RLL Container Report - 20 December 2017
From: John Keir, Ross Learmont Ltd. Email: john.keir@telia.com Date: 20 December 2017
Wise men say only fools rush in.
While western investors are still testing the water, China is investing billions in infrastructure projects in Iran. In September CITC Group, China’s state investor, provided Iran with a USD 10 Billion credit line, while China’s development bank is ready to provide an additional USD 15 Billion. Hard on the heels of their Chinese competitors in second place, comes South Korea through its Export-Import Bank, which has extended to Teheran a credit line in the order of Euro 8 Billion. It is calculated that China alone has invested twice as much in the Iranian economy as all the countries of the European Union combined.
The reason why the EU has not invested heavily in Iran is that the Union needs all its financial resources to upgrade the large and diverse European rail network. The European Commission proposed a Euro 1 Billion investment for 39 transport projects, which will in turn unlock a total of Euro 4.5 Billion of public and private co-financing. By far the largest part of the funding will be allotted to the development of the European rail network (EUR 719.5 million), decarbonising and upgrading road transport (EUR 99.6 million), as well as developing maritime ports (EUR 78.9 million) and inland waterways (EUR 44.7 million). Poland provides an example of how this money is put to good use. Here, the authorities will invest no less than Euro 816 million to rehabilitate four key highways, one of which is the E75 line from Bialystok via Suwalki and on to the Lithuanian border via Trakiszki. At the same time, the Poles are constructing a new high-speed rail line to the Lithuanian border, where it will form part of the Rail Baltica line running through the Lithuanian rail hub at Kaunas and the Latvian capital, Riga and then north to the Estonian capital, Tallinn.
At the same time, out in Central Asia, the Kazakh authorities have double-tracked a 113 km stretch of line from the capital, Almaty to Chemolgan. This second track has taken two years to construct but will now increase capacity fourfold on one of Kazakhstan’s busiest lines. Equally important, the upgraded line opens up new opportunities to develop Kazakhstan as a major transit route between Asia and Europe. To the north, Russia is keen to gain faster access to markets in the former Soviet republics in Central Asia, while at the same time, Kazakhstan is seeking access to the large Iranian market to the south. Both Russia and Kazakhstan value the ice-free ports in the Persian Gulf with their regular intermodal services to East Africa and the Indian sub-continent. The road and rail routes south to the ports of the Persian Gulf provide the major industrial cities of Siberia and Central Asia with a far quicker and possibly less expensive trade route out into the wider world.
John Keir, Ross Learmont Ltd.
20 December 2017
Copyright ©, 2017, John Keir