and there is sufficient commercialization of the activities at the multimodal transfer points, then it is necessary to ensure that a high level of competition is maintained. This requires relatively little effort in road transport since there is little scope for economies of scale. Ocean and inland water transport offer economies of scale, but have traditionally enjoyed strong competition with few barriers to the entry or exit. Rail transport does not have these advantages but faces strong competition from road transport, which has captured significant market share from the railroads. Air transport had been a problem in regions where national flag carriers are dominant but competition has increased dramatically as the markets for both local and international services have been liberalized. The only area in which competition is likely to be constrained is the provision of services at the transfer nodes, especially the international gateways. For these, it is important to ensure either direct competition in the provision of services or sufficient contestability in the granting of concessions for these services. Further protection can be provided through general legislation against anti-competitive behavior. The benefits from improving market access for transport operators from different countries within a corridor include not only lower costs and greater diversity of services but also savings in cost and time from not having to transship cargo at the border and greater ability to respond to peak demands without substantial price increases. While both public and private entities have been involved in the development and regulation of the corridors, it is not clear that they managed either the development or continuing operation of these corridors. The term management implies some form of control, but it is difficult to create a single point of coordination given the diversity of stakeholders. Not only are there a large number of government agencies involved in the activities of the corridor but the users are a diverse set of transport and logistics service providers carrying a wide variety of trades. As a result, the management of a corridor is generally limited to organizations established by government, the private sector, or jointly to plan development, disseminate 257

information and coordinate stakeholder efforts. The appropriate structure for corridor management depends on the nature of the corridor and the specific functions to be managed. 4.6 Role of Corridors The three types of corridor, domestic, foreign, and transit, have different roles and require different management approaches. There are synergies since all foreign corridors are also domestic corridors and transit corridors also act as foreign corridors. Successful management of domestic corridors provides the basis for development of trade corridors. Successful management of the border crossings and international gateways for trade corridors provides the basis for development of transit corridors. The basic goals for management are to promote the use of the corridor, to provide sufficient capacity to meet demand, and to improve connectivity between modes and between transport logistics services. However, these corridors have different objectives and management requirements. Furthermore, there are differences in the jurisdictions responsible and the enabling legislation and regulations. Public responsibility for the development of domestic corridors is usually limited to construction and maintenance of the infrastructure and enforcement of regulations regarding safe operation of transport vehicles. The agencies responsible will be national, provincial or some combination of the two. One of the difficulties in developing an efficient corridor is to eliminate the difference in throughput for links and their connecting nodes. The goals for management of foreign corridors are similar to those for domestic corridors but add ensuring the security of the borders and enforcing trade agreements. The difficulties confronting management are greater due to the addition of the border crossings and gateways. These introduce the problems of avoiding monopolistic behavior and resolving the conflict between trade facilitation and increased security. The goal for transit corridor management is simply to provide efficient and safe movement of transit cargo through the country. The principal problems confronting the corridor management are issues related to security and preventing leakage of the cargo into the domestic economy. As such, management must focus on improving coordination between border crossings and gateways and developing effective methods for verifying that the cargo is not tampered with during its journey across the country. The problems become daunting where there are serious security concerns as discussed in the box below.

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There are two difficulties with the use of border crossings as the major point of a security check. The first is that securityʼs main concern is to reduce the risk of violence. As such, it is not concerned with the cost, delays, or damage caused to the goods moving across the border. Also, it relies on unpredictability as a means of reducing risk. The second problem is that by focusing on the border, insufficient effort is made it to secure the corridors that utilize the border crossing. To be effective, it must be integrated with other sources of information about the cargo. It is also important that these be designed to reduce the costs and delays for movement of cargo across the border. This requires the introduction of simpler and more transparent inspection procedures. It also requires that some of the inspection procedures ne moved away from the border. This means extending the security envelope from the border to the corridor and using information from upstream activities to minimize the interventions required at the border. This can be achieved through advances in supply chain management, which have significantly increased the amount of information available about the goods moving through a corridor, the means of monitoring this movement and the protection provided by the transport units used to convey these cargoes. Further security can be provided by establishing cargo consolidation facilities near the source/destination of the cargo. There is considerable overlap between good supply chain management and improved security. Both require closer attention to be given to the movement of goods through a corridor. Both also require better coordination between those involved in this movement. They also need more active participation by those who benefit from trade. One of the current problems with improving procedures is that various parties benefit from the current inefficiency and lack of transparency. 4.7 Corridor Functions For each corridor, there are three general functions requiring management oversight – operation and maintenance of public infrastructure and facilities, provision of transport and logistics services, and regulation of trade and transport. While there should be some level of integration of these functions, the management responsibilities are different by each function. 4.8 Infrastructure and Facilities Corridor infrastructure, which includes links and nodes along the routes as well as border crossings and international gateways, is developed and funded primarily by the public sector but increasingly constructed and maintained by the private sector. On the other hand, an increasing proportion of the facilities constructed at the nodes and gateways are developed, financed and operated by the private sector. The principal exceptions are land border crossings, which so far continue to be developed by customs and other border security agencies. Management‘s role is to guide the planning and procurement of these assets. Its goal is to insure that these assets are: . designed to provide efficient movement of transport and cargo along the infrastructure and through the facilities, . constructed and maintained to meet required standards, . of sufficient capacity to meet projected demand, . used efficiently, and

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. fully utilized. The capital costs for the infrastructure are covered through general revenues but maintenance costs are often covered by user fees. For facilities, capital and maintenance costs are generally recovered through activity charges. Corridor management can promote efficient use of infrastructure through judicious use of user fees and efficient operation of facilities through commercial operation. The latter raises two concerns. The first is to avoid public or private monopolies from controlling these assets. The second is to provide reasonable access for potential users while at the same time allowing for the specialization of facilities and activities so as to increase efficiency. The management can address these concerns by ensuring a contestable commercial operation or by introducing economic regulation. 4.9 Transport and Logistics Services The primary services offered for freight moving through a corridor are transport, handling, and storage. Increasingly, these activities are undertaken by the private sector in a competitive market with costs recovered through user charges. The objective of the managers of individual services is to capture significant market share by offering a competitive combination of cost, time and reliability. This often means offering a variety of services with different combinations of these factors and with the flexibility to adjust them to meet the needs of individual clients. Significant improvements in quality of service have been achieved by transferring these services from public to private sector management. To the extent that corridor management is responsible for overseeing these services, its objective should be to promote more efficient services, usually be encouraging competition but often by allowing vertical and horizontal integration. Vertical integration offers advantages to shippers who want to contract for door- to-door services rather than a sequential series of services. Horizontal integration offers economies of scale in the marketing and information services necessary to achieve efficient utilization of transport equipment. 4.10 Regulatory Procedures Corridor management generally has some oversight over the regulatory procedures that affect the movement of goods in the corridor and the transport and logistics providers that operate in the corridor. Rarely are they involved in the enforcement of the regulations or even in the enactment of these regulations. Instead, they perform an advocacy role discouraging excessive regulation and reforming regulation that leads to inefficiency in the movement of goods through the corridor especially unnecessary delays and informal payments. They can encourage reform by supporting efforts to simplify documentation and procedures, introduce greater transparency regarding procedures, encourage expanded use of ICT and risk management and promoting harmonization of procedures on both sides of the border.

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4.11 Implications for Management These corridor functions require different management approaches. One involves the private sector, another the public sector and the third both. One involves provision of services in a competitive market with full cost recovery, another provision of assets in a market with limited competition and partial cost recovery, and the third with enforcement of laws and regulations. It is difficult to imagine a management structure that encompasses all three. For most corridors, the focus has been on only one and different management structures have been employed. 4.12 Approaches to Corridor Management Leadership in developing a corridor can come from different sources. In most corridors, the central governments have not offered direct legislative support but rather established or supported autonomous organizations that promote the development of the corridor. In this regard, high level working committees are a popular mechanism but their effectiveness depends on their support staff. The function of these entities is quite diverse, reflecting differences in objectives and in the scope of the agreements that they are meant to support. An international commission, can be established to implement the basic agreement signed. It receives some funding from member states and with this fund, . Designs and funds small projects for alleviating bottlenecks in the network, . Conducts technical studies related to improving the efficiency of border crossings, . Collects performance statistics, and . Organizes conferences to address issues related to the corridor. The experiences for corridor management are quite different, but it is clear that some formal institutions can play an important role in each of the three functions. To do this, they must involve both the public and private sector in a meaningful partnership that works closely with the Customs Authorities and other border agencies. Their structure will depend on: . relevant agreements between the participating governments, . type of corridor, . functions that the institution will address, . management objectives, . principal impediments faced in achieving these objectives, and . budgetary resources available for its operation. One of the more important activities of formal institutions is to act as advocates for the development of their corridors in interactions with the participating governments. This can include: . providing advice on current practices, available legislation and lessons learned for previous efforts, . collecting and disseminating information to potential users concerning the costs for using the corridor, the procedures and performance at the border crossings, gateways, and choke points within the corridor . quantifying constraints, evaluating efforts to remove these constraints and

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developing targets for future improvements. 4.13 Role of Agreements Depending on the protocols and formal arrangements among the participating countries, the corridor institutions may be granted power to coordinate: . investments to improve the performance of the corridor, . efforts to harmonize standards, . introduction of simplified documents and clearance procedures . cost recovery mechanisms The first is difficult, as it requires that the participating governments coordinate their capital investments. Since most of the investment is for upgrading existing infrastructure, the coordination of investment is not as critical. Where investment in new infrastructure in cross-border routes is required, then private sector concessions, can provide the necessary coordination. There are three approaches to the harmonization of standards and introduction of simplified documents and procedures. The first is to adopt international conventions pertaining to transit procedures, and trade in transport services. The second is to develop regional agreements on general standards and procedures that will be applied by member countries and serve as guidelines for long-term improvements in trade facilitation. The third is to implement back-to-back bilateral agreements that facilitate the movement of freight and transport through the corridor. These agreements can also specify cost recovery mechanisms to be introduced as well as complementary investments to improve cross border movements. The most successful corridors development programs have taken place within customs unions since these simplify the border crossings procedures. 4.14 Three Management Structures While there has been significant variation in approach to the development of international freight corridors, there are three general models that have been applied. The first is disjointed incrementalizm as part of a general development model. This approach is characterized by a project focus. Governments undertake improvements in the corridor infrastructure based on local requirements and problems. Growth in trade combined with liberalization of the transport and logistics sector offers a steady improvement in the variety, quality and competitiveness of the transport services. An evolving consensus on the concept of the corridor allows stand-alone projects to be related to the development of the corridor. Efforts to facilitate movements across borders or through international gateways begin with bilateral agreements. This model has been most effective in providing improvements in infrastructure. However, it lacks a formal corridor organization or other mechanism to identify and prioritize initiatives. The second is the legislative development model. This is characterized by the use of legislation to provide formal recognition of the importance of corridors, designation of specific routes, harmonization of standards, simplification of cross-border movements and funding for corridor infrastructure. Implementation is left to individual jurisdictions and government agencies. Coordination is undertaken at the regional or ministerial level and is characterized by formal meetings to review progress made by others. Development of services on the corridor is left to private sector competition. Improvements in infrastructure are undertaken by government agencies responsible for transport. This approach emphasizes consensus. It is effective in targeting funding infrastructure and reducing 262

formal impediments to movement of goods on these corridors. It is less effective for improving interconnections through modifications of regulatory constraints on cross-border and transit movements. The third is the consensus-building institution model. This approach uses a regional institution to mobilize stakeholder support for improvements in the corridor and to push for trade facilitation reforms including improving border-crossing procedures. Its primary function is to provide information to stakeholders, including government agencies, concerning current performance, needs for improvement, and success of previous initiatives. The success of this model depends on the active participation of public and private sector stakeholders in a partnership to address issues related to regulation, investment and quality of service. Where corridors have been successful, there have been strong political and market support for their development. A corridor organization provides a point of coordination for stakeholder efforts and a forum for identifying major impediments. It also provides coordination for the lending programs of multinational organizations, which typically develop their lending programs with individual line ministries. As a promoter, this organization must have the support of the private sector but be able to work closely with government agencies to improve procedures and policies. As a coordinator, it must have some form of public-private partnership as well as linkages with a regional ministerial committee that is tasked to address issues of regional harmonization. 4.15 Developing and Managing Corridors The development of trade and transit corridors has two phases: 1. organization of a coherent set of routes with services to transport domestic, foreign and transit traffic in a competitive manner, and 2. gradual improvement in efficiency of these services. The initial phase occurs in response to market forces but depends on the public sector for basic infrastructure as well as coherent regulatory structure and procedures to create the conditions for accelerating growth of the traffic. The time to complete this phase depends on the efforts to prepare and implement the bilateral agreements and supporting legislation required for efficient border crossing procedures. The second phase is a continuing effort following the introduction of a basic framework. There are three complementary actions that can sustain the development through both phases, a long- term plan, a series of parallel initiatives and a program for monitoring performance. While simple in concept, they provide a basis for coordinating the activities of the governmental agencies involved in the performance of the corridor. Despite the non-linear and often chaotic nature of corridor development, it is clear that a long-term plan is important to identify problems that need to be addressed. This requires a consensus concerning the objectives for development of the corridor and identification of the impediments to efficient end-to-end transport services. The latter can be determined by an elaborate regional economic/ transport, or a simpler supply chain analysis of major trades that use the corridor. For continuous development of the corridor, it is necessary to undertake parallel initiatives including: . short-term improvements in customs and border crossing procedures and traffic control, . medium-term improvements in infrastructure and interoperability and, 263

. long-term improvements in harmonization and trade facilitation. The possible initiatives are well established. In order to choose among them, it is necessary to evaluate their expected benefits and costs using an approach. This evaluation should be done from the adopt the frame of reference of the shippers taking into account their requirements to move their cargo between origin and destination within a given period of time. Since most of these initiatives will involve changes in policies and procedures rather than capital investments, it is also necessary to consider the level of stakeholder and governmental support. 4.16 Types of Initiatives 4.16.1 Asset Management • capital investments in capacity and/or quality of links and facilities at the nodes • new transport technology • improved maintenance of these assets • private sector operations and maintenance • private financing of facilities • user fees to finance maintenance and improvements • new transport technology 4.16.2 Regulation • reduction in the level of regulation of transport and logistic services • increased competition in the provision of these services • reform of customs and transport regulations. • simplified transit procedures • relaxation of cabotage laws • reduction in informal payments • increase in transparency for border crossings • change in incentive structures 4.16.3 Information • Simplified documents • simplified financial transactions • ITC (Information Technology Center) for  data entry and processing  electronic transfers and direct debit arrangements  scheduling and control of transport services  coordination among customs offices, and among customs with other agencies involved in CIQS1, and between officials on each side of the border.

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Figure 4.1 Evaluation of Corridor Performance Supply chain analysis can be used to determine the relative importance of different activities in overall corridor performance and to identify the features of these activities that contribute most to time, cost and unreliability. Transport systems analysis can be used to identify physical and operational problems that contribute to cost, time and delays. Transaction analysis can be used to evaluate the time and cost for processing the information associated with typical shipments. These techniques are also useful in estimating the potential improvement in performance and relative cost for various initiatives. Although a corridor is often amorphous, it is essential that its performance be monitored. The collection and dissemination of performance data is one of the more important responsibilities of a corridor organization. This data can be used by providers of transport and logistics services to improve quality of services. It can be used to identify chokepoints and evaluate the effectiveness of different initiatives in eliminating them. It can also be used to justify improvements and additions to the corridor infrastructure. Much of the data on physical performance is reported as part of specific activities within the corridor, e.g. port operating statistics, customs trade and operating statistics. Additional data on demand must be collected through surveys, in particular, through interviews with shippers and transport providers to determine demand for different levels of service, negotiated costs and range in transit times. There are several methods available for collection of the data needed to evaluate performance as summarized in Table below.

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Table 4.1 Sources of Data on Route Performance

4.17 Recommendations The three factors that determine corridor performance are quality and competitiveness of transport and logistics services, capacity and condition of public infrastructure used by these services, and domestic, bilateral, and sometimes, multilateral regulation of these services and the trades that they serve. The organization responsible for corridor development must address all three factors, however, one area usually dominates. Transport and logistic services are rarely the primary concern. The exception occurs where the government is heavily involved in providing these services or there are significant constraints on market access. Where infrastructure is the problem, it may be due to poor condition, insufficient capacity or lack of physical integration. Policy and regulation is the more likely to be the major problem, especially as relates to border crossing procedures for both import/export trade and transit shipments.

Figure 4.2 Areas of Management Focus

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Efforts to improve corridor performance require a cooperative effort by the public and private sector. While there are some initiatives that can be undertaken exclusively by the public sector (Figure above), most require private sector involvement to insure that the quality of services offered in the corridor are improved. The configuration presented in Figure above suggests that most initiatives improve some combination of market access, interoperability and interconnection. The initiatives at the center of the figure take longer to implement but have a more substantial effect on corridor performance. These are generally the subject of continuing efforts at improvement. The initiatives at the periphery can be achieved in a shorter time frame but must be built on developments in the core areas. The range of public and private sector stakeholders involved in a corridor and diversity of their goals limit the ability to control development of the corridor. The major challenge is to define a common set of objectives and, based on these, to coordinate the activities of the stakeholders. The private sector should take the lead where there is sufficient infrastructure and an appropriate regulatory environment. The public sector should take the lead where there is a requirement for significant improvements in infrastructure or for major regulatory reform. The three institutional formats mentioned above can provide this coordination but their effectiveness depends on the situation. In all cases, the role of coordination is primarily one of facilitating the flow of information between the parties, advocating changes that the parties agree will foster the development of the corridor and building consensus on the initiatives to be taken. These three roles, facilitator, advocate and consensus-builder, can be most effective where there is an autonomous entity with regular staff, funding commensurate with the scale of initiatives required and an executive board that includes the principal stakeholders from the public and private sector.

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5 General problems and bottlenecks in the introduced

corridors

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General problems and bottlenecks in the introduced corridors

Railway transport on a Euro-Asian scale faces both physical and non-physical obstacles, but the two most cumbersome were and still are the existence of two legal regimes and the change of gauge. 5.1 Two legal regimes The majority of the problems arise from the lack of organization and coordination of transport movements (especially at borders) and from the insufficient exchange of information between neighboring railways. Customs procedures do not have a major negative impact on railway movements. With some exceptional cases which will probably always occur at some border stations, customs checks in general do not significantly undermine the seamlessness of railway movements. In order to facilitate international wagon exchange, it would be worth considering the application of CUV (Uniform Rules concerning contracts of Use of Vehicles in International Rail Traffic, Appendix D to COTIF), common CIM/SMGS consignment note, and the General Contract of Use (GCU) on a Eurasian scale, including the railway route from China to Europe. 5.2 Gauge differences Another troublesome problem sometimes encountered is the difference in track gauges. Generally, when the track gauge is different, a train cannot run continuously from one rail section of one gauge to a rail section of another gauge. Countries of the former Soviet Union use the broad gauge of 1520 mm while most neighboring countries use the standard gauge of 1435 mm. As a result, trains crossing from China and Iran into Kazakhstan and Turkmenistan must change bogies, or the passengers and goods must transfer to a new wagon. At Druzhba on the border between China and Kazakhstan, passenger trains change bogies while most freight is transshipped. This is impractical for freight such as liquids, frozen goods and hazardous materials, so the wagon bogies are changed in these cases. Both transshipment and bogie changes require a lot of heavy lifting equipment and the Silk Road express stops for about 5 hours to complete the change of gauge. The same change-of-gauge problem occurs at many other borders throughout the world. For example, in Europe, trains from Russia must change their bogies or transship freight at the border with Poland. 5.3 International railway lines with different gauges According to the International Union of Railways (UIC), broad gauges are above 1520 mm (inclusive), standard gauge is 1435 mm, and narrow gauges are below 1067 mm (inclusive). Different gauge systems have led to drawbacks such as low efficiency and high operating costs. Various solutions exist for international railway lines. 5.4 The break-of-gauge problem in corridors One of the major impediments to the smooth flow of railway traffic along some international corridors linking parts of Europe with parts of Asia is the lack of a uniform track gauge among the railways. There are five track gauges, namely: the 1524 mm gauge in Finland; the 1520 mm gauge in 269

Armenia, Azerbaijan, Kazakhstan, the Russian Federation, Turkmenistan, and Uzbekistan, Tajikistan, and Kyrgyzstan; and the 1435 mm gauge and 1676 mm gauge in the Islamic Republic of Iran, albeit the latter is limited to the link between Mirjaveh and Zahedan (94 km). In South Asia, the above-mentioned links in India and Pakistan are of 1676 mm gauge, leaving operation between these two countries free of a break-of-gauge problem. In South-East Asia, the same applies to operation between Malaysia and Thailand which both operate on 1000 gauge. The magnitude of the gauge difference between Finland and the Russian Federation is insignificant and does not technically impair rail operation between the two countries. However, the difference between the 1435 mm gauge on the Iranian Railways and the 1520 mm on the railways of its two neighboring countries in the corridor with which rail- carried goods is or could be exchanged in future, i.e. Azerbaijan and Turkmenistan, is an obstacle to smooth cross-border operation. Given the above, attracting traffic to the corridor will require overcoming the break-of- gauge problems. Typically, the types of traffic that will use the corridor as well as their volumes and trade directions will influence the type of equipment that will be installed to solve the problem at a particular location. While it is difficult at this point in time to clearly estimate how traffic will shape up in the corridor in terms of the nature of the cargo as well as volumes, it is interesting to look at the various ―gauge bridging measures implemented by railways facing a gauge problem at their border-points, i.e. techniques or measures applied in order to overcome the discontinuity of railway track gauge to permit vehicles and/or their loads to pass from one gauge to another. These measures include: 1) Transshipment. The transfer of freight by manual or mechanical means from wagons of one gauge to wagons of another gauge. techniques vary from basic labor intensive methods to mechanical methods involving equipment with different levels of automation and technological sophistication. The type and volume of the cargo to be transshipped as well as the extent of containerization all have a role in determining the type of transshipment employed. The uses of containers permit safer and quicker handling of cargo. Transshipping containers requires a transshipment yard with a set of parallel tracks of either gauge. Depending on the type of equipment to be used, the tracks might be separated by an area of heavy duty pavement to allow the operation of vehicles. Rubber-tired gantry cranes or overhead rail mounted gantry cranes – in varying numbers depending on the length of the tracks to be served and the need for high throughput – may also be used. Overhead rail mounted gantry cranes guarantee that the equipment is there as soon as a set of wagons is positioned for transshipment. However, they do not remove entirely the need for some sort of rubber-mounted equipment (gantry or reach- stackers) as it may be necessary to interrupt the journey of one or several container(s), e.g. repair or specific customs requirements. The type of equipment to be provided will typically depend upon the volumes of containers to be transhipped as well as yard configuration/constraints. For volumes exceeding 50,000 TEU per year, it is likely that either rail-mounted gantry or rubber-tyred gantry would be required in order to minimize the unit cost of transshipment. For smaller volumes, the use of heavy toplifting trucks or reach-

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stackers would be sufficient. 2) Bogie changing. This involves lifting wagons on a set of jacks, rolling out bogies of one gauge and rolling in bogies of the other gauge. It is an inter-gauge transfer technique by which each wagon and its load is raised off bogies of one gauge and then lowered onto bogies of the other gauge. Two alternative methods are available for bogie exchange, i.e. a labor intensive method and an automated method with little impact on the layout of the facilities. Within the bogie exchanging area proper, the system differs depending upon whether a labor intensive or an automated technique is applied. For a typical labor intensive bogie exchange, a wagon is brought into the shed by a tractor or a small shunting engine, and four electrically actuated portable jacks are positioned under special jacking plates on the wagon. The brake rods are disconnected from the bogies and the wagon is raised off the bogies. These bogies are rolled forward and the different gauge bogies, which have been placed on the track behind the wagon by a mobile crane, are rolled forward into position. The wagon is then lowered onto these bogies, the brake rods are attached, the brakes are tested and the wagon is pushed out by a tractor or a small shunting engine. This labor intensive method for bogie exchange is practiced by the countries in the corridor which face one or more break-of-gauge problem on their rail systems. 3) Use of wagons with variable gauge bogies. These are wagons fitted with bogies, or wheelsets, equipped with adjustable axles enabling the distance between the wheel flanges to adjust from one track gauge to another as the wagons are pulled along a special transition track at reduced speed. Another gauge bridging measure involves the provision of dual gauge, i.e. the provision of two different track gauges on a single track foundation through the insertion of a third rail (or sometimes a fourth rail to obtain the so-called composite gauge). Finally, another option is to uni-gauge tracks, i.e. a process involving the conversion of tracks of different gauges to a single gauge standard. However, these two solutions are viable only when different standards are applied within the same country, or for cross- border movements over a very short distances to fit specific requirements such as extending a line section of one country onto the territory of another country to gain access to specific installations or sites, e.g. ports or mining sites. There are no situation requiring such solutions within the north-south corridor and, therefore, only the options of transshipment, bogie-changing, or wagons with variable gauge bogies are considered hereafter. 5.5 Lack of customs Lack of customs and tariff agreements with most of the countries along transcontinental and regional transport routes also creates barriers for smooth cargo flows along the routes. Greater flexibility of tariff policies is required amid the present day competition. 5.6 Regulations There is no globally unified regime to cover rail transport in the same way as for air and maritime transport. This complicates international rail operations, as there is a lack of consistency in the legal regimes for rail operations. The risk associated with multiple legal frameworks discourages the international use of railway services.

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Domestic regulations for transport can also create difficulties for international operations. National operating rules, signaling systems and safety standards vary between countries, giving rise to compliance issues and requiring additional training of staff to ensure safe operations. Formalities not related to transport, such as visas for train crews and customs procedures, can also create unnecessary delay and costs. In general, countries with international rail transport face common challenges, namely:  Congestion and delays at border stations, particularly at stations with a change of gauge,  Excessive customs controls and often unreasonable and repetitive border checks, veterinary inspections; lengthy procedures for crossing borders,  Lack of harmonization in the documents that are required by different countries; incorrect information written on the consignment note or absence of the consignment note and accompanying documents,  Inspections on both sides of border crossings,  Different technical standards for rolling stock, power supply, braking systems and signaling systems,  Lack of qualified staff to operate cross-border trains,  Weak infrastructure. The majority of the technical, operational and administrative difficulties fall under the scope of responsibility of the railway authorities and can be resolved by improving and harmonizing operational regulations and communication and the conclusion of bilateral or multilateral agreements between the railways concerned. When ensuring through cross-border transport, one necessarily comes into contact with the privileges based on state authority. Resolving questions such as the simplification of excessive customs inspections and transit procedures, harmonization of transport documents, opening hours of border offices and providing enough personnel are under the scope of responsibility of the states and should be dealt with at intergovernmental level. As an intergovernmental organization which functions exclusively for the interests and benefits of railway transport, OTIF is authorized to intervene in the sphere of rail facilitation at governmental level. In COTIF 1999, an important role was given to the task of border crossing facilitation. Not only do the aims of the Organization refer explicitly to the removal of obstacles to the crossing of frontiers (see Article 2 § 1 b), they also establish responsibility for special public interests. At the same time, COTIF 1999 also provides the instruments for achieving this aim: Article 2 § 2 a) says that OTIF may elaborate other systems of law, which does not exclude the customs sector. The Member States may even elaborate other international conventions using the framework of OTIF (Article 2 § 2 b)). Strengthening the Organization as a platform for action is also an objective, as according to Article 3 § 1, the Member States undertake to concentrate international

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cooperation within the framework of OTIF, which also concerns facilitation in border crossing. In order to develop international rail transport, a number of key issues need to be addressed. The main ones are:  participation in international railway organizations,  harmonization of transport documents,  tackling difficulties in terms of gauge changes,  simplification of customs procedures for crossing borders,  standardization and harmonization of technical requirements. The two international railway organizations, OTIF and OSJD, play a key role in the coordination and organization of international rail transport between countries in Europe and Asia. It is estimated that the member countries of the two organizations have a significantly higher volume of international traffic than other countries. Both organizations coordinate law, operating rules, key transport documents, wagon use, safety and technical standards for infrastructure and rolling stock. OSJD also coordinates policy, transit tariffs and train timetables. Railways will be used more for international traffic with the increase in regional integration and intra-regional trade, as well as environmental awareness. However, operational systems cannot be established in a short time period. Countries need to gradually harmonize their technical standards, transport documents operating rules, tariff structures (in the OTIF area, this is considered as a commercial issue and left to the sector) and rules for wagon exchange. The clear role of the international and regional organizations is to work together with the various railways in each country to develop the international corridors and prioritize work on the relevant routes. The numerous international railway corridors were established and identified by different railway organizations. OSJD has identified 13 rail corridors, ECO has prioritized five. UNECE and ESCAP have also identified their own priority transport corridors and some of them are identical. To promote their corridors, international organizations have elaborated various agreements and regulations, which need to be executed effectively in order to remove or reduce legal incompatibility and facilitate the crossing of borders.

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6 En-route countries in the introduced corridors, top exports and imports,…

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En-route countries’ situation in introduced corridors, top exports and imports, top export destinations, top import origins, …

6.1 Afghanistan A landlocked nation in south-central Asia, the Islamic Republic of Afghanistan shipped US$421.1 million worth of goods around the globe in 2016. That dollar amount results from a 4.4% gain since 2009 when the Great Recession kicked in, but a -26.3% decline from 2015 to 2016. Based on statistics from the International Monetary Fund‘s World Economic Outlook Database, Afghanistan‘s total Gross Domestic Product amounted to $67.5 billion in April 2017 (on a purchasing power parity basis). Therefore, exports represent an estimated 0.6% of total Afghan economic output. 6.2 Azerbaijan Azerbaijan is the 70th largest export economy in the world and the 104th most complex economy according to the Economic Complexity Index (ECI). In 2015, Azerbaijan exported $16.9B and imported $11.1B, resulting in a positive trade balance of $5.78B. In 2015 the GDP of Azerbaijan was $53B and its GDP per capita was $17.8k. The top exports of Azerbaijan are Crude Petroleum ($14.4B), Refined Petroleum ($620M), Raw Sugar ($222M), Petroleum Gas ($212M) and Other Nuts ($117M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Other Large Iron Pipes ($401M), Cars ($347M), Valves ($317M), Wheat ($276M) and Jewelry ($258M). The top export destinations of Azerbaijan are Italy ($4.22B), Germany ($1.68B), France ($1.13B), Indonesia ($1.07B) and the Czech Republic ($929M). The top import origins are Turkey ($1.69B), Russia ($1.69B), the United Kingdom ($875M), Germany ($838M) and Italy ($729M). Azerbaijan borders Armenia, Georgia, Iran, Turkey and Russia by land and Turkmenistan by sea. In 2015 Azerbaijan exported $16.9B, making it the 70th largest exporter in the world. During the last five years the exports of Azerbaijan have decreased at an annualized rate of -7.9%, from $25.3B in 2010 to $16.9B in 2015. The most recent exports are led by Crude Petroleum which represent 85.5% of the total exports of Azerbaijan, followed by Refined Petroleum, which account for 3.67%. Imports In 2015 Azerbaijan imported $11.1B, making it the 93rd largest importer in the world. During the last five years the imports of Azerbaijan have increased at an annualized rate of 1.7%, from $10.1B in 2010 to $11.1B in 2015. The most recent imports are led by Other Large Iron Pipes which represent 3.62% of the total imports of Azerbaijan, followed by Cars, which account for 3.13%. Top export destinations Italy ($4.22B), Germany ($1.68B), France ($1.13B), Indonesia ($1.07B) and the Czech Republic ($929M).

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Origins Top import origins of Azerbaijan are Turkey ($1.69B), Russia ($1.69B), the United Kingdom ($875M), Germany ($838M) and Italy ($729M). 6.3 Austria Austria is the 31st largest export economy in the world and the 6th most complex economy according to the Economic Complexity Index (ECI). In 2015, Austria exported $141B and imported $146B, resulting in a negative trade balance of $4.74B. In 2015 the GDP of Austria was $376B and its GDP per capita was $49.4k. The top exports of Austria are Packaged Medicaments ($5.49B), Vehicle Parts ($4.55B), Cars ($4.02B), Human or Animal Blood ($2.88B) and Combustion Engines ($2.52B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Cars ($8.19B), Vehicle Parts ($3.82B), Refined Petroleum ($3.5B), Hormones ($3.24B) and Packaged Medicaments ($3.04B). The top export destinations of Austria are Germany ($38.8B), the United States ($11B), Italy ($9.1B), Switzerland ($7.82B) and France ($6.17B). The top import origins are Germany ($56.6B), Italy ($9.2B), Switzerland ($8.36B), China ($8.28B) and the Czech Republic ($6.21B). Austria borders Switzerland, the Czech Republic, Germany, Hungary, Italy, Slovakia and Slovenia. 6.4 Bulgaria Bulgaria is the 65th largest export economy in the world and the 41st most complex economy according to the Economic Complexity Index (ECI). In 2015, Bulgaria exported $26.4B and imported $29B, resulting in a negative trade balance of $2.52B. In 2015 the GDP of Bulgaria was $50.2B and its GDP per capita was $18.2k. The top exports of Bulgaria are Refined Petroleum ($1.79B), Refined Copper ($1.45B), Packaged Medicaments ($843M), Raw Copper ($800M) and Wheat ($721M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Crude Petroleum ($2.02B), Copper Ore ($1.71B), Packaged Medicaments ($1.01B), Petroleum Gas ($958M) and Cars ($854M). The top export destinations of Bulgaria are Germany ($3.41B), Italy ($2.55B), Turkey ($2.34B), Romania ($1.9B) and Greece ($1.54B). The top import origins are Germany ($3.53B), Russia ($3.38B), Italy ($2.05B), Romania ($1.93B) and Turkey ($1.66B). Bulgaria borders Turkey, Greece, Macedonia, Romania and Serbia. 6.5 China China is the largest export economy in the world and the 19th most complex economy according to the Economic Complexity Index (ECI). In 2015, China exported $2.37T and imported $1.27T, resulting in a positive trade balance of $1.1T. In 2015 the GDP of China was $11T and its GDP per capita was $14.5k.

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The top exports of China are Computers ($188B), Broadcasting Equipment ($165B), Telephones ($112B), Integrated Circuits ($65.7B) and Office Machine Parts ($45.4B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Crude Petroleum ($119B), Integrated Circuits ($95.2B), Gold ($65.8B), Iron Ore ($42.9B) and Cars ($38.5B). The top export destinations of China are the United States ($457B), Hong Kong ($273B), Japan ($152B), Germany ($97.4B) and South Korea ($90.1B). The top import origins are South Korea ($131B), the United States ($128B), Japan ($116B), Germany ($78.6B) and Other Asia ($73.4B). China borders Afghanistan, Bhutan, Hong Kong, India, Kazakhstan, Kyrgyzstan, Laos, Macau, Mongolia, Nepal, Pakistan, North Korea, Tajikistan, Vietnam and Russia by land and Brunei, Indonesia, Japan, South Korea, Malaysia, the Philippines and Taiwan by sea. 6.6 The Czech Republic The Czech Republic is the 29th largest export economy in the world and the 8th most complex economy according to the Economic Complexity Index (ECI). In 2015, the Czech Republic exported $147B and imported $139B, resulting in a positive trade balance of $7.52B. In 2015 the GDP of the Czech Republic was $185B and its GDP per capita was $33.8k. The top exports of the Czech Republic are Cars ($16.6B), Vehicle Parts ($12.4B), Computers ($7.57B), Telephones ($2.8B) and Seats ($2.27B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Vehicle Parts ($7.76B), Computers ($7.23B), Broadcasting Equipment ($3.67B), Cars ($3.37B) and Packaged Medicaments ($3.18B). The top export destinations of the Czech Republic are Germany ($45B), Slovakia ($11.5B), the United Kingdom ($7.82B), Poland ($7.36B) and France ($7.36B). The top import origins are Germany ($36.8B), China ($18.5B), Poland ($11.4B), Slovakia ($7.66B) and Italy ($5.7B). The Czech Republic borders Austria, Germany, Poland and Slovakia. 6.7 Finland Finland is the 38th largest export economy in the world. In 2016, Finland exported $55.1B and imported $58.3B, resulting in a negative trade balance of $3.13B. The top exports of Finland are Refined Petroleum ($4.15B), Kaolin Coated Paper ($4.14B), Unspecified ($3.21B), Large Flat-Rolled Stainless Steel ($2.12B) and Sawn Wood ($1.81B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Unspecified ($3.98B), Crude Petroleum ($3.79B), Cars ($2.69B), Refined Petroleum ($2.19B) and Packaged Medicaments ($1.68B). The top export destinations of Finland are Germany ($7.36B), Sweden ($6.08B), the United States ($4.15B), the Netherlands ($3.73B) and Russia ($3.23B). The top import origins are Germany ($10.3B), Sweden ($9.4B), Russia ($6.54B), the Netherlands ($4.54B) and China ($2.88B). Finland borders Norway, Russia and Sweden by land and Estonia by sea.

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6.8 Georgia Georgia is the 87th largest export economy in the world and the 60th most complex economy according to the Economic Complexity Index (ECI). In 2016, Georgia exported $2.11B and imported $7.23B, resulting in a negative trade balance of $5.12B. In 2016 the GDP of Georgia was $14.3B and its GDP per capita was $10k. The top exports of Georgia are Copper Ore ($311M), Other Nuts ($178M), Ferroalloys ($169M), Cars ($166M) and Wine ($113M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($618M), Cars ($475M), Petroleum Gas ($317M), Packaged Medicaments ($272M) and Copper Ore ($248M). The top export destinations of Georgia are Russia ($206M), Turkey ($173M), China ($169M), Bulgaria ($167M) and Azerbaijan ($153M). The top import origins are Turkey ($1.18B), Russia ($840M), China ($745M), Germany ($392M) and the United States ($324M). Georgia borders Armenia, Azerbaijan, Turkey and Russia by land and Ukraine by sea. 6.9 Germany Germany is the 3rd largest export economy in the world and the 4th most complex economy according to the Economic Complexity Index (ECI). In 2015, Germany exported $1.24T and imported $989B, resulting in a positive trade balance of $252B. In 2015 the GDP of Germany was $3.36T and its GDP per capita was $48k. The top exports of Germany are Cars ($153B), Vehicle Parts ($56.2B), Packaged Medicaments ($50.3B), Planes, Helicopters, and/or Spacecraft ($32.8B) and Human or Animal Blood ($16.3B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Cars ($46.7B), Vehicle Parts ($34.9B), Crude Petroleum ($30.5B), Computers ($26.1B) and Packaged Medicaments ($24.1B). The top export destinations of Germany are the United States ($122B), France ($101B), the United Kingdom ($93.9B), China ($78.6B) and the Netherlands ($72.1B). The top import origins are China ($97.4B), the Netherlands ($91.3B), France ($72.3B), the United States ($63.3B) and Italy ($51.5B). Germany borders Austria, Belgium, Switzerland, the Czech Republic, Denmark, France, Luxembourg, the Netherlands and Poland by land and the United Kingdom and Sweden by sea. 6.10 Hungary Hungary is the 35th largest export economy in the world and the 10th most complex economy according to the Economic Complexity Index (ECI). In 2015, Hungary exported $98.1B and imported $88.8B, resulting in a positive trade balance of $9.3B. In 2015 the GDP of Hungary was $121B and its GDP per capita was $26.5k. The top exports of Hungary are Cars ($11.5B), Vehicle Parts ($5.13B), Spark- Ignition Engines ($3.24B), Packaged Medicaments ($3.09B) and Computers ($2.97B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Vehicle Parts ($5.19B), Packaged Medicaments ($2.61B), Cars ($2.35B), Engine Parts ($2.27B) and Integrated Circuits ($2.16B).

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The top export destinations of Hungary are Germany ($25.8B), Romania ($5.26B), the United States ($5.19B), Italy ($4.96B) and France ($4.29B). The top import origins are Germany ($22.9B), Austria ($5.54B), China ($5.36B), Poland ($4.86B) and the Czech Republic ($4.36B). Hungary borders Austria, Croatia, Romania, Serbia, Slovakia, Slovenia and Ukraine.

6.11 India India is the 18th largest export economy in the world and the 33rd most complex economy according to the Economic Complexity Index (ECI). In 2016, India exported $256B and imported $344B, resulting in a negative trade balance of $88.1B. In 2016 the GDP of India was $2.26T and its GDP per capita was $6.57k. The top exports of India are Refined Petroleum ($25.4B), Diamonds ($24B), Jewelry ($12.6B), Packaged Medicaments ($11.6B) and Cars ($6.36B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Crude Petroleum ($60.7B), Gold ($22.9B), Diamonds ($19B), Coal Briquettes ($12.7B) and Telephones ($10.6B). The top export destinations of India are the United States ($42B), the United Arab Emirates ($30B), Hong Kong ($13.2B), China ($8.92B) and the United Kingdom ($8.57B). The top import origins are China ($58.4B), the United States ($21.7B), Hong Kong ($15.4B), Switzerland ($14.6B) and South Korea ($11.6B). India borders Afghanistan, Bangladesh, Bhutan, China, Burma, Nepal and Pakistan by land and Indonesia, Sri Lanka, Maldives and Thailand by sea. 6.12 Iran Iran is the 60th largest export economy in the world. In 2015, Iran exported $31.8B and imported $43.9B, resulting in a negative trade balance of $12.2B. Exports In 2015, Iran exported $31.8B, making it the 60th largest exporter in the world. The most recent exports are led by Crude Petroleum which represents 57.6% of the total exports of Iran, followed by Ethylene Polymers, which account for 7.55%. Imports In 2015 Iran imported $43.9B, making it the 51st largest importer in the world. During the last five years the imports of Iran have decreased at an annualized rate of - 8.9%, from $70.4B in 2010 to $43.9B in 2015. The most recent imports are led by Cars which represent 3.35% of the total imports of Iran, followed by Corn, which account for 2.13%. Destinations The top export destinations of Iran are China ($14.5B), India ($5.66B), Japan ($2.89B), South Korea ($2.11B) and Turkey ($1.3B).

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Origins The top import origins of Iran are China ($17.8B), South Korea ($3.76B), Turkey ($3.62B), India ($3.13B) and Germany ($2.19B). The top exports of Iran are Crude Petroleum ($18.3B), Ethylene Polymers ($2.4B), Acyclic Alcohols ($1.27B), Other Nuts ($830M) and Peat ($694M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Cars ($1.47B), Corn ($936M), Vehicle Parts ($932M), Jewelry ($885M) and Flat Flat- Rolled Steel ($860M). The top export destinations of Iran are China ($14.5B), India ($5.66B), Japan ($2.89B), South Korea ($2.11B) and Turkey ($1.3B). The top import origins are China ($17.8B), South Korea ($3.76B), Turkey ($3.62B), India ($3.13B) and Germany ($2.19B). Iran borders Afghanistan, Armenia, Azerbaijan, Iraq, Pakistan, Turkmenistan and Turkey by land and the United Arab Emirates, Bahrain, Kuwait, Oman, Qatar and Saudi Arabia by sea. 6.13 Kazakhstan Kazakhstan is the 42nd largest export economy in the world. In 2016, Kazakhstan exported $36.8B and imported $25.1B, resulting in a positive trade balance of $11.6B. In 2016 the GDP of Kazakhstan was $133B and its GDP per capita was $25.3k. The top exports of Kazakhstan are Crude Petroleum ($19.4B), Refined Copper ($1.82B), Radioactive Chemicals ($1.77B), Petroleum Gas ($1.74B) and Ferroalloys ($1.4B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($777M), Packaged Medicaments ($695M), Other Large Iron Pipes ($525M), Valves ($483M) and Petroleum Gas ($473M). The top export destinations of Kazakhstan are Italy ($7.47B), China ($4.21B), Russia ($3.51B), the Netherlands ($3.26B) and Switzerland ($2.69B). The top import origins are Russia ($9.4B), China ($8.29B), Germany ($1.26B), the United States ($1.11B) and Italy ($931M). Kazakhstan borders China, Kyrgyzstan, Turkmenistan, Uzbekistan and Russia. 6.14 Kyrgyzstan Kyrgyzstan is the 141st largest export economy in the world. In 2015, Kyrgyzstan exported $1.29B and imported $4.67B, resulting in a negative trade balance of $3.38B. In 2015 the GDP of Kyrgyzstan was $6.57B and its GDP per capita was $3.43k. The top exports of Kyrgyzstan are Gold ($547M), Refined Petroleum ($69.4M), Dried Legumes ($46M), Planes, Helicopters, and/or Spacecraft ($38.9M) and Vehicle Parts ($31.5M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($676M), Light Mixed Woven Cotton ($215M), Packaged Medicaments ($130M), Synthetic Filament Yarn Woven Fabric ($102M) and Rubber Footwear ($86.5M). The top export destinations of Kyrgyzstan are Switzerland ($441M), Kazakhstan ($204M), the United Arab Emirates ($97.8M), Turkey ($95.9M) and Uzbekistan ($95M). The top import origins are China ($1.67B), Russia ($1.27B), Kazakhstan ($535M), Turkey ($216M) and the United States ($119M).

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Kyrgyzstan borders China, Kazakhstan, Tajikistan and Uzbekistan. A landlocked and mountainous country located in Central Asia, Kyrgyzstan shipped US$1.5 billion worth of goods around the globe in 2016. 6.15 Oman Oman is the 53rd largest export economy in the world. In 2016, Oman exported $21.1B and imported $20.6B, resulting in a positive trade balance of $439M. In 2016, the GDP of Oman was $66.3B and its GDP per capita was $15k. The top exports of Oman are Crude Petroleum ($12.1B), Refined Petroleum ($2.28B), Nitrogenous Fertilizers ($499M), Raw Aluminium ($468M) and Cyclic Hydrocarbons ($454M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($1.85B), Gold ($558M), Cement ($415M), jewelry ($373M) and Iron Ore ($337M). The top export destinations of Oman are China ($10.7B), the United Arab Emirates ($1.84B), India ($924M), the United States ($811M) and Iraq ($759M). The top import origins are the United Arab Emirates ($5.15B), India ($2.58B), Japan ($2.55B), China ($2.15B) and the United States ($1.8B). Oman borders the United Arab Emirates, Saudi Arabia and Yemen by land and Iran and Pakistan by sea. Based on statistics from the International Monetary Fund‘s World Economic Outlook Database, Oman‘s total Gross Domestic Product amounted to $173.1 billion in 2016 (on a purchasing power parity basis). Therefore, exports accounted for about 14.1% of total Omani economic output. From a continental perspective, 88.4% of Omani exports by value were delivered to Asian countries while 3.8% were sold to African importers. Oman shipped another 3.7% worth of goods to North America with 3% going to Europe. Given Oman‘s population of 3.4 million people, its total $24.5 billion in 2016 exports translates to roughly $7,300 for every resident in that country. 6.16 Pakistan Pakistan is the 54th largest export economy in the world and the 79th most complex economy according to the Economic Complexity Index (ECI). In 2016, Pakistan exported $20.5B and imported $45.9B, resulting in a negative trade balance of $25.5B. In 2016 the GDP of Pakistan was $283B and its GDP per capita was $5.25k. The top exports of Pakistan are House Linens ($2.99B), Rice ($1.7B), Non-Knit Men's Suits ($1.48B), Non-Retail Pure Cotton Yarn ($1.18B) and Heavy Pure Woven Cotton ($936M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($5.74B), Crude Petroleum ($1.98B), Palm Oil ($1.7B), Petroleum Gas ($1.06B) and Cars ($1B). The top export destinations of Pakistan are the United States ($3.43B), China ($1.59B), the United Kingdom ($1.56B), Afghanistan ($1.37B) and Germany ($1.19B). The top import origins are China ($17.2B), the United States ($2.11B), Indonesia ($2.02B), Japan ($1.93B) and India ($1.59B). Pakistan borders Afghanistan, China, India and Iran by land and Oman by sea.

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6.17 Poland Poland is the 19th largest export economy in the world and the 20th most complex economy according to the Economic Complexity Index (ECI). In 2016, Poland exported $196B and imported $186B, resulting in a positive trade balance of $9.6B. In 2016 the GDP of Poland was $469B and its GDP per capita was $27.8k. The top exports of Poland are Vehicle Parts ($11.2B), Cars ($7.59B), Seats ($5.46B), Computers ($4B) and Other Furniture ($3.98B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Cars ($7.21B), Crude Petroleum ($7.13B), Vehicle Parts ($6.67B), Packaged Medicaments ($3.89B) and Computers ($3.61B). The top export destinations of Poland are Germany ($53B), the United Kingdom ($13B), the Czech Republic ($12.7B), France ($10.8B) and Italy ($9.4B). The top import origins are Germany ($58.9B), China ($15.1B), Italy ($12.4B), the Netherlands ($11.2B) and the Czech Republic ($9.2B). Poland borders Belarus, the Czech Republic, Germany, Lithuania, Russia, Slovakia and Ukraine by land and Denmark and Sweden by sea. 6.18 Romania Romania is the 34th largest export economy in the world. In 2016, Romania exported $63.4B and imported $74.4B, resulting in a negative trade balance of $10.9B. The top exports of Romania are Vehicle Parts ($6.69B), Insulated Wire ($4.61B), Cars ($4.06B), Unspecified ($2.69B) and Electrical Control Boards ($1.99B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Unspecified ($3.79B), Vehicle Parts ($3.71B), Packaged Medicaments ($2.69B), Cars ($2.33B) and Crude Petroleum ($2.15B). The top export destinations of Romania are Germany ($13.7B), Italy ($7.37B), France ($4.59B), Hungary ($3.3B) and the United Kingdom ($2.75B). The top import origins are Germany ($15.2B), Italy ($7.31B), Hungary ($5.14B), France ($4.02B) and Poland ($3.49B). Romania borders Bulgaria, Hungary, Moldova, Serbia and Ukraine by land and Turkey by sea. 6.19 Slovakia Slovakia is the 40th largest export economy in the world and the 16th most complex economy according to the Economic Complexity Index (ECI). In 2015, Slovakia exported $68.9B and imported $71B, resulting in a negative trade balance of $2.11B. In 2015 the GDP of Slovakia was $87.3B and its GDP per capita was $29.9k. The top exports of Slovakia are Cars ($13.2B), Video Displays ($4.81B), Vehicle Parts ($4.47B), Refined Petroleum ($1.98B) and Vehicle Bodies ($1.73B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Vehicle Parts ($6.54B), Broadcasting Equipment ($3.32B), Crude Petroleum ($2.24B), Petroleum Gas ($1.9B) and Cars ($1.85B).

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The top export destinations of Slovakia are Germany ($15.2B), the Czech Republic ($7.66B), Hungary ($4.22B), Poland ($4.18B) and France ($4.13B). The top import origins are Germany ($12.5B), the Czech Republic ($11.5B), China ($5.92B), South Korea ($4.55B) and Poland ($4.39B). Slovakia borders Austria, the Czech Republic, Hungary, Poland and Ukraine. 6.20 Syria Syria is the 158th largest export economy in the world. In 2015, Syria exported $613M and imported $4.68B, resulting in a negative trade balance of $4.07B. The top exports of Syria are Spice Seeds ($83.2M), Apples and Pears ($53.2M), Calcium Phosphates ($37.1M), Refined Copper ($32.1M) and Other Nuts ($30.3M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Seed Oils ($140M), Wheat Flours ($99M), Wheat ($96.9M), Delivery Trucks ($96.8M) and Cars ($96.3M). The top export destinations of Syria are Egypt ($153M), Jordan ($100M), Saudi Arabia ($82.5M), India ($33.5M) and Turkey ($25.4M). The top import origins are Turkey ($1.38B), China ($1.02B), Egypt ($237M), South Korea ($209M) and Russia ($186M). Syria borders Iraq, Jordan, Lebanon and Turkey by land and Cyprus by sea. 6.21 Tajikistan Tajikistan is the 152nd largest export economy in the world. In 2015, Tajikistan exported $846M and imported $3.54B, resulting in a negative trade balance of $2.69B. In 2015 the GDP of Tajikistan was $7.85B and its GDP per capita was $2.83k. The top exports of Tajikistan are Raw Aluminium ($257M), Gold ($140M), Raw Cotton ($83M), Lead Ore ($57.1M) and Zinc Ore ($55.9M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($315M), Wheat ($184M), Rubber Footwear ($97.7M), Petroleum Gas ($92.2M) and Knit Men's Suits ($91M). The top export destinations of Tajikistan are Turkey ($198M), Kazakhstan ($155M), Switzerland ($140M), Algeria ($54.5M) and Afghanistan ($50.6M). The top import origins are China ($1.8B), Russia ($758M), Kazakhstan ($418M), Turkey ($162M) and Switzerland ($42.5M). Tajikistan borders Afghanistan, China, Kyrgyzstan and Uzbekistan. 6.22 Turkey Turkey is the 28th largest export economy in the world and the 40th most complex economy according to the Economic Complexity Index (ECI). In 2015, Turkey exported $153B and imported $187B, resulting in a negative trade balance of $34.1B. In 2015, the GDP of Turkey was $717B and its GDP per capita was $20k. The top exports of Turkey are Gold ($8.45B), Cars ($7.41B), Delivery Trucks ($4.48B), Vehicle Parts ($4.31B) and jewelry ($3.56B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Cars ($9.5B), Refined Petroleum ($9.1B), Vehicle Parts ($5B), Planes, Helicopters, and/or Spacecraft ($4.06B) and Scrap Iron ($3.92B).

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The top export destinations of Turkey are Germany ($15.1B), the United Kingdom ($12.1B), Iraq ($8.55B), the United States ($7.47B) and Italy ($7.33B). The top import origins are China ($24.4B), Germany ($22.5B), Russia ($12.1B), Italy ($10.8B) and the United States ($10.4B). Turkey borders Armenia, Azerbaijan, Georgia, Iran, Iraq, Syria, Bulgaria and Greece by land and Egypt, Cyprus, Romania, Russia and Ukraine by sea. Based on statistics from the International Monetary Fund‘s World Economic Outlook Database, Turkey‘s total Gross Domestic Product amounted to $1.670 trillion as of November 2016. 6.23 Turkmenistan Turkmenistan is the 90th largest export economy in the world. In 2015, Turkmenistan exported $8.94B and imported $5.54B, resulting in a positive trade balance of $3.4B. In 2015 the GDP of Turkmenistan was $35.9B and its GDP per capita was $16.5k. The top exports of Turkmenistan are Petroleum Gas ($7.17B), Refined Petroleum ($447M), Peat ($252M), Crude Petroleum ($243M) and Raw Cotton ($236M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Iron Structures ($351M), Raw Iron Bars ($175M), Insulated Wire ($173M), Iron Pipes ($136M) and Delivery Trucks ($128M). The top export destinations of Turkmenistan are China ($7B), Afghanistan ($549M), Turkey ($542M), Italy ($169M) and Georgia ($111M). The top import origins are Turkey ($1.85B), Russia ($843M), China ($813M), Germany ($329M) and South Korea ($182M). Turkmenistan borders Afghanistan, Iran, Kazakhstan and Uzbekistan by land and Azerbaijan by sea. The top export destinations of Turkmenistan are China ($7B), Afghanistan ($549M), Turkey ($542M), Italy ($169M) and Georgia ($111M). The top import origins of Turkmenistan are Turkey ($1.85B), Russia ($843M), China ($813M), Germany ($329M) and South Korea ($182M). 6.24 Uzbekistan Uzbekistan is the 100th largest export economy in the world. In 2015, Uzbekistan exported $5.85B and imported $10B, resulting in a negative trade balance of $4.18B. In 2015 the GDP of Uzbekistan was $66.7B and its GDP per capita was $6.09k. The top exports of Uzbekistan are Gold ($1.88B), Petroleum Gas ($577M), Non-Retail Pure Cotton Yarn ($484M), Radioactive Chemicals ($432M) and Refined Copper ($341M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Packaged Medicaments ($570M), Vehicle Parts ($551M), Refined Petroleum ($493M), Coated Flat-Rolled Iron ($248M) and Sawn Wood ($212M). The top export destinations of Uzbekistan are Switzerland ($1.88B), China ($1.21B), Turkey ($703M), Kazakhstan ($690M) and Russia ($570M). The top import origins are China ($2.24B), Russia ($2.22B), South Korea ($1.28B), Kazakhstan ($940M) and Turkey ($487M).

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Uzbekistan borders Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan by land and Azerbaijan by sea. 6.25 Ukraine Ukraine is the 50th largest export economy in the world and the 43rd most complex economy according to the Economic Complexity Index (ECI). In 2015, Ukraine exported $41.7B and imported $39.6B, resulting in a positive trade balance of $2.1B. In 2015 the GDP of Ukraine was $90.6B and its GDP per capita was $7.94k. The top exports of Ukraine are Semi-Finished Iron ($3.38B), Seed Oils ($3.05B), Corn ($3B), Wheat ($2.68B) and Iron Ore ($2.12B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Petroleum Gas ($4.91B), Refined Petroleum ($3.94B), Coal Briquettes ($1.36B), Packaged Medicaments ($1.15B) and Cars ($864M). The top export destinations of Ukraine are Russia ($4.99B), Egypt ($3.34B), Turkey ($2.89B), China ($2.48B) and Italy ($2.1B). The top import origins are Russia ($8.18B), Germany ($4.07B), China ($3.77B), Poland ($2.77B) and Belarus ($2.53B). Ukraine borders Belarus, Hungary, Moldova, Poland, Romania, Russia and Slovakia by land and Georgia and Turkey by sea.

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7 Conclusion

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The strategic position of Middle East enables the Region to benefit from transit of goods from China, its own region, as well as to Europe. The active participation of Middle Eastern states in creating international transport corridors caused by several factors:  geographical location of the region,  the efforts to maximize the transit potential,  the desire to diversify and strengthen the economy and to stimulate the development of the transport sector in the region,  as well as to get direct access to the world markets and to become a hub,  consolidating the flow of goods coming from China to Europe. To realize its transit potential, Middle Eastern and Central Asian countries carry out a set of measures to modernize existing transport corridors and to build new ones with the multiplier effect. Internal railways linking different regions within each country are developing. This contributes to the economic growth and social stability of the states. Construction of the transit corridors through Middle East and Central Asia motivates the regional integration since it makes countries interdependent in solving economic and political issues. Diversification of export routes allows Middle Eastern and Central Asian countries to increase the attractiveness of the region for international freight operators and to increase the transit flows. Transit transport system has been and will continue to carry top priority for Middle Eastern countries due to their physical isolation and remoteness from the major sea lanes. The futility of the existing infrastructure to meet the requirements of the modern economies came to forefront. The countries concerned would have to respond to the new challenges. The encouragement they receive from the world community makes them to adopt regionalism as a state policy. The underlying idea is to make use of cost effective transport lanes available in this region. The lack of resources and declining foreign investment and official development assistance inflows make it difficult for the countries to improve upon the existing infrastructure. Yet many of the countries have managed to get loans and technical assistance to refurbish their crumbling infrastructure. The costs of replacing or upgrading the depleting infrastructure including maintenance of rail and tracks and rolling stock etc. are formidable. More coordinated approach to use the existing infrastructure, where possible instead of opting for big projects with doubtful utility, should be adopted. This is the only way to meet the in infrastructures needs to overcome the limited available resources. Currently border crossings and the related formalities restrict the smooth transit movement of goods between different landlocked countries and their transit neighbors. Construction and refurbishment of border crossings and border infrastructure would improve the situation. The accession to international conventions costs money but perhaps it is the most effective vehicle.  Simplification,  standardization of regulations,  harmonization of transit fees,  relaxation of consular difficulties,  facilitating customs clearances regional cooperation

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can be ensured through the application of regional and international laws. The benefits of regional cooperatives ties can improve tremendously if the concerned countries start providing high political support to their implementation. Recommendations on infrastructure development 1. It is of utmost importance to expedite the implementation of identified priority projects with secured funding to improve the competitiveness of routes and relieve the major infrastructure bottlenecks, 2. Political will and long-term commitment from the countries concerned are pre- requisites for a successful implementation of programs that are included in the long-term national plans for infrastructure development. Recommendations on facilitation 1. The obstacles to the smooth movement of goods across international borders should be addressed in an integrated manner by all the authorities concerned and in consultation with the private sector. Partnership between the public and private sectors is indispensable to accelerate progress in transport facilitation. 2. En-route countries should focus on capacity building. Particular emphasis on activities aimed at strengthening the capacities of national officials from the various agencies dealing with border- crossing formalities and procedures is advisable. 3. The establishment and strengthening of appropriate national trade and transport facilitation mechanisms with the participation of government officials and representatives from the private sector, as appropriate, would be necessary in each of en-route countries. This would also contribute to the coordination between the countries and other stakeholders. 4. Sharing experiences and best practices among concerned countries as well as regular assessment and monitoring of progress at the major border-crossing points along the corridors should be ongoing processes. Corridors support economic development Corridors constitute the backbone of a country‘s transport network, providing efficient and low cost transport of goods and people in areas with high density areas. Beyond simply facilitating cheaper and more efficient movements of goods, people, and ideas across places, corridors may impact the distribution of economic activity and development across regions and promote poverty reduction and inclusive growth. This is so because:  Corridors facilitate more efficient trade, which generates economic growth and expands market access,  Corridors may expand factor mobility and access to education, health care and other services,  Ultimately corridors may expand a poor household‘s consumption possibility frontier Corridors contribute to inclusive growth  Moving forward it will be important to assess the project‘s distributional outcomes and  understand the causal change linking corridor development with Poverty Reduction 288

Construction in transit corridors Immediate

Outcomes Reducing in vehicle c operating tio costs Reduction in travel time

Improved access to markets and social infrastructure Short-term nd tran Outcomes Increased vehicular activity- more inter-regional trips

Increased investment and employment Medium-term

Outcomes 4 Increased production, mobility, trans actions (trade and migration)

Gene

Increased household incomes and consumption Long-term

Outcomes

Reduced rural poverty through sustain able increase in economic performance of the agricultural sector

Reduced urban poverty through agglomeration economies

Figure 7.1 Different levels of corridors development

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Regional integration and cooperation through transport connectivity

Challenges

 large financing needs,

 asymmetry in costs and benefits among neighboring countries investing in common infrastructure,  landlocked countries are economically disadvantaged by lack of access to ports,  diverging standards (e.g. on axle load of trucks) or weak transit regimes can lead to forced cargo transfer at borders, costly guarantee schemes, empty backhaul.

Response

 corridor approaches critical to integrating economies (infrastructure and services),

 work with international and regional organizations for harmonization of technical standards, regulatory framework, more efficient utilization of infrastructure and access to markets,  develop regional markets for services, including trucking and transport logistics,

 financing integrated infrastructure investments on both sides of the border,

 tracking and reporting on corridor performance (e.g. average transit speed).

On the Promotion of Multimodal Transport To promote the growth of multimodal transport in Middle East and specially Central Asia, railways and other interline railways must invest in better intermodal facilities, container-handling equipment, and wagons; introduce best practices in empty container and container chassis management; adopt standardized interchange agreements; build up a system of sharing and exchanging information; promote common standards and communication protocol; create electronic portals for rate quotation, booking, and track and trace; consider privatizing state-owned enterprises; and foster competition and market discipline to forge an effective and efficient transport system. Case conclusions If railroads on corridors are put into operation, transportation cost and running time would be reduced dramatically and the importance of rail transport as compared to the maritime and air transport will be doubled, and this definitely enhances the importance of regional and trans-regional as well as develops the commercial and economic relations among region‘s countries, Europe and Persian Gulf ports. The North-South corridor is one of the most important transit routes in Central Asia and it is the most important trade circulate between Asia and Europe, which in comparison with current routes is 40 percent shorter in terms of distance and time, also it is 30 percent cheaper

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than the current route. The North-South corridor is connecting the transit route between North of Europe and Russia, Indian Ocean, Persian Gulf and South Asian countries through Iran and Caspian Sea. The East-West Corridor can transit goods from china and central Asia in east and northeast to Caucasus, West Asia and Mediterranean Sea through Iran and mutually transit goods from these areas to Central Asia and China`s markets. The Asia- Europe Corridor through the Bandar Abbas- Almaty Railroad is connected to the North- South Corridor so the South East Asia is linked to Eastern Europe, Southern Asia, Indian peninsula and the North Africa. Some Railway infrastructure projects along Container Trains on the Islamabad- Tehran-Istanbul, Istanbul-Almaty and Bandar Abbas-Almaty routes are as follows:  improving existing lines along these routes  up-gradation of Quetta-Kohi Taftan Section, (682 Km)  construction railway line between Tabriz-Miyaneh (183 km) and  chabahar-Zahedan Railway (570 Km)  renewing the segment between Van-Kapikoy  supplying Lake Van Ferry Boat  equipping the Zahedan station  electrification of Bafq-Bandar Abbas and Tehran-Mashhad

 up-gradation of Turkmenistan Sarakhs Station Objectives  facilitation of movement of goods and passengers  ensuring the safety of goods and passengers and avoiding unnecessary delays during the transit traffic  cooperation and coordination of the efforts to avoid the incidence of customs frauds and tax evasion  harmonizing necessary administrative affairs dealing with transit traffic International corridors are introduced to facilitate the coordinated implementation of the connecting network. They bring together public and private resources, particularly to:  remove bottlenecks,  build missing cross-border connections, and  promote modal integration and interoperability. They also aim at:  integrating  promoting clean fuel and  other innovative transport solutions,  advancing telematics applications for efficient infrastructure use,  enhancing safety.

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This study, the result of a collaborative effort, was:

Prepared by: Poupak Ashtari, Fahimeh Rahbari, Azadeh Poursaddami

Revised by: Mozhgan Kordbacheh, Deputy Director General of International Affairs Bureau, RAI

Endorsed by: Abbas Nazari, Director General, International Affairs Bureau of RAI & UIC M.E. Regional Office Director

Published by: UIC M.E. Regional Office Email: [email protected], [email protected]

Website: www.rameuic.com

Address: 11th fl. (west wing), HQ of Iranian Railways, Africa Blvd., Argentina Sq., Tehran, Iran

Tel.: (+98) 21 88 200 378 Fax: (+98) 21 88 200 377

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