POTENTIAL IN DEMAND

Azerbaijan could significantly benefit from the change of the geopolitical situation in the region. The establishment of partnerships between Russia and Iran and the revitalization of the Great Silk Road project by China can significantly increase revenues in the budget of Azerbaijan from the upcoming transit of goods across the country.

Right now, all conditions are right for close relations between Russia and Iran. The settlement of problems related to Iran's nuclear programme and the upcoming lifting of sanctions offer prospects for investing in different sectors of the Iranian economy. For Russia, this creates additional opportunities in the light of the similarity of positions on the settlement of a number of international issues, in particular the Syrian crisis.

The visit to Iran by Russian Energy Minister Aleksandr Novak was aimed precisely at expanding economic cooperation. In Iran, he held meetings with ministers and heads of economic agencies.

During the visit, the sides discussed issues of increasing bilateral trade from the current 2bn to 10bn dollars, joint investment and financing of projects, etc.

During the talks with the head of the Central Bank of Iran, Valiollah Seyf, the sides discussed the creation of a joint Russian-Iranian bank to deepen economic cooperation.

"I do not agree that we are late in arriving at the Iranian market. We started this work long before other countries, and in the last 2 years, we have achieved a lot: we have already agreed on a list of projects worth up to 40bn dollars," the Russian minister of energy said.

Among the main directions of cooperation between Russia and Iran, Novak, besides trade and economic cooperation, highlighted deliveries of Russian equipment and technology in the fields of communications, space and transport, including marine transport, as well as in the construction of railway infrastructure.

It will be difficult to ensure the rapid development of trade relations between Russia and Iran without a well-functioning infrastructure, by which goods should be delivered to both countries. Azerbaijan has all opportunities to become an important transport link between Russia and Iran, given the rapid development of Russian-Iranian relations.

One of the important projects of cooperation between Russia and Iran is the North-South international transport corridor, in which Azerbaijan takes an active part.

An international consortium organized in 2004 called for the creation of a transport corridor from Scandinavia to Iran with access to the Persian Gulf and India. In the first half of 2011, a direct rail connection was expected between Scandinavia, the Baltic States, Russia, Azerbaijan and Iran, which was supposed to link many European and Asian countries by the shortest route possible.

But sanctions against Iran significantly delayed the commissioning of the North-South railway.

The settlement of the issue of Iran's nuclear programme had a positive impact on this corridor. During a recent visit to Iran by Azerbaijani Minister of Economic Development Sahin Mustafayev, the sides agreed to intensify work on the route and identified key areas and projects. It is expected that the North-South route will start work at full stretch in 2016.

Also, the Baku-Tbilisi-Kars is expected to be launched next year. The start of this route was somewhat delayed - the agreement on the construction of the line was signed in February 2007. Now it remains only to carry out work on the territory of Turkey; According to recent reports, trains are scheduled to begin operating by the third quarter of 2016.

The success of transit cargo through Azerbaijan can be seen in a pilot project when Baku hosted a ceremony on 3 August to welcome the Nomadexpress container train Shihezi (China) - Dostyk - Aktau (Kazakhstan) - Alat - Kesla (vicinity of Baku, Azerbaijan).

The container train covered more than 3,500 km through Kazakhstan and the Caspian Sea in 5 days. This route was opened within the framework of the Nurly Zhol new economic policy and the New Silk Road programme.

The president of JSC Kazakhstan Railways, A. Mamin, stressed at the ceremony that "the Trans-Caspian route has great potential for the establishment of Azerbaijan and Kazakhstan as a transit bridge between Asia and Europe". According to him, a huge impetus to the development of freight traffic on this line will be given by the commissioning of the Kars-Akhalkalaki railway, which will become an important part of the Trans-Caspian route.

Taking into account the development of transit potential, active work is under way to increase transit volumes in the direction of the Caucasus, Turkey and Europe.

According to Mamin, given the projected turnover between the countries of the region, the potential of traffic by the trans-Caspian route by 2020 is estimated at over 300,000 containers. This potential, he said, can be fully realized with the coordinated work of the whole multimodal chain of China, Kazakhstan, Azerbaijan, Georgia and Turkey, including railways, Caspian Sea ports, shipping lines, terminals and a competitive pricing policy.

Similar goods were transported on alternative routes for 25-40 days through the ports of Bandar Abbas (Iran) and Poti (Georgia).

Given the importance of coordination in the organization of transport, Azerbaijani President Ilham Aliyev ordered the creation of a coordinating council for transit cargo transportation. The establishment of this council is the start of an important regional process as the transport sector of the country will enter a new stage in its development starting from 2016, taking into account the connection of Azerbaijani railways to Turkey and Iran.

A "single window" principle should be applied in the process of carrying transit goods through the territory of Azerbaijan by means of railway and maritime transport.

The authority to monitor the implementation of the "single window" principle is handed over to the Coordinating Council of the Azerbaijan Republic.

The Azerbaijani Ministry of Economic Development has been instructed to prepare and submit within two months tariffs for transit cargo transportation by railway, sea transport, etc. to the president.

The coordinating council of Azerbaijan for transit cargo transportation will address not only issues of coordinating the work of Azerbaijani ministries and agencies, but also negotiate freight rates with foreign ministries and foreign companies.

Thus, the rapid growth of cargo transportation by the North-South and East-West international transport corridor will not only make it possible to replenish state coffers with additional revenues worth hundreds of millions of dollars from the transit of goods, but also create new jobs in the non-oil sector of the country.