© EPA/ABEDIN TAHERKENAREH/TASS

Economic cooperation between Moscow and Tehran is gaining momentum. The other day, Bank of Russia Chairman Elvira Nabiullina visited the Iranian capital to meet with her counterpart Mohammad Farzin and discuss the need to strengthen trade exchanges and the use of national currencies in bilateral trade.

Farzin pointed to the need of banking infrastructure cooperation expansion, referring to the sides’ vast commercial opportunities.

And this is not mere protocol language.

Faced with increasingly tough Western sanctions, Russia keeps developing new logistics routes. During Russian Deputy Prime Minister Alexander Novak’s visit to Tehran, an intergovernmental agreement was signed "on cooperation in the construction of the Rasht-Astara railway line in Iran to boost transportation via the international North-South transport corridor". The Presidents of Russia and Iran Vladimir Putin and Ibrahim Raisi took part in the document’s signing ceremony via video link.

"I would like to emphasize that the unique North-South transport artery, due to include the Rasht-Astara railway line, will help considerably diversify global transport flows. Traffic via the new corridor will possess substantial competitive advantages. For example, it will take about 10 days to deliver consignments from St Petersburg to Mumbai. I would like to note, as a comparison, that it takes 30 to 45 days to deliver them using traditional commercial routes. In effect, this makes it possible to slash delivery deadlines and costs," Putin said.

In turn, Mr. Novak has highly appreciated the deal: "This agreement is critically important and allows us to move to a whole new phase of cooperation in the transport field. The next phase includes the construction of a 162 km-long Astara-Rasht railway line, which will close the railway loop going across Russia, Azerbaijan and Iran from Ust-Luga and St Petersburg to the port of Bandar Abbas in the Persian Gulf. After this project goes live, we will have a through route for transit shipment of goods to Europe and the Persian Gulf. In fact, this represents a global change in supply chains. Once the project becomes operational, Russia-Iran cargo turnover by rail will increase to at least 15 million tons per year in terms of transit cargo with an option to expand. This project can offer an alternative to the Suez Canal."

Financing parameters have been determined, too — according to Novak, the construction of the Rasht—Astara section in Iran will require €1.6 billion, of which €1.3 billion are an interstate loan, with Russia’s share being 85 percent. "The loan is repayable during the payback period of this project," the Deputy Prime Minister said.

The relevance of this route increased last year, when the transit of goods to Russia via Iran grew significantly amid Western sanctions, and the existing transport routes became overloaded. Apart from the Russian-Iranian agreement, a trilateral Russian-Iranian-Azerbaijani one will be signed on the future railway line between Rasht, Iran and Astara, Azerbaijan.

So, the Rasht—Astara railway is an important link of the North-South transport artery running from St. Petersburg to the Indian port of Mumbai. Its key purpose is to provide cargo flows between Russia and countries of Transcaucasia, the Caspian region, Iran, South Asia, and the Persian Gulf. Its total length is 7,200 kilometers. In the Caspian Sea region, the North—South corridor operates along three routes: transcaspian — using the ports of Russia and Iran; western — via Azerbaijan; eastern — via Kazakhstan, Uzbekistan and Turkmenistan. The new Rasht—Astara railway section (162 km) will enable operation of the western route. The planned commissioning date is 2025.

Novak's visit also embraced discussions of prospects for Russian investment in the republican fuel and energy sector. Iran is ready to jointly develop ten more oil and gas fields. Negotiations with Gazprom on joint projects worth a total of $40 billion are underway. Earlier, Gazprom and the National Iranian Oil Company (NIOC) signed an agreement on the development of the Kish, North Pars and a number of other fields.

At a press conference following his meeting with the Novak-led delegation, Iranian Oil Minister Javad Owdji said that over the past two years, Russian and Iranian oil and gas companies have signed "certain contracts, and some of our deposits are now being developed by Russian partners."

Iran is cooperating with Russia within OPEC+, and "we are offering each other assistance, and this cooperation helps us sell oil on international markets, he stressed.

An important cooperation aspect between Moscow and Tehran is avoiding the US dollar and the euro in mutual settlements: their "substitution" with rials and rubles reached some 80% already, and there are also plans to use the Chinese yuan in trade operations.

The Russian-Iranian stepped-up partnership has become a great concern and irritator to the West, with its subsequent traditional reaction of threatening to tighten sanctions, which is particularly heard from Washington.