International North-South Transport Corridor is operating, but Turkey, UAE continue to earn on Russia’s goods. Interview

Arabs, Indians and Europeans buy products in Russia and then supply them to East Africa and South Asia. Where are the Russians? Our big companies are used to the readily available decisions: sell, and that’s it, and we sit back in Davos

The International North-South Transport Corridor (ITC) linking Russia with the Indian Ocean countries via Iran has been launched. But not much cargo is going through it so far. Why is this happening? Why are Russian goods in the region sold by middlemen who take most of the margin? How to change the situation and who should do it? Aleksandr Sharov, General Director of the RusIranExpo group of companies, Deputy Head of the Representative Office in the Islamic Republic of Iran of the business club SHOS, answered these and other questions in an interview with Rossa Primavera News Agency.

Rossa Primavera News Agency publishes the second part of the interview.

Rossa Primavera News Agency: There is constant talk about North-South trade corridors through Iran. Has anything changed in the last two years? Or, as before, is there much talk but no action?

Aleksandr Sharov: There is a lot of talk. They are all about acquiring the Russian budget for some objects of their own; that’s why Murmansk and almost Dickson have already joined. But that is not the point.

RZhD Logistics actually launched trains, and they run regularly. But the containers are half-empty. There is no cargo. People are not used to working with Iran or transporting through Iran.

When our client brought three containers of flour to Bandar Abbas with further delivery to Kenya, or Tanzania, or Pakistan, we struggled for two or three months to find buyers. We did not find buyers in those countries. We gave lower prices than the Turks and others. The quality was, of course, better. It ended up that these three containers had to be evacuated to the Emirates and the flour had to be utilized. The loss was more than $50,000.

It is not possible to do it just on impulse. We must make warehouses in Pakistan, Afghanistan, Kenya, Mozambique and Tanzania. In this case, it will work.

East Africa has about 300 million people.

We need to make warehouses, we need storekeepers. There are opportunities to export flour, sunflower oil, everything else. We don’t need to keep big warehouses there, just to have everything for the necessary assortment. A disabled war invalid, some smart, good guy or man sits down. And customers come to him, “I want to buy something, I’m fed up with all the French, Arabs, Indians and the like.” The guy in the warehouse replies, “No problem, with the first steamer, we’ll deliver, give me the money.” That’s it.

It is in these countries that our Russian face should appear, a face that people trust. Not Hindus, not Arabs, not some Dubai people, especially. Who are the Dubai people and who is Africa? Africans are much closer to Arabs from Yemen or Oman than to some sheiks from Dubai.

The simplest statistics of fertilizer sales. In the past, fertilizers, how were they delivered? They went from Russia to Europe. They were repackaged there and then delivered to the Global South through murky European schemes. Europe made money. Russia was working at a low level of profitability.

Now, we need to establish contacts with all these Indian Ocean countries. Nobody’s doing it. Just no one!

We organized a trade mission in Ethiopia last August. And before that, what were you doing? Nothing. We had trade representatives in Europe, but there were none in East Africa.

Here’s a simple example: Saudi Arabia. They’re asking for coal. Because big ships can’t get through there logistically. They’re interested in small shipments. And nobody works with small shipments.

In Saudi Arabia, where all our Muslims go for the hajj to pay money through a cash register, there is still not a single branch of a Russian bank. And we keep saying, “Islamic banking, Islamic banking.” And there is not a single branch of a single Russian bank in Saudi Arabia. There are already about 30 branches in India.

There is not a single Russian transportation company that would set up a branch in Saudi Arabia. And as we all know very well, our Dagestanis and North Caucasians and Volga people love to visit Saudi Arabia. And no branch of a transportation company has been established in Saudi Arabia so far. How to establish contacts? At the Russian trade mission in Saudi Arabia. Go to them, all the information is from them. And they will organize this for you with great pleasure. You have to work there, not from time to time, but to work constantly, closely. And of course, building warehouses and some sort of factories.

The corridor through Iran works. No cargo.

Cargo goes where? Taman port. They’re loading coal. The port of Taman charges $40 per ton for transshipment of coal. Coal miners say to me, “You are underestimating, there is somewhere around $50, with an annual contract of at least 2 million tons per year.”

And in Iran, coal transshipment is $6 per ton. But for some reason, our coal miners are not there. They are more accustomed to getting state subsidies for transportation to one or another Russian port, to Taman or Novorossiysk, or to Vostochny port with Vladivostok, than to go to the south.

And the Iranians give very interesting prices for transit and everything else.

Then, where is that great genius of our petrochemical company Uralkhim Dmitry Mazepin, with his ammonia pipeline to Odessa? Why is he begging the Kremlin for something? Please, now you can transport ammonia through Iran. But he keeps begging the Kremlin for some reason. Same with methanol.

Propane-butane. It turns out that no port on the Black Sea now accepts propane-butane because of Ukrainian drones. This situation will be for another three or four years for sure. No one has canceled guerrilla warfare, even when we win. And now we can safely transport propane-butane through Iran, Turkey. But no one is doing it. The technical possibilities are all there, the logistical possibilities are all there, and financially, everything has been solved. There are just no cargoes.

Rossa Primavera News Agency: The North-South corridor has several route options. Which one is better for trade, for example, with East Africa?

Aleksandr Sharov: Well, of course, the eastern route: through Kazakhstan and Turkmenistan by rail. Russian Railways has received discounts. And further to Bandar Abbas [in Iran] and there to the Global South via the Indian Ocean. Almost 3.5 billion people live in the area of the North-South ITC route.

Yes, there are moments there that for some reason they, the cargoes, are waiting for ships for a long time, although Iranians send a ship to East Africa almost every day. This is a technical and administrative problem of RZhD Logistics. I think they know it, they will solve it. There are no problems. No cargo. No one has created a fashion for working with Iran and East Africa.

The whole world, Arabs, Indians and Europeans among others, buy products in Russia and then deliver them to East Africa and South Asia. Where are the Russians in East Africa? I have not heard much about such companies. Most of our companies do not go further than Turkey, further than Egypt, they are afraid.

Rossa Primavera News Agency: Why are they afraid? Do they expect someone to do it for them? For example, agreements with the Dubai-based DP World company are constantly being discussed online. What is the idea of those who are waiting?

Aleksandr Sharov: The Dubai company is just an investor. They invest in some ports. They have to sit in one place. Here is the Taman port, their coal transshipment prices are higher than the usual world average of $6 per ton and are $40. They can recoup all the costs of the new mechanized berths in two years. They’re doing great. Similarly, the same Emiratis. They’re not traders. They’re just owners of some port. Or the port of Ust-Luga. Is there any difference compared to the Dubai company? No. How will Ust-Luga help the sale of oil products to South Asian countries? In no way.

You have to work there. Russian traders should work there. Vitol [a Swiss-Dutch oil trader – Rossa Primavera News Agency] is working, Trafigura [a Singaporean trader trading oil, metals, etc. – Rossa Primavera News Agency] is working. Some fertilizer traders from Europe are working. Where are these Russian companies? They are gone. There used to be. Then they were dispersed – monopolization by Uralkhim, Eurokhim and the like. Well, where are Eurokhim and Uralkhim? Uralkhim thinks only about an ammonia pipeline to Odessa. Even when it is allowed after negotiations, what will the Ukrainians do with it? They’ll blow it up, say the partisans blew everything up. Just like Nord Stream. What does Uralkhim do in South Asia? It does nothing.

Here, we need to learn from the same Iranians how they work with their fertilizers – with the same urea, ammonia, and methanol.

Why do we need Dubai? Dubai, Dubai, everyone is used to it. Our big companies are used to buying something ready-made at once, so that once and all, we can sit in Switzerland, in Davos, sharing money and enjoying the life.

Rossa Primavera News Agency: Have there been any positive developments in the direction you describe over the past two years? Is there any progress? Or is nothing changing, everything is standing still?

Aleksandr Sharov: Yes, there is.

The latest deliveries. North Caucasian companies have started supplying flour, barley, and grain legumes to Iraq and Afghanistan. They forced the Turks out of there. There are supplies to Astara, to Enzali (Iranian ports on the Caspian Sea – Rossa Primavera News Agency), and then transit through Iran to Iraq. This is how North-South is being developed.

But in fact, we need to build warehouses there. And we should also make a road to Afghanistan through Iran. It is much cheaper, quieter and more reliable than through Uzbekistan. Afghans are fed up with the Uzbeks on the border, fed up with the same Turkmen. They want to take goods in a different way, to take them at a lower price. But we continue talking about Termez and Torgundi (Termez is a Uzbek-Afghan crossing, and Torgundi is a Turkmen-Afghan crossing).

There are 37 million people in Afghanistan. And it is not that there is no flour and oil there, there is no firewood. You can even transport pellets. It would seem a paradoxical idea, but coal and other such things are needed there.

And all this is being supplied.

But it is strange that it is not Russian companies that are transporting the cargoes. Russian diesel fuel is imported through Iran to Iraq and Armenia. Russian propane-butane is transported through Iran to Pakistan. Where are the Russian transportation companies, why are they not doing this? Are they afraid of sanctions? That’s my only explanation for why they don’t do it.

Rossa Primavera News Agency: Could one say that Iran has become a window for Russia to the Indian Ocean, or is it not the case?

Aleksandr Sharov: There are alternatives in the world. There is Turkey, there is Kazakhstan. Let people choose. Do they think that it is so easy to operate in Iran? (laughs) There are some faults there. But it is more expensive and longer to work through Turkey. But people work because they are used to it.

They signed some kind of agreement. We now have about five contracts under which we help to transport someone’s containers. Who do they contract with? Turks, Pakistanis, Dubai. And they hire Iranian contractors. As a result, there are some underpayments and so on, and these containers are stuck.

But why do our Russian companies not conclude contracts with Iranian companies directly? Why do they need all these intermediaries? I can’t understand. I just can’t understand why it’s like that. Is it because they speak English there, in Turkey or Pakistan? Well, that should not play any role. An interpreter is much cheaper in the end than losing cargo and all these activities.

And of course, it is necessary to build a large railroad along the eastern route through Turkmenistan to Bandar-Abbas and to Chabahar with a gauge of 1520 millimeters. It is necessary to transport coal, chemicals, mineral fertilizers, petroleum products finally to the Indian Ocean and oust all European and Arab intermediaries from the Indian Ocean. And start doing the same trading and other associated things there.

Rossa Primavera News Agency: Does anyone have plans to build such railroad?

Aleksandr Sharov: There are. It is not super expensive, by the way. The Iranians themselves suggested it. It’s either $6 billion or $9 billion. That’s roughly the cost. And there is a Russian contractor. There is no customer yet.

We take delegations to Iran, delegations of large, very large companies that still travel incognito. Russia needs much more positive news, more interviews, including interviews with Iranian young journalists. We need to get away from the usual way of transportation. Especially in  Azerbaijani or Armenian ones.

(End of the second part of the interview).

 

This is a translation of the interview by Yevgeniya Shevchenko and Andrey Safronov first published on Rossa Primavera News Agency website on February 5, 2024.