Iran develops Caspian port

By JOHN C.K. DALY, UPI International Correspondent   |   May 21, 2008 at 5:49 PM   |   0 comments

WASHINGTON, May 21 (UPI) -- For the last decade the U.S. administration has brandished the 1996 Iran-Libya Sanctions Act to isolate Iran and punish naughty Western companies seeking a foothold in Iran's hydrocarbon sector. Since the 1979 Iranian Revolution overthrew Shah Mohammad Reza Pahlavi, it has been a core tenet of U.S. foreign policy to contain the Islamic Republic of Iran, and ILSA is the most formidable weapon in Washington's arsenal.

Now Iran is proposing to construct a massive port facility in Bandar-e Anzali ("Anzali port") on its northern Caspian shore, a development that may provide a mortal blow to the ILSA sanctions regime, at least for the former Soviet republics of the Caucasus region and Central Asia. Those with a sense of historical irony might note that prior to the Islamic Revolution, Bandar-e Anzali was known as Bandar-e Pahlavi ("Pahlavi port").

The first U.S. sanctions against Iran followed the 1979 hostage crisis, when Washington froze about $12 billion in Iranian assets. Extending Washington's reach, 17 years later ILSA threatened foreign nations and companies with sanctions if they invested more than $20 million in developing Iran's energy resources, provoking protests in particular from the European Union. Some EU members note Washington's "double standard" as U.S. foreign policy persistently strives to undercut the Arab League's boycott of Israel while promoting ILSA.

Tehran in turn has sought to escape ILSA's clutches by wooing foreign companies with enticing investment opportunities, but, playing on its geography, is now reaching out to Kazakhstan and Turkmenistan in particular by offering its territory as a duty-free transit corridor for their exports, a siren song that undoubtedly will prove as alluring in Almaty and Ashgabat as it is discordant in Washington. As an added incentive, Tehran will make Bandar-e Anzali a free trade and industrial zone, which Kazakhstan and Turkmenistan, long subjected to punitive energy and goods transit tariffs by Russia, will find an additional incentive.

The development project is squarely aimed at Iran's Caspian neighbors; in telling journalists that Tehran intends to construct the Bandar-e Anzali Port Free Trade and Industrial Zone, the project's managing director, Kamal Firouzabadi said: "Countries try various social, political and economic methods to reach economic development. One of these ways is enriching free trade zones," adding, "Among our other projects, I can refer to studies for constructing roads and transport routes to this zone. This port is to be constructed through investing approximately $435 million." Construction is slated to begin early next year.

The port's infrastructure is already capable of handling its expanded role, as it is connected to five power stations and has an international airport 15 miles away in Rasht, capital of Iran's northwestern Gilan province and Iran's largest city on the Caspian.

The Bandar-e Anzali Free Trade and Industrial Zone covers approximately 12.3 square miles, with nearly 5 miles of shoreline and docks including industrial, trade, tourism and service zones. For gourmands, Bandar-e Anzali also produces some of the world's best caviar.

Kazakhstan has already dabbled its toes in utilizing Iranian transit for its energy exports, shipping small amounts of its oil across the Caspian to the northern Iranian port of Neka, with Almaty receiving an equivalent amount of Iranian crude at Iran's southern port facilities on the Persian Gulf. Up to now, Kazakhstan, fearing to anger Washington, has made limited use of the arrangement; in 2007 Neka received a paltry 70,000 to 80,000 barrels per day of Kazakhstan's 1.2 million bpd exports.

But in a development certain to interest Almaty in the Bandar-e Anzali project, Iranian-Kazakh trade is steadily rising, exceeding $2 billion in 2006, up from $700 million only two years earlier. Besides Neka, Iran's Caspian port of Bandar-e Amirabad also receives Kazakh oil imports, and in 1999-2002 received $40 million in upgrades.

Of the Caspian's 11 major seaports, five are Iranian, three Russian, with Azerbaijan, Turkmenistan and Kazakhstan each having at present a single facility. The capacity of Iran's four main Caspian ports already exceeds the total combined capacity of those in Azerbaijan, Kazakhstan, Turkmenistan and Russia.

Adding to Washington's anxieties, the upgrading of Iran's Caspian ports is part of a much larger Eurasian transport initiative. In September 2000 Russia, Iran and India signed an intergovernmental agreement in St. Petersburg to construct an international "North-South Transport Corridor," which in turn built upon an earlier trilateral agreement India and Iran signed with Turkmenistan in 1997. As envisaged, the "North-South Transport Corridor" will permit the transit of goods from Indian ports to Iran's Persian Gulf Bandar-e Abbas or Chahbahar ports, from where they will be conveyed via rail across Iran to Bandar-e Anzali and Bandar-e Amirabad. Goods then will be shipped across the Caspian to Russia's Mahachkala or Derbent ports, from where they can access the Russian railway network, while Russia's Astrakhan port on the Volga has the added benefit of being astride the delta of one of Europe's longest and most navigable rivers, before the goods end up at St. Petersburg or Rotterdam to enter the lucrative EU market.

Needless to say, Indian officials are very enthusiastic about the route, as its 3,880-mile length is much shorter than an Indian-Suez Canal-Mediterranean transit of more than 10,000 miles.

If any further proof is needed that the world is growing increasingly deaf to Washington's barking about ILSA, the two-day Eighth Iran Petrochemical Forum, which opened in Tehran on May 19, is being attended by representatives of 76 companies from 27 countries, including Russia and U.S. NATO allies Canada, Denmark, France, Germany, Italy, the Netherlands, Norway, Spain, Turkey and Britain.

The thought of Russian Prime Minister Vladimir Putin's energy commissars from the former Evil Empire exchanging vodka toasts and eating caviar with their Axis of Evil counterparts is enough to make a Texan good ol' boy from the oil patch weep into his Lone Star beer.

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