Background of the Ashgabat Agreement
The Ashgabat Agreement, which envisions the development of an International Transport and Transit Corridor between Central Asia and the Persian Gulf, was recently signed by India in the year 2018. The Gulf countries and Central Asian Republics (CARs) will be benefited from this corridor, which is said to improve communication, cargo, trade, and transit. India has taken a step further in its efforts to improve connectivity with Eurasia by joining the Agreement.
Since Central Asia is a landlocked territory, all five CARs must pass through at least one state to reach the open seas. Because most of the old trade routes travelled through this territory, it played a crucial role in ancient trade and commerce. CARs, on the other hand, began to fall behind with the introduction of maritime trade. During the Soviet era, and even after the CARs gained independence in 1991, the majority of their trade was routed through the borders of their neighbours, such as Russia and China, which was time-consuming, inconvenient, and expensive.
The CARs gradually realised that Iran and the Persian Gulf could play an important role in easing access to the free seas. The proposal for a transit corridor connecting Central Asia and the Gulf dates back to a bilateral meeting in October 2010 between the then Uzbek President Islam Karimov and his Turkmen colleague Gurbanguli Berdimuhamedov. As a result, in November 2010, delegates from Uzbekistan, Turkmenistan, Iran, and Oman convened in Tehran to form a working group to examine the creation of such a corridor.
Importance of the Ashgabat agreement to India
International North-South Transport Corridor (INSTC) and the Central Asian Regions
India’s participation in the Ashgabat Agreement will allow it to take advantage of the existing transportation and transit corridor to facilitate trade and commercial relations with the Eurasian region. This will also be in line with India’s efforts to build the International North-South Transport Corridor (INSTC), a multi-modal trade transportation network that runs from Mumbai, India, through Bandar Abbas, Iran to Moscow, Russia. The INSTC would lower the cost of shipping commodities from India to Eurasia and the neighbouring regions significantly.
The Ashgabat Agreement aims to establish a commerce and transportation corridor connecting the CARs and the Persian Gulf. The corridor will be multi-modal, with road, rail, and sea transit options. It must also involve the removal of trade obstacles and the establishment of simplified processes for the transfer of commodities between member countries. Rail links go via Kazakhstan, Uzbekistan, Turkmenistan, and Iran as part of the agreement’s land transport component. The Iran-Turkmenistan-Kazakhstan (ITK) railway line, which opened in December 2014, is a crucial link in this corridor. It will also establish a connection with the Omani ports of Salalah, Duqm, and Sohar, as well as the Iranian ports of Bandar Abbas, Jask, and Chabahar. The region’s current transportation and connectivity linkages will be beneficial to India’s trade.
CARs have the potential to serve as a land bridge between Europe and Asia, as well as between Asia’s diverse regions. These countries’ strategic locations can further help India’s land connectivity with the rest of the Eurasian area. Direct access to CAR will help India establish itself as a major participant in the region while also undermining China’s much-hyped Belt and Road Initiative flagship projects.
India’s decision to join the Ashgabat Agreement was motivated by a desire to align India’s Look West policy with its Connect Central Asia agenda. India’s ratification of the Agreement would broaden India’s connectivity choices with Central Asia and have a significant positive impact on India’s trade and commercial connections with the area.
Connection with the Chabahar port
India’s inclusion into the Ashgabat Agreement comes a month after the first phase of the Shahid Beheshti terminal at Chabahar port, which is financed with $85 million, was inaugurated on December 3, 2017. With the completion of the Shahid Beheshti terminal and India’s joining of the Ashgabat Agreement, the possibility of expanding Chabahar’s operational and practical scope to become a vital gateway and the shortest land route to Central Asia has increased.
India has relied on Chabahar to connect to Afghanistan, and it has already transferred wheat shipments to the country through the port. India’s proposal to build a 610 km north-south railway from Chabahar to Zahedan, as well as the operation of a multi-purpose terminal at Chabahar, could not have been achieved unless India joined a Central Asian-led transport network.
International North-South Transport Corridor (INSTC)
- The INSTC (International North-South Transport Corridor) is a multi-modal trade transport network that includes rail, road, and water transport from Mumbai in India via Bandar Abbas in Iran to Moscow in Russia.
- The concept was initiated by Russia, India, and Iran in September 2000 to establish transportation networks among the member states and to enhance connectivity with the landlocked region of Central Asia.
- The Foreign Trade Policy of India, 2015-20, has highlighted the importance of the North-South Transport Corridor in expanding India’s trade and investment links with Central Asia.
- The INSTC envisages movement of goods from Mumbai (India) to Bandar Abbas (Iran) by sea, from Bandar Abbas to Bandar-e-Anzali (an Iranian port on the Caspian Sea) by road, and then from Bandar-e-Anzali to Astrakhan (a Caspian port in the Russian Federation) by ship across the Caspian Sea, and thereafter from Astrakhan to other regions of the Russian Federation and further into Europe by Russian railways.
- INSTC could facilitate India’s economic integration with Eurasian economies and other countries in surrounding regions.
The relevance of INSTC to India – Economic and Strategic Dimensions
- At present, India has to depend on the sea route via Rotterdam to St. Petersburg and increasingly through China and then inland to transport goods to Russia.
- INSTC would substantially reduce the cost of transporting goods from India to Eurasia and the surrounding regions.
- Some studies say that with INSTC transit time and cost will come down and this would enable the seamless movement of goods from India to Russia and surrounding countries.
- Estimates are such that the corridor would be 30 per cent cheaper and 40 per cent shorter than the current route via St. Petersburg to Moscow.
- If India negotiates a comprehensive economic partnership agreement with the Eurasian Economic Union, INSTC would help India expand its economic, trade and investment opportunities in this region.
(Because it would be easier to access these markets through the INSTC and it would boost the competitiveness of India’s trade) (Note: Eurasian Economic Union consists of Belarus, Kazakhstan, Kyrgyzstan and Russia, & Armenia likely to join)
- Energy- India is one of the largest energy consumer in the world. Central Asia has abundant natural resources, including petroleum, natural gas and uranium, which could meet India’s energy needs.
- The region also offers abundant deposits of fertilizer inputs such as potash.
- Notably, there is huge scope for these countries to benefit from India’s expertise in information technology and IT-enabled services ( Because many of the sectors are becoming increasingly service-oriented)
- It will deepen our engagement inline with Connect Central Asia Policy.
What are the challenges faced by Central Asian countries:
- Competition and rivalries between the countries
- Issues of water scarcity
- Border disputes
- Extremism and fundamentalism
- Drug trafficking
- Environmental degradation and
- Growing Violence & Security challenges
International North-South Transport Corridor (INSTC) – Role of India
- There is a strong political and commercial case for India to allocate more political capital to better access to the INSTC and link Iran.
- India should establish an India-Central Asia Forum along the lines of the India-Africa Forum.
- India should be proactive in engaging with the Shanghai Cooperation Organisation (SCO), which has emerged as an influential regional grouping in Eurasia.
- India should to expand the scope of its customs cooperation agreement with Iran so as to get transit facilities via Iran to the Caspian Sea and other Central Asian countries.
- Removal of sanctions on Iran has opened up many opportunities for investors in completing the missing links on the INSTC which in the past was not possible.
- India has already proposed an investment of $100 million to develop a free trade zone at Iran, Chabahar, and now the focus should be to ensure that this development is completed fast.
India’s intention to accede to the Ashgabat Agreement was to sync India’s Look West policy in tune with its Connect Central Asia policy. India’s Accession to the Agreement would diversify India’s connectivity options with Central Asia and have a positive influence on India’s trade and commercial ties with the Central-Asian region majorly.
The Way Ahead
- India, Iran, and Russia are three major pillars of this huge network of north-south connectivity projects, a larger share of responsibility will have to be borne by them.
- Regular enhanced cooperation among the 14 member states of the INSTC needs to be accelerated.
- New members from the region should be encouraged to join the INSTC to make it more effective.
- Important is the prioritization and identification of the projects (both reviving old routes and building missing links) which deserve more attention from the point of their utility in enhancing the trade and economic ties between the countries.
- Member countries need to formulate long-term strategies both at the bilateral and regional levels to address the bottlenecks and to realize the future potential of the corridor.
- Creation of high level working for groups on transport cooperation among the regional partners, setting up of independent joint study groups, and organizing annual meetings of the technical groups to follow the developments in a phased manner.
A major challenge before the member countries is sustaining the momentum of progress that they have achieved in the last few years.
Also, while reading about Ashgabat Agreement, candidates should also know about the Chabahar-Zahedan rail link and International North-South Transport Corridor. From one topic, the aspirant should link a couple of related issues and read about them. That is how the Ashgabat Agreement topic will be covered holistically.