Ashgabat Agreement

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has recently given its approval for India to accede to the Ashgabat Agreement, an international transport and transit corridor agreement. India’s intention to accede to the Ashgabat Agreement would now be conveyed to the Depository State (Turkmenistan). India would become party to the Agreement upon consent of the founding members. (Note: This is an important development in India’s Look West policy intune with its Connect Central Asia policy. In light of the above, students should have broad understanding of the issue from UPSC Main examination point of view

What is this Ashgabat Agreement?

  • Ashgabat Agreement, is an international transport and transit corridor facilitating transportation of goods between Central Asia and the Persian Gulf.

[Ashgabat (It used to be called as Poltoratsk between 1919 and 1927) is the capital and the largest city of Turkmenistan in Central Asia, situated between the Karakum Desert and the Kopet Dag mountain range].

  • The Ashgabat Agreement, aims to develop a shortest trade route between Central Asian countries and Iranian and Omani ports.
  • The transit agreement provides for a transit corridor across Central Asia and the Middle East through the continuous landmass between Kazakhstan, Uzbekistan, Turkmenistan and Iran before reaching the Persian Gulf and into Oman.

Background:

  • The agreement was initially signed among Uzbekistan, Turkmenistan, Iran, Oman and Qatar back in April 2011.
  • It was given additional support in 2014 when a Memorandum of Understanding (MoU) was signed. The MoU discussed on various aspects like legal, procedural, infrastructure etc., of the trade and transit agreement.
  • The entry of Kazakhstan has increased the significance of the agreement by extending it further into Central Asia to the borders of Russia and China.
  • The land transport component of the agreement includes rail links running through Kazakhstan, Uzbekistan, Turkmenistan and Iran, of these the Iran-Turkmenistan-Kazakhstan (ITK) railway line is a major route.
  • ITK railway line, connects Turkmenistan in the north with Uzen in Kazakhstan and with Gorgan in Iran to the south.
  • ITK railway link which became operational in December 2014 is also a part of the India-sponsored North-South international transport corridor (NSITC/INSTC).
  • Besides the ITK rail link, the other rail project is the Turkmenistan-Afghanistan-Tajikistan (TAT) rail line.
  • TAT railroad will link Afghanistan’s Akina-Andkhoy to Turkmenistan’s Atamurat-Ymamnazar via Pyandzh in Tajikistan.

(Note: Students should identify these places in the map to get more familiarity)

  • Turkmenistan also participates in TRACECA (Transport Corridor Europe-Caucasus-Asia), an international transport programme which includes the EU and 14 Eastern European, South Caucasus and Central Asian states.
  • Some experts opine that India’s strategy should be
    • To participate in all regional connectivity arrangements that exist outside China’s the One Belt One Road (OBOR) Initiatives
    • Involve in connectivity initiatives that supplement and complement the INSTC
    • To diminish the leverage being exercised by Pakistan in curtailing India’s connectivity to Central Asian countries.
    • To optimise India’s trade routes to the EU, both in terms of costs and time.
    • India – Turkmenistan relation is the key for India’s ‘Connect Central Asia’ initiative.

(Because Turkmenistan is already engaging its neighbours to establish itself as the regional transportation and transit hub) Importance of this Agreement:

  • It will enable India to utilise the existing transport and transit corridor to facilitate trade and commercial interaction with the Eurasian region.
  • It would synchronise India’s efforts to implement the International North South Transport Corridor (INSTC) for enhanced connectivity.

What is INSTC?

    • The INSTC (International North South Transport Corridor) is a multi-modal trade transport network that includes rail, road, and water transport from Mumbai in India via Bandar Abbas in Iran to Moscow in Russia.
    • The concept was initiated by Russia, India and Iran in September 2000 to establish transportation networks among the member states and to enhance connectivity with the land locked region of Central Asia.

  • The Foreign Trade Policy of India, 2015-20, has highlighted the importance of the North-South Transport Corridor in expanding India’s trade and investment links with Central Asia.
  • The INSTC envisages movement of goods from Mumbai (India) to Bandar Abbas (Iran) by sea, from Bandar Abbas to Bandar-e-Anzali (an Iranian port on the Caspian Sea) by road, and then from Bandar-e-Anzali to Astrakhan (a Caspian port in the Russian Federation) by ship across the Caspian Sea, and thereafter from Astrakhan to other regions of the Russian Federation and further into Europe by Russian railways.
  • INSTC could facilitate India’s economic integration with Eurasian economies and other countries in surrounding regions.

(Note: To understand the problem areas and to realise the full potential of the corridor, a dry run was already conducted on the Nhava Sheva–Bandar Abbas (Iran)–Baku (Azerbaijan) and the Nhava Sheva–Bandar Abbas–Amirabad (Iran)–Astrakhan (Russia) route via Caspian Sea in 2014)

Relevance of INSTC to India: Economic and Strategic Dimensions (In the context of increasing aspirations of China through its OBOR Initiative)

  1. At present, India has to depend on the sea route via Rotterdam to St. Petersburg and increasingly through China and then inland to transport goods to Russia.
  2. INSTC would substantially reduce the cost of transporting goods from India to Eurasia and surrounding regions.
  3. Some studies say that with INSTC transit time and cost will comedown  and this would enable the seamless movement of goods from India to Russia and surrounding countries.
  4. Estimates are such that the corridor would be 30 percent cheaper and 40 percent shorter than the current route via St. Petersburg to Moscow.
  5. If India negotiates a comprehensive economic partnership agreement with the Eurasian Economic Union, INSTC would help India expand its economic, trade and investment opportunities in this region.

(Because it would be easier to access these markets through the INSTC and it would boost the competitiveness of India’s trade) (Note: Eurasian Economic Union consists of Belarus, Kazakhstan, Kyrgyzstan and Russia, & Armenia likely to join)

  1. Energy-India is one of the largest energy consumer in the world. Central Asia has abundant natural resources, including petroleum, natural gas and uranium, which could meet India’s energy needs.
  2. The region also offers abundant deposits of fertilizer inputs such as potash.
  3. Notably there is huge scope for these countries to benefit from India’s expertise in information technology and IT-enabled services ( Because many of the sectors are becoming increasingly service-oriented)
  4. It will deepen our engagement inline with Connect Central Asia Policy.

What are the challenges faced by Central Asian countries:

  • Competition and rivalries between the countries
  • Issues of water scarcity
  • Border disputes
  • Extremism and fundamentalism
  • Drug trafficking
  • Environmental degradation and
  • Migration
  • Growing Violence & Security challenges

What should India do now?

  • There is a strong political and commercial case for India to allocate more political capital to better access to the INSTC and link Iran.
  • India should establish an India-Central Asia Forum along the lines of the India-Africa Forum.
  • India should be proactive in engaging with the Shanghai Cooperation Organisation (SCO), which has emerged as an influential regional grouping in Eurasia.
  • India should to expand the scope of its customs cooperation agreement with Iran so as to get transit facilities via Iran to the Caspian Sea and other Central Asian countries.
  • Removal of sanctions on Iran has opened up many opportunities for investors in completing the missing links on the INSTC which in the past was not possible.
    • India has already proposed an investment of $100 million to develop a free trade zone at Iran, Chabahar, and now the focus should be to ensure that this development is completed fast.

The Way Ahead

  • India, Iran and Russia are three major pillars of this huge network of north south connectivity projects, a larger share of responsibility will have to be borne by them.
  • Regular enhanced cooperation among the 14 member states of the INSTC needs to be accelerated.
  • New members from the region should be encouraged to join the INSTC to make it more effective.
  • Important is the prioritisation and identification of the projects (both reviving old routes and building missing links) which deserve more attention from the point of their utility in enhancing the trade and economic ties between the countries.
  • Member countries need to formulate long-term strategies both at the bilateral and regional level to address the bottlenecks and to realise the future potential of the corridor.
  • Creation of high level working groups on transport cooperation among the regional partners, setting up of independent joint study groups and organising annual meeting of the technical groups to follow the developments in a phased manner.

A major challenge before the member countries is sustaining the momentum of progress which they have achieved in the last few years.