Economic Implications of the Iraq-Iran Railway Project
The newly proposed railway line connecting Iraq and Iran has sparked significant debate within Iraqi economic circles. While some analysts view the initiative as a potential boon for trade and building bilateral relations, others express concerns that it primarily serves Iran’s interests, potentially at Iraq’s expense.
Project Overview
The railway will stretch 32 kilometers, linking the Iranian city of Shalamjah to Iraq’s Basra. It features two proposed routes—one via the Syrian border and another through the city of Albukamal—and aims to transport 3 million passengers annually, alongside goods. The initial phase of this ambitious project carries a price tag of $148 million, with total estimated costs reaching up to $10 billion.
Iraqi Prime Minister Mohammed Shia Al-Sudani laid the foundation stone for this venture in September 2023, indicating a commitment to the project’s future.
Political Context and Economic Concerns
The complex political landscape in Syria remains a crucial factor affecting the railway project. Economist Ziad Al-Hashemi suggests that the recent shifts in Syria’s political environment could jeopardize the railway’s execution, stating that Iran might reconsider its strategic objectives in the region.
He recalled a 2021 agreement between ousted Syrian President Bashar al-Assad and then-Iranian President Hassan Rouhani, which aimed to establish a banking link between the two countries without Iraq’s input. Al-Hashemi argues that Iran’s diminished interest in a corridor to the Mediterranean necessitates a reevaluation of its strategy regarding this railway project.
Historical Perspective and Strategic Intent
Al-Hashemi emphasized that the Iraq-Iran railway is not a new concept; it has been in discussion for over two decades as part of Iran’s efforts to create a regional transport network linking its economy to Mediterranean ports through Iraq.
He noted that the railway project was intended to connect Iraq’s rail network via two primary points: from Shalamjah to Basra and through Khazrawi Khanaqin in central Iraq. Ultimately, the project aims to extend the Iraqi rail network to Syria’s ports, Tartous and Lattakia, enhancing Iran’s ability to export goods to European and North African markets.
While Iraq could benefit from serving as a land corridor for goods transiting from Iran, Syria, and Europe, the greatest economic advantage would arise if Iraq leveraged this connection to facilitate local manufacturing, positioning factories along the rail corridor for efficient exports through Syrian ports.
Financial Aspects and Infrastructural Development
The cost for establishing the Basra segment of the railway is estimated at approximately $250 million. The Khatam al-Anbiya company, associated with the Iranian Revolutionary Guards, is tasked with completing this project and ensuring the area is cleared of mines.
Although Iraqi officials indicate that the main goal of the link is to facilitate passenger transport, Iranian analysts argue that the underlying intent is to streamline trade, allowing for quicker and cheaper transport of goods into Iraqi markets.
On January 23, Iran announced the commencement of construction for the railway, starting with a demobilization station at the Shalamjah crossing, with operations expected to begin by the upcoming spring.
Economic Viability and Future Perspectives
Al-Hashemi warns that without strategic adjustments—such as developing a water link to supply Iranian cities—Iraq may not derive substantial benefits from the railway. An alternative would involve unloading goods at the Al-Faw port for subsequent railway transport, which could translate into incremental returns for Iraq’s railway systems. However, he emphasizes the need for a thorough analysis of the project’s economic feasibility and its broader social and political ramifications.
Posing Challenges to the Al-Faw Port
Adnan Mazloum, a transport expert, expressed skepticism regarding the railway’s benefits for Iraq, arguing that it could diminish the viability of the Al-Faw port. He contended that goods could be unloaded at various ports before being shipped to Iraq by rail, thereby undermining the intended purpose of Al-Faw.
Mazloum asserted that the railway primarily serves the interests of western Iraq, while the Al-Faw port has potential benefits extending further into markets in Turkey, Syria, and beyond, allowing for global trade connections.
Furthermore, he criticized the railway link to Iran, suggesting that by routing through Syria, Iraq might only be used as a transit corridor with limited economic benefit. He urged that broader investment in infrastructure, particularly along the developmental road, holds greater promise for economic returns.
Final Remarks from Officials
In response to criticisms, Maitham Al-Safi, spokesperson for the Iraqi Ministry of Transport, defended the railway project as a strategic initiative aimed at fostering economic diversification and accommodating increased visitor traffic—projected at over 5 million annually.
The ministry recently convened to discuss project developments with the relevant stakeholders, signaling ongoing support from government officials.
Al-Safi highlighted the project’s environmentally sustainable design, intended to reduce road accidents among bus transport, while emphasizing its importance in transforming mobility between Iraq and Iran, particularly for religious tourism and student exchanges. The ministry aims to pioneer modern transportation solutions that bolster tourism and diversify state revenue.
In a significant milestone, Iraq, through the General Company for Iraqi Railways, signed a contract with Emathia Konsterokason of Spain on November 17, 2024, for the establishment of the Basra-Shaja railway line. This initiative underscores the ongoing commitment to enhance transportation infrastructure and facilitate economic growth.