Transportation Ministry’s Performance in Retrospect

EghtesadOnline: When Iran and the West reached a deal in 2015 to finally resolve a dispute over Iran’s nuclear program and lift the crippling economic sanctions, Iran was off to a good start. But perhaps without savvy technocrats inducted by President Hassan Rouhani in his Cabinet, this opportunity would have been wasted.

News ID: ۷۷۸۴۰۹

15 August 2017

What Foreign Minister Mohammad Javad Zarif and his team of negotiators achieved in the foreign policy was followed by the sterling performance of Minister of Roads and Urban Development Abbas Akhoundi, among other ministers.

He took charge of the ministry when prolonged sanctions, coupled with a tight budget, had led to underdeveloped infrastructures. Sanctions, tightening as of 2010, had affected sea, rail and road transportation, not to mention the aviation sector hard hit by unilateral US sanctions since 1979.

Thanks to Akhoundi and his team at the ministry, transportation became a key sector in the process of Iran’s engagement with the world after the nuclear deal. Iranian companies signed tens of billions of dollars of deals with international businesses to build roads and rails and to buy passenger planes, Financial Tribune reported.

Iranian airlines signed firm contracts to purchase up to 280 passenger plans from the European planemaker Airbus, its American rival Boeing and the French-Italian aircraft manufacturer ATR. State-owned carrier Iran Air has received seven Airbus and ATR aircraft so far, and it awaits the delivery of the first Boeing plane in April 2018.

> Breathing Life Into Aviation Sector

Before the plane deals were officially announced, many commentators doubted the feasibility of the breakthrough, as Airbus and Boeing were banned from engaging with Iran for decades. The aircraft orders will breathe life into Iran's aviation industry whose fleet age has passed critical levels.

The massive deals come as the government is grappling with financial shortage. Some 85% of these deals are to be financed by international banks and financial institutions. However, amid the current US administration’s hostile Iran policy, the finalization of these deals remains a challenge for the ministry.

So far, big European banks have shown little interest in working with Iran. Even so, many experts believe Iran will be able to get big financers from around the world to fund its big deals.

Of course, these are the results of the nuclear deal, otherwise known as the Joint Comprehensive plan of action. But what distinguishes the performance of Akhoundi is the fact that, unlike the government’s performance in industries and manufacturing, the ministry’s engagement with the world came with a vision. The billions of dollars of incoming investment are aimed at exploitation of Iran’s potential in transportation, given its strategic location.

> Railroad Expansion Measures

The rail sector has seen huge deals for its part. A recent example is a contract with China’s Exim Bank to provide $1.5 billion in loan for the development of a 926-km railroad from Tehran to Mashhad, which will be part of the “New Silk Road” project to launch an integrated railroad from China to Iran and then to Europe.

Not to mention an agreement with India to develop the port of Chabahar and hundreds of kilometers of rails connected to it. The southeastern port is set to play a big role in the future of Iran’s transportation.

Not only did Akhoundi put the rail industry on top of his priority list, but his ministry also revised rail expansion plans to detect and resolve fundamental issues. Notably, the ministry did order a relocation of the train stations in big cities, as part of the so-called Transport-Oriented Urban Development Roadmap.

The ministry also prioritized the construction of railroads connecting the capital of five provinces to the main rail network. These projects have been making rapid progress, breaking rail track-laying records in the past months.

> Housing Sector Remains in Slump

Nonetheless, such a vision was not clearly visible in the housing sector that has been struggling to emerge out of a years-long recession.

Although experts see signals of improvement in home sales, the sector is still far from an all-out recovery.

The ministry was also burdened with the ill-famed Mehr Housing Project—a plan initiated by the previous administration to provide low-income strata with cheap houses.

Akhoundi was the top critic of the scheme which, he said, was launched with little study and assessment, but promised and made effective efforts regarding its progress.

The deeply troubled housing market led the government to propose splitting the Ministry of Roads and Urban Development into two ministries of transportation and housing.