The Transportation Framework of Multipolarity

10.19.2023

Cooperation within the bounds of the EAEU and BRICS is fostering the growth in trade between the member countries

On September 12, within the bounds of the Eastern Economic Forum, a discussion was held titled «EAEU and BRICS: the Role in Creating a New Multipolar World». The main topic was fortifying the commercial and logistics arteries in the space of these unions, as well as the work that Russian Railways, OJSC, is conducting with its partners in those countries.

Trade dynamics

«Today, the Eurasian Economic Union (EAEU) is a collective partner of BRICS,» Chairman of the Eurasian Economic Commission (EEC) Mikhail Myasnikovich declared. Consequently, the mutual trade of its member countries is on the rise. Total trade over the first half of 2023 reached 150 million dollars.

As Russian Railways, OJSC, first deputy director general Sergey Pavlov said, from January to August 2023, railroad shipments between the Russian Federation and EAEU countries increased 15% over the same period the previous year.

Despite the sanctions that have been introduced, Russian Railways, OJSC, and its colleagues from EAEU countries have completed shipments and payments on a constant basis. «We have never experienced any limitations in our cooperation and ability to make payments,» Sergey Pavlov stated.

According to him, the current payments system and agreement system operating within the bounds of the union is providing the basis to formalize any shipments and never look back.

New Opportunities

It’s worth noting that in August at the 15th annual summit withs heads of state, BRICS members in Johannesburg, South Africa, made the decision to add six new members to the union as of January 1, 2024 — Argentina, Iran, Saudi Arabia, Egypt, UAE, and Ethiopia. During the event, Russian President Vladimir Putin made a speech in the format of a video conference and announced an initiative to create a permanent transportation commission.

«Thanks to this commission, new opportunities to operate more efficiently will arise within the bounds of existing transportation and logistics corridors,» Sergey Pavlov noted during the 2023 EEF. Today, the total volume of railroad trade between the union’s member countries is 7 trillion TKM, or 2/3 of world cargo turnover. «The addition of these new countries will help BRICS grow, not only quantitatively, but qualitatively,» the first deputy of the head of Russian Railways, OJSC, said.

1520 International previously reported that in August among the events of the BRICS Business Council, the Russian party proposed creating a railroad transport subgroup, which with the extension of the member states of the union could become an effective platform for coordinating cooperation in innovation sharing, R&D, infrastructural development, and recruits training. The initiative is currently being developed along with the national constituents of the Business Council. It’s planned to launch next year.

«Meanwhile, all new member countries of the union are playing a global role in energy and transportation logistics,» Deputy Chairman of the Government of the Russian Federation Aleksey Overchuk said.

«The UAE, Egypt, and Ethiopia can be regarded as access points to the African continent, which as of late is being considered an increasingly more promising, fast developing market,» he emphasized.

Transportation Support

Today, Russian Railways, OJSC, in coordination with the party of the Government of the Russian Federation, is actively developing areas of railroad shipments, such as the Eastern one, which connects Russia to Asia; entries to the ports of the Northwest and the Azov-Black Sea basin; and the North-South international transportation corridor (ITC).

The holding company is actively conducting operations to sew together these «narrow sites» in the Eastern shipments area. For instance, Russian Railroads, OJSC, is conducting synchronous work with partners from friendly countries along the Belarus-Russia-Kazakhstan-China. In August, the holding company signed an agreement with Belarusian Railroads to develop a corridor going from Belarus to Northern and Northwestern ports of Russia.

Sergey Pavlov emphasized that Russian Railroads, OJSC, has a project that the company is implementing in the EAEU space called «Unified Transportation and Logistics Company ‘Eurasian Rail Alliance’ (UTLC ERA)». It’s a joint project between Belarus, Russia, and Kazakhstan (33.33% share of the railroads of each of the countries). He says that the transportation company will ensure 15% annual growth for container shipments, which is a decent indicator.

The «expansion» of the North-South ITC is also ongoing. In particular, new regular container services are in operation on the Eastern route of the corridor along the Russia-Kazakhstan-Turkmenistan-Iran-India line," Sergey Pavlov noted. According to him, Russian Railroads, OJSC, has already struck agreements with all the member countries for a unified tariff policy as well as train movement schedule.

«In the Trans-Asian route of the ITC, we’ve noticed 21% growth in shipments and that is also an achievement that we can declare without hesitation,» he emphasized.

In the Western route of the North-South corridor, in turn, construction of a missing 160-km section of the Rasht-Astara railroad is taking place. «Works have already begun which will end toward the end of 2027 and this will give a colossal advantage and an increase in opportunities for mutual trade,» Sergey Pavlov emphasized.

Going forward, the North-South ITC will become a departure point for Russian cargos to African countries. Of course, the corridor can be used in the reverse direction as well.

We will note that the African region is currently one of the most promising from the perspective of its potential for development and economic growth. Previously, in an interview, Deputy Minister of Economic Development of the Russian Federation Dmitry Volvach stated that beginning in 2030, the center of world demographic growth will shift to Africa, where today its population’s growth rates are already the highest in the world. By 2050, the population of the African continent will exceed 2.5 billion people. According to him, the expected high economic growth rates are ensured by the low base effect.

According to the research of the Russian Congress Foundation, as many as five African nations in 2023 will rank within the top 10 fastest growing economies in the world. Despite the issues that exist, the growth rates in all regions of the continent remained positive over 2022 and will stay stable over the next two years.

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