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Looming Sanctions Jeopardize Expansion Of Iran’s Rail Network

Railroad tracks in Iran - Undated

The decision of U.S. President Donald Trump in May to scrap the landmark 2015 nuclear deal (JCPOA) has jeopardized Iran’s railway projects with international companies.

The nuclear agreement encouraged several European and Asian companies to sign contracts worth billions of dollars with Iran for expanding the country’s rail network. But fearing sanctions from the U.S., companies such as Germany’s Siemens now say they’ll cancel their projects in Iran, despite the fact that their own governments still support the JCPOA.

After years of international sanctions and neglect from the government, Iran has an underdeveloped railway system that is only 10,000 km long. In recent years, the government has announced it is determined to modernize the existing railroads and expand them to 25,0000 km.

Officials have promised to allocate approximately $25 billion from Iran’s oil and gas income over the next 10 years, for railway projects.

In October 2016, Siemens agreed to upgrade Iran’s railway network during a two-day visit to Tehran by Economy Minister Sigmar Gabriel. Siemens said it would provide components for 50 diesel-electric locomotives to Iran. Iran was also in discussions with the German company to lease modern trains.

In July 2017, Iran’s state rail company and its Italian counterpart signed an agreement worth $1.37 billion to build a high-speed railway between the cities of Qom and Arak. A few months later South Korean manufacturer Hyundai Rotem signed a contract worth $843 million with Iran’s state-owned railway company to produce 450 suburban railbus train cars in Iran.

Map Of Rail Way Projects In Iran
Map Of Rail Way Projects In Iran

In March of this year, China National Machinery Industry Corp, known as Sinomach, secured a contract to build a 410-km railway in western Iran to connect the capital Tehran to the cities of Hamedan and Sanandaj.

However, the reimposition of U.S. sanctions against Iran means that all these projects will be suspended until further notice.