Iran Moves to Position Itself As Central Asia's Trade Path

THE dusty town of Sarakhs, straddling the border between Iran and Turkmenistan, has long been isolated from the rest of the world by distance and desert. By next March, however, it could become a bustling center of commerce, if plans formulated by the Iranian government are successful.

Amid the jagged mountains and clumps of pistachio bushes in the surrounding desert, hundreds of Iranian engineers and laborers are already building the first phase of a vast business center, one of several free-trade zones under construction along the country's northern border.

This effort is part of Iran's gambit to position itself as a trade gateway to the new Muslim states in Central Asia, formed after the Soviet Union's breakup.

"Iran is helping to open untapped markets in Central Asia," says Iraj Kazemian, project consultant for the Sarakhs Special Zone Establishment. "These republics are developing fast. The people there are crying out for consumer goods. And when the [planned rail] route is established, all the trade between India and Europe will come through Sarakhs." This may be over-optimistic, but the Indian government is said to be interested in the Sarakhs venture.

Mr. Kazemian describes the project as "immense."

"We're converting a small airport into an international cargo hub," he says. "We're providing accommodation for 50,000 businesspeople, and we're even building a dam to provide water."

Such ambitious planning is common in Iran, and many projects never get off the drawing board. But this scheme is guided by Astan Qods Razavi, the Foundation of the Holy Shrine of Imam Reza, a $40 billion religious organization with nearly 60 companies and a reputation for results.

Since the Soviet collapse in 1991, analysts have speculated about the future of the southern former Soviet republics, the Muslim states of Turkmenistan, Kazakstan, Uzbekistan, Kyrgyzstan, Tajikistan, and Azerbaijan. Several of the republics are land-locked and, for many decades, have depended on Russia for access to the outside world.

IRAN, along with Turkey and Pakistan, rushed to offer alternative access to Central Asia, each believing it could dominate the region and benefit from increased trade. The three countries reactivated the long-defunct Economic Cooperation Organization (ECO) trading group and extended it to include Afghanistan and the six new Muslim republics.

But Turkey has found its overland route to the region cut by hostilities between Armenia and Azerbaijan, while continued fighting in Afghanistan has severed Pakistan's land route. Only Iran, which shares an uninterrupted border with Azerbaijan and Turkmenistan, can provide access to international seas through its warm-water Persian Gulf ports.

"Transportation within Afghanistan is not a serious proposition within the next 10 years," says Ali Akbar Torkan, Iran's minister of roads and transport. "Turkey has to suffer the [Nagorno-] Karabakh problems [in Armenia/Azerbaijan]. What does that leave? Naturally, it leaves the best route: Iran."

This year, 1 million tons of Iranian consumer goods passed through Sarakhs on its way to eager customers in Turkmenistan and Kazakstan, the minister says. By next spring - if construction proceeds on schedule - Sarakhs will be servicing millions of dollars worth of trade between Central Asia and the outside world.

Already the Iranian government has completed a 440-mile railway line from its Persian Gulf port of Bandar Abbas to join the national railway network at Bafq. A 100-mile extension from Mashhad to Sarakhs, completing the link between Iran and the Soviet-built rail network, is scheduled for completion in March. Goods will be able to flow by rail year-round from the Gulf to Moscow, Beijing, or Europe.

To cope with potential demand, a private-sector Iranian company is planning a 1,100-mile railway from the new port of Chah Bahar direct to Sarakhs. "This route will cut 7,500 miles from the standard sea journey between Asia and Europe," says Muhammad Porkar, of Porimex Trading AG, a Swiss company consulting with the railway consortium.

Not all Iranians believe unlocking Central Asia will be easy. Iranian businessmen and their Western competitors find the former Soviet republics are short on hard currency, have embryonic private sectors, and have public sectors that still look to Moscow for guidance. Moreover, although the Central Asian states have a long Muslim history, they are culturally very different from Iran.

Iranian exports may still find a niche: They boast better quality than Central Asia's goods but are cheaper than Western imports.

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