Magazine article Insight on the News

Will New Railway Open Door to Central Asia?

Magazine article Insight on the News

Will New Railway Open Door to Central Asia?

Article excerpt

Iran's plans to turn a sleepy village into a boom town may come to fruition with a railway that opens trade lines to Asia and Europe. Meanwhile, Iran prepares for controversial elections in March.

Ever since medieval traders abandoned the Silk Road between Europe and Asia, the dusty town of Sarakhs has been a sleepy place. Tucked away in the northeast corner of Iran and divided by razor wire marking the border with the former Soviet Union, the town has been isolated from the rest of the world by distance and desert.

Next year, however, Sarakhs could become a bustling center of commerce, if plans formulated by the Iranian government succeed. Amid the jagged mountains and clumps of pistachio bushes, hundreds of Iranian engineers and laborers are building a vast business center, one of several free-trade zones under construction in the north.

"The final project at Sarakhs is immense," enthused Iraj Kazemian, project consultant for the Sarakhs Special Zone Establishment. "We're converting a small airport into an in cargo hub, we're providing accommodation for 50,000 businesspeople, and we're even building a dam to provide water."

The first stage of the business center - a 125-acre development complete with customs house, 240-room hotel, restaurants and ample office space - is scheduled for completion next March. By the following year, another 1,250 acres will be turned into a shopping mall, bus terminal, mosque and commercial space.

Already, the Iranian government has completed a 440-mile railway line from its warm-water Gulf port of Bandar Abbas to join the national railway network at Bafq (see map). A 100-mile extension from Mashhad to Sarakhs, completing the link between Iran and the Soviet-built rail network, is scheduled for completion in March, when goods will be able to flow by rail year-round from the Gulf to Moscow, Beijing and Europe.

Furthermore, a 1,100-mile shortcut from the new port of Chah Bahar direct to Sarakhs is planned by a private-sector group. Iranian bureaucrats hope this will steal trade from Turkey and Pakistan. "This route will cut 7,500 miles from the standard sea journey between Asia and Europe," says Mohammad Porkar, managing director of Porimex Trading AG, a Swiss-based company providing consultancy services to the railway consortium. "Goods can flow from India, China, Indonesia and Malaysia directly to Russia and Eastern Europe."

This year, 1 million tons of Iranian consumer goods passed through Sarakhs on its way to eager customers in Turkmenistan and Kazakhstan. By next March - if construction proceeds on schedule - Sarakhs will be servicing millions of dollars' worth of trade between Central Asia and the outside world.

"Iran is helping to open markets in Central Asia" says Kazemi an. "These republics are developing fast; the people there are crying out for consumer goods. And when the route is established, all the trade between India and Europe will come through Sarakhs."

The U.S. government is suspicious that Tehran is trying to export its fiery brand of Islamic militancy into the region's Muslim republics. But religion is markedly absent from Iran's proposals to develop international business through Sarakhs; diplomats agree that Iran's motivation for developing its ties with Central Asia appears to be primarily economic. Tehran has been pressured by tough economic sanctions imposed by President Clinton in May. By targeting Asian countries less sympathetic to the American view, it hopes to minimize the effects of U.S. hostility.

Moreover, Central Asia offers the Iranian government refuge from the disappointing economic climate at home. Iran has yet to emerge from a debt crisis that saw Tehran's access to foreign money dry up in 1994, even as rampant inflation and import cuts led to virulent criticism of the regime at home.

Tehran has rescheduled its loans with international creditors, but the country is anxious to reduce its rehance on its notoriously unstable crude-oil revenues. …

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