The Second Asia-Europe Road Transport Conference by International Road Transportation Union (IRU) was held in Tehran. During the conference, which was attended by 450 domestic and foreign transportation experts from 35 developed and developing European and Asian countries, such issues as developing infrastructures of road transportation, problems of border crossing, resilience of road transportation and, most importantly, solutions for bolstering and activating the North-South Corridor were discussed.

At the end of the conference, which was sponsored by IRU (the biggest organization of world corridors supervised by the United Nations), a resolution was issued. The main point in the resolution was the emphasize put on relative advantages and economic benefits of North-South Corridor for international transport of goods and the necessity of strengthening transit capacities of the corridor.

Although the conference discussed the issue of reactivating the North-South Corridor, but under current circumstances and considering the fact that the North-South Corridor has been marginalized during the past two years, activation of other corridors may cause the North-South Corridor to slip into oblivion. Therefore, real activation of North-South Corridor due to rapid growth of global commerce and the importance attached to the plan by Iran needs extensive measures. In fact, international trade is rapidly growing as the driving force behind the present global economy. One of the important factors and variables in this regard is the international transportation system. At present, the volume of transactions in international trade has reached $2,000 billion per year, 10% of which is the cost of transportation. International traders are trying to take advantage of modern and high-tech transportation systems and tools with the goal of gaining the highest profit through reducing the time for goods transport and lowering costs. This issue has not only led to an intense competition among providers of international transportation services, but has caused prosperity of communication and transportation technologies and presentation of strategic projects. At present, a major part of goods transport in the world is being carried out through marine transportation. Apart from Americas and Oceania, which are not connected to other continents through land, new plans for land transport of commodities, especially from East Asia to Europe have been proposed. At present, the volume of trade between Asia and Europe exceeds $2,000 billion.

Asia, which contains about 60% of the world population accounts for only 30% of global trade. Due to rapid economic growth of the Asian nations, especially China as well as Southeast and Southwest Asian countries, the figure is expected to grow rapidly during the coming years. As a result, goods transport systems are gaining in importance.

In this regard, special attention has been paid to land transport corridors by governments, industrialists as well as commercial and transportation systems during recent years. The ACTID project including three northern, southern and central corridors was brought up in 1980s. The northern corridor connects East Asia to Europe in parallel to Russian cross-country railroads. The central corridor passes through Turkmenistan and the Caspian Sea to reach the eastern ports of the Black Sea, while the southern corridor passes through Turkmenistan, northern Iran and Turkey to reach Europe. These corridors once again became a center of attention for both the European Union and Asian countries after disintegration of the former Soviet Union and elimination of political and security obstacles of 1990s. This attention was mainly focused on the central corridor. The European Union (EU) approved a plan for bolstering the central corridor with the goal of having access to newly independent states of the Central Asia and Caucasus in 1993 and in 1995, several working groups assumed responsibility for studying various aspects of the plan and determining a specified course for its implementation. In line with TRASICA plan, 25 projects for technical cooperation and 11 investment projects for renovating installations and facilities of member countries were proposed—which were financed by financial institutes and banks—and were proposed to countries located along the path of the plan. For example, European Bank of Renovation and Development granted a $300-million loan to member countries. The World Bank also is a partner to the plan. Renovation and strengthening Caucasus railroad, establishment of container terminals, equipping freeboot terminals, establishing automated and mechanized systems at terminals, constructing warehouses, bolstering international service systems and establishment of information systems are other projects considered for bolstering the corridor. Establishment of the corridor and extensive investments made in it indicate the high importance attached by Europe to more transport ties with Central Asia and Caucasus.

The North-South Corridor was first approved during 1992 meeting of EU member countries in Helsinki as transit highway No. 9 (NOTRAL). This corridor establishes transit connection between north and south European states as well as Russia with Central Asia and Caucasus countries, Persian Gulf littoral states, the Indian subcontinent as well as Southeast Asia.

A 40% reduction in distance in terms of time as well as a 30% decrease in the expenses of transportation and transport security are among the main advantages of this corridor in comparison to other corridors. Russia, Iran and India are three major countries that affect and are being affected by this corridor. Therefore, the three countries signed an agreement in September 2000 by their ministers of transportation to establish the North-South Corridor. In August 2001, the agreement for implementing the plan was signed during a meeting held among experts from three countries in Tehran. At present, five countries are members of the corridor and seven countries are in the process of becoming members. Also, 15 countries have declared readiness to become a member.

Implementation and activation of North-South Corridor will be very profitable for countries situated along its route and even the countries of origin and destination from the economic and political points of view. Activation of the corridor will reduce cost price of commodities and the countries located along the corridor will have access to inexpensive goods and, at the same time, can export their commodities to consumer markets at a lower cost by taking advantage of inexpensive transportation facilities.

Meanwhile, Iran’s situation is more prominent. Activation of the corridor will make Iran a center of gravity for one of the most important international transportation corridors. This will not only increase strategic importance of Iran in commercial and economic transactions both at regional and international levels, but also lead to earning foreign exchange revenues resulting from providing transportation services, creating jobs and activation of transportation service systems along the route from southern ports to northern ports.

For example, if only 10% of annual transactions between Asia and Europe were carried out through this corridor, its value would have stood at $200 billion and Iran could have earned about 2-3 billion dollars in foreign exchange revenues by providing transit services. This is apart from use of the corridor by Iran to exports its own goods to the Asian and European countries.

At present, implementation and activation of the corridor has been slowed down. This is a result of more attention paid by Russia and European Union to northern and central corridors; shortage of marine, rail and road transport facilities and capabilities in countries located along the route; lack of awareness on the part of governments, industrialists and service providers about the plan and the advantages of using the corridor; lack of constructive and useful contacts among Iran, India and Russia; as well as incompatibilities in customs and transit laws and regulations of the said countries.

Therefore, activation of the corridor requires compilation of a set of practical policies and essential measures, which is a duty of governments when it comes to policymaking and encouragement while its execution should be undertaken by private economic, commercial, industrial and service institutes.

The policymaking could be realized at two large- and small-scale levels. The large-scale level pertains to the nature of relations and, in other words, coordination among countries situated along the corridor, especially among Iran, Russia and India. The three countries must be aware of the importance of the plan for countries of origin and destination in Asia and Europe as well as the role that implementation of the plan will play in promoting their status in global trade. Then they must make up their minds to activate the corridor.

This important goal can be realized through establishing a powerful and active secretariat; establishment of a powerful information dissemination system to introduce the advantages of the plan to other governments as well as industrial, commercial and service institutes and companies; contacting member countries of the European Union as well as Southeast Asian nations as well as the Arab Persian Gulf littoral countries to convince them to take part in the project; attracting contributions from international financial and commercial institutes and organizations including the World Bank and regional banks to boost international transportation service systems and efforts for coordination and unification of customs and transit laws and regulations of member countries.

At the small-scale level, each of the above three countries must pay attention to bolstering and equipping their domestic transportation systems to create enough motivation for transit of goods through the said corridor. This is more important for Iran, which is considered as the center of gravity for the corridor and would play a key role in its success. Other important measures include formulation of laws and regulations pertaining to facilitation of transit of commodities; taking advantage of new standards in the field of transportation; equipping southern and northern ports with modern service installations; completing and equipping rail transport system, especially completion of Mashhad-Chabahar as well as Bandar Abbas-Bafq-Mashhad railroads; renovation and improvement of road transportation system.

Among the rest, Mashhad-Chabahar railroad project enjoys special importance because Chabahar port is located at the entrance of the Indian Ocean and has a free zone. In this regard, about 9,800 billion rials were allocated for the implementation of road construction, railroad construction as well as port development projects during the current Iranian calendar year (started 21 March 2003). Also to equip northern and southern ports, especially Shahid Rajaei and Amir Abad ports, $130 million in foreign investments has been attracted, and the figure is expected to increase to $500 million. Although these measures are desirable, they are much less that what is needed to activate and bolster the North-South Corridor.

Therefore, Iran’s geographical situation has given it a special importance in global economy for transit of goods and crossing oil and gas pipelines.

By relying on this advantage, Iran can obtain many profits and boost its economic status both at regional and international levels. Realization of this objective would be possible by taking advantage of opportunities and making necessary arrangements to compete with regional and international competitors. The North-South Corridor plan is an exceptional and unique economic and commercial opportunity for Iran. Implementation of the plan can turn Iran into the center of one of the big global commercial corridors. Importance of this issue for boosting Iran’s economic status both at regional and international levels and realization of the idea of an economy that would not be dependent on oil is not deniable. Therefore, Iran’s political and economic investment in the plan will entail medium-term and long-term benefits. Overlooking those benefits will only bolster rival corridors and lead to a loss of opportunities whose compensation will not be easily possible.