Baku, May 19, AZERTAC

The Azerbaijan State News Agency (AZERTAC) presents an interview with Iranian analyst Ali Pourmand.

- How does Iran assess the development of transport projects in Azerbaijan, especially the new Kalaleh-Aghband route?

- The latest reports on the progress of the Julfa–Kalaleh road improvement project, along with the construction of a new border terminal in the region by Iran, reflect the country’s goodwill and commitment to linking this route with Aghband in the Republic of Azerbaijan.

Since the development of the Aghband–Kalaleh–Julfa corridor essentially preserves and upgrades the traditional route that Azerbaijan has long used to access Nakhchivan through Iran, From Tehran’s perspective, maintaining and modernizing this route is strategically important, as it reinforces Iran’s role as a key transit hub in the region and secures its position in the South Caucasus.

Additionally, the economic interests of Iran’s border provinces, through which this route passes, play a significant role in the country's favorable stance toward such development initiatives.

The recent collaborative efforts between Iran and Azerbaijan to advance this key segment of the Araz Corridor reflect a pragmatic approach, emphasizing mutual benefits. However, the broader strategic impact will depend on continued alignment between the two countries, effective management of regional rivalries, and the ability to navigate the complex web of international trade agreements and infrastructure investments.

- Do you think that the Araz Corridor can become a serious alternative to other routes in the region?

- The Araz Corridor, as an extension and optimized version of the traditional route connecting Azerbaijan to Nakhchivan, can serve as a viable alternative to other regional transit routes that have emerged, particularly following the 2020 Nagorno-Karabakh war.

In particular, compared to the Zangezur route—which has been proposed by the Republic of Azerbaijan in recent years as a corridor to connect its mainland to Nakhchivan —the Araz Corridor holds undeniable technical, political, and geopolitical advantages. From a logistical perspective, constructing new transit pathways through Armenia appears significantly more challenging and less feasible than utilizing the Iranian route.

Moreover, the extension of the Araz Corridor enables joint access for Iran and Azerbaijan to the Republic of Türkiye and subsequently to Europe, thereby opening up avenues for mutually beneficial economic cooperation among all three countries. The Araz Corridor also has the potential to function as a complementary route to the North–South Transport Corridor by linking east–west and north–south networks.

If Iran succeeded in connecting the Araz Corridor to rail or road infrastructures in Türkiye and Armenia, it could effectively integrate western and northwestern routes into the broader North–South framework.

It also contributes meaningfully to regional synergy and cooperation, especially within the framework of the 3+3 regional mechanism.

This Corridor can go beyond being merely a transportation route and become a symbol of economic solidarity between Iran and the Republic of Azerbaijan, grounded in the historical cultural and civilizational ties between the two countries.

- What are the prospects for the new transport route connecting the Persian Gulf and the Black Sea through Azerbaijan? How can Iran integrate into this route from an economic and logistical point of view?

- It appears that efforts to establish such a corridor are of particular importance from the perspective of enhancing the economic capacities of the member states of the Eurasian Economic Union. In addition to offering major trade benefits for Iran, this route also engages the three key countries of the South Caucasus in an economic corridor that plays a vital role in transporting goods from the Persian Gulf and open waters to Europe.

Once completed, the Persian Gulf–Black Sea corridor could provide not only a shorter and more competitive route compared to the traditional southern European trade paths, but also contribute to strengthening the activities and economic capacities of the International North–South Transport Corridor (INSTC) via Azerbaijan.

Beyond economic cooperation, the realization of this corridor could promote broader multilateral collaboration among South Caucasus countries and Black Sea states such as Georgia, Bulgaria, and Greece in the Mediterranean region.

However, the main challenge of this corridor lies in the development of economic and logistical capacities in the segment that begins within Iran. Increasing the capacity of Iran’s southern ports and connecting them to Caspian Sea ports via a rail network are among the key bottlenecks that must be addressed for the corridor to become operational.

In this context, the completion of the Rasht–Astara railway, along with the development of customs, warehousing, and logistics infrastructure in northwestern Iran, constitutes a critical part of the project. Without due attention to these elements, the realization of the corridor would be virtually impossible.

In addition to infrastructural obstacles, the project also faces geopolitical considerations—particularly the role of Türkiye, which currently serves as one of the main trade routes connecting Iran to Europe. The establishment of this corridor could reduce Iran’s dependence on Turkish routes, potentially prompting political or competitive reactions from Ankara. Addressing this issue will require persuading Türkiye and establishing a smart political-economic balance in bilateral relations.

- What stages is the construction of the Rasht-Astara railway currently underway? How important is this project for Iran and what are the expectations from its launch?

- It seems that in the past year, the Rasht–Astara railway project, which has been designed as part of the North-South corridor for about 20 years, has entered a more serious phase. Iran, Russia, and Azerbaijan have shown a stronger commitment to completing this project.

According to the latest reports from the Iranian side, some Russian companies that are set to provide technical and engineering support for the implementation of the Rasht–Astara railway have recently completed specialized studies for the construction of this rail route. Iran is currently advancing the land acquisition phase for building this railway.

Additionally, Russia’s financial support of around 1.5 billion euros in the form of a loan could accelerate this process and help complete this missing link in the North-South corridor more swiftly.

Iran considers the completion of this project essential, as it is expected to increase the annual transit volume by 15 million tons of cargo and generate around 750 million dollars in customs revenue. The Ministry of Roads and Urban Development of Iran has been actively pursuing the initiation of the construction of this rail route in recent months.

This project, in addition to boosting transit traffic, will lead to the development of parts of the neighboring provinces along this route in Iran and will bring various benefits to the country. This route, while crucial for Iran, is also of key importance for the member countries of the North-South corridor. It is expected that with its completion, the connection between Northern Europe, Scandinavia, and Russia through Iran to the Gulf countries, the Indian Ocean, and Southeast Asia will be facilitated within the framework of the North-South corridor.

- How can Iran and Azerbaijan coordinate the modernization of railway infrastructure to create a single transport network?

- The first step in this regard seems to be the development and coordination of joint railway lines. Projects such as the Rasht–Astara railway, which cover parts of the North–South Corridor, can serve as successful models for connecting the two countries’ rail networks. These projects can facilitate the transport of goods and passengers and help reduce costs.

In addition, Iran and Azerbaijan need to coordinate on railway technical standards. The lack of uniform technical standards between the two countries has been a longstanding obstacle—one that was evident on the railway link from Azerbaijan to the Astara terminal in Iran and had slowed exchanges in the region. Fortunately, this issue has been resolved in recent years. Standardization in this area—including harmonization of signaling systems, rail equipment, tracks, and stations—will help facilitate train movement between the two countries, reduce wait times, and enhance network safety.

Developing financial cooperation and joint investments also plays a key role in advancing these projects. Iran and Azerbaijan can attract joint investments from public and private sources to modernize railway infrastructure. In addition, securing international financial assistance, loans, and cooperation with global financial institutions can help fund these joint projects.

Another crucial aspect is the development of integrated logistics and customs systems. Iran and Azerbaijan can establish a unified system for faster movement of goods and shorter customs clearance times, which would ease transport and trade processes. This step can significantly improve the efficiency and performance of the transportation network.

In conclusion, with close cooperation and coordination in these areas, Iran and Azerbaijan can build an integrated and efficient rail transport network that will not only benefit both countries but also contribute to the development and strengthening of trade and economic ties at the regional and international levels.

- What areas of energy cooperation between Iran and Azerbaijan are the most active today?

- Iran and Azerbaijan currently maintain active cooperation in several key energy sectors: electricity exchange, joint exploration in the Caspian Sea, and shared water infrastructure such as dams. Although natural gas swaps were previously a critical element of their cooperation, that agreement has recently been suspended.

One of the most active areas is electricity exchange. In the summer of 2025, Iran plans to import 140 megawatts of electricity from Azerbaijan to help meet peak domestic demand. This initiative is part of a broader effort to synchronize their national power grids, enhancing energy stability and efficiency across the region.

In the Caspian Sea, Iran and Azerbaijan continue to cooperate on joint oil and gas development. A memorandum signed in 2018 laid the foundation for shared offshore resource development, and Iran has recently resumed drilling in the shallow Rudsar Block 18, reflecting continued interest in Caspian energy projects.

Additionally, Iran and Azerbaijan collaborate on shared water and hydroelectric infrastructure, most notably through joint dam projects. Two key examples are the Khoda Afarin and Qiz Qalasi dams on the Araz River. These dams serve multiple purposes, including hydroelectric power generation, irrigation, and flood control, and represent a significant symbol of practical cooperation and interdependence between the two nations.

Altogether, these initiatives underscore the strategic depth of Iran-Azerbaijan energy and infrastructure cooperation. Despite the suspension of the gas swap deal, both countries remain committed to expanding their energy ties, with electricity, water infrastructure, and Caspian resource development leading the way toward greater regional integration and energy security.

- Is the prospect of creating a regional energy market between Iran, Azerbaijan and Russia realistic?

-About the prospect of creating a regional energy market, particularly for natural gas, between Iran, Azerbaijan, and Russia holds promise in its strategic intent and early stages. Several agreements and planned projects are already in motion, notably regarding the transit of Russian gas to Iran through Azerbaijan. This collaboration presents clear mutual benefits, driven by shifting geopolitical dynamics and economic imperatives.

However, the path to establishing a fully integrated and resilient regional energy market remains challenging. Key obstacles include the extensive impact of international sanctions, unresolved commercial issues such as pricing, and the urgent need for significant infrastructure investment. Additionally, underlying geopolitical complexities, including Azerbaijan’s cautious approach, add to the difficulty. These factors suggest that achieving ambitious long-term goals, such as the 55 bcm gas transit target, will be a high-risk endeavor. While project-specific cooperation is expected to continue and may expand, creating a comprehensive, seamlessly integrated energy market akin to those in more stable, sanction-free regions is still a formidable challenge.

- Why, in your opinion, does the trade turnover between Iran and Azerbaijan lag behind the growth rate of trade with other neighbors? What measures could accelerate the growth of bilateral trade?

- It seems that part of this issue is related to the export and import capacities of the countries, and another part is due to the political tensions between the two countries in recent years. Regarding export and import capacities, crude oil and gas are Azerbaijan’s main exports to the world, accounting for about 90% of the country’s total exports. The volume of non-oil, non-gas exports and imports of Azerbaijan is approximately 4 billion dollars, mostly consisting of agricultural products. The largest portion of Iran’s imports from Azerbaijan is also related to these agricultural products, such as raw silk.

This issue becomes particularly significant when analyzing the growth of trade, as the lack of trade advantage for certain products, like agricultural products or oil and gas, must also be considered. Therefore, part of the lag and insufficient growth in trade can be attributed to the lack of economic capacity for diversified exports and imports between the two countries.

At the same time, both countries also face logistical and financial limitations. Iran, while striving to maintain trade routes and develop economic relations with its neighbors, constantly faces restrictions due to sanctions on trade and financial transfers.

Considering the role of limited export and import capacities in a diversified non-oil trade basket, taking developmental steps in this area could increase the trade volume between the two countries.

These developmental measures could include identifying and strengthening joint investment capacities, particularly in sectors like food and pharmaceuticals. The volume of agricultural trade between the two countries also supports this potential for investment.

At the same time, focusing on trade agreements and preferential or free trade agreements to reduce tariffs, along with the creation and expansion of free trade zones at border points, could help develop exports and imports between the two countries.

It seems that the development of transport corridors and customs infrastructure, combined with the political will of both governments to reduce tensions and increase cooperation, heralds better days for this sector.

- What specific sectors could become growth points in trade between our countries?

- It seems that agricultural trade, as an area with historical ties between the two countries, could be one of the sectors that not only has room for growth but also holds significant development potential. This is why agricultural trade occupies an important and substantial share in the non-oil exports of both sides.

At the same time, the development of transit routes, including joint projects between the two countries, could lead to an increase in trade capacity if their implementation is expedited.

In newer sectors, it appears that focusing on industries such as pharmaceuticals and healthcare is showing signs of trade potential. The increase in health tourism and reciprocal medical visits between citizens of the two countries supports this potential.

The fields of renewable energy and information technology also seem to be areas where, considering the global development status of these sectors, both countries could rely on mutual cooperation for growth and trade in these fields. Leveraging their combined capacities and collaboratively advancing these key technological sectors can reduce both countries' reliance on non-regional powers and positively influence regional cooperation.

In terms of what could bring both countries to an optimal economic relationship, moving toward resolving political conflicts, building mutual trust, reducing tensions at the macro level, and managing relations with non-regional powers are essential steps.