As the US intensifies its inhuman sanctions and seeks to stifle Iran’s economy through an illegal naval blockade, Tehran has made strategic adjustments.

Pakistan formally activated a new transit corridor through Iran on Friday, announcing that the inaugural shipment including frozen meat bound for Tashkent, Uzbekistan had been dispatched via the China-Pakistan Economic Corridor (CPEC) and Iranian overland routes.

The country designated six transit routes, including multiple key corridors connecting ports and border points inside Pakistan, forming a wide network for overland trade into Iran in a bid to bypass the maritime trade routes in the Persian Gulf.

The order, which took effect on April 25, aims to ease the logjam at Karachi Port and Port Qasim, where more than 3,000 Iran-bound containers have been stuck due to the ongoing US naval blockade of Iranian ports.

By using the new corridor, officials estimate travel time to the Iranian border will drop from 18 hours to just three hours, which in turn will lower logistics costs for regional traders.

The designated routes create a land bridge between Pakistan’s deep-sea ports and the Iranian border, offering a lifeline for third-country goods that that would otherwise be vulnerable to US naval piracy at sea.

For China, the world’s largest oil importer and the destination for an estimated 90 percent of Iran’s crude exports before the current war, the opening of overland alternatives carries acute strategic significance.

With the US Navy enforcing an illegal cordon at the mouth of the Gulf of Oman since April 13, the maritime route that once carried one-fifth of global petroleum has been hijacked by armed naval raid, subjected to systematic plunder.

The blockade’s primary target has always been as much about Beijing as Tehran. China purchases roughly 13 to 15 percent of its crude oil imports from Iran, volumes that before the war exceeded 1.38 million barrels per day.

Iranian crude, often trans-shipped through Malaysia and other intermediaries, feeds China’s independent “teapot” refineries and helps underpin Beijing’s energy security.

The Trump administration has made no secret of its intent to sever this flow. On April 23, Washington imposed sanctions on Hengli Petrochemical’s Dalian refinery, one of China’s largest independent processors, with 400,000 barrels per day capacity, alongside roughly 40 shipping companies and tankers involved in Iranian oil transport.

In a draconian announcement, Treasury Secretary Scott Bessent warned that the US would constrict “the network of vessels, intermediaries and buyers Iran relies on to move its oil to global markets”.

Yet even as the American piracy tightens, the physical blockade is showing gaps. Satellite imagery and tracking data have revealed that several Iranian-flagged vessels under sanctions had sailed out of the Persian Gulf.

While tankers maneuver, Iran’s top diplomat has been building the political architecture for overland alternatives. Foreign Minister Abbas Araghchi embarked on a high-stakes tour on April 23, travelling twice to Pakistan for consultations and to coordinate the corridor activation before heading to Oman and finally to Russia.

In Islamabad, the discussions reportedly focused on key issues, the details of which are not specified. But the tangible outcome was the corridor itself.

Pakistan’s new transit routes, connecting Gwadar, Karachi and Port Qasim to the border crossings of Gabd and Taftan, provide Iran with immediate access to CPEC’s road and rail infrastructure.

Gwadar was built with Chinese loans and Chinese labor precisely as a hedge against maritime chokepoints. Now, with the Sea of Oman effectively closed, goods moving overland from Iran to Gwadar can connect to Chinese markets via the CPEC network, bypassing the US Navy entirely.

On April 27, Araghchi met with President Vladimir Putin in St Petersburg for talks lasting more than 90 minutes. The Iranian foreign minister described the discussions as covering “all issues, both in bilateral relations and regional issues, as well as the issue of war and aggression by the US and Zionist regimes”.

According to media reports, the Russian president said Moscow “will do what it can to support the interests of Iran and other regional countries and help bring peace to West Asia as soon as possible”.

He added that “not only Russia, but now the whole world is admiring the Iranian people for their resistance against America”.

While Russia and Iran signed framework agreements on the International North-South Transport Corridor years ago, the current crisis has given those plans new urgency.

Araghchi used the St Petersburg meeting to reaffirm that Tehran views its relationship with Moscow as a “strategic partnership” that will continue “with greater strength and breadth”.

For China, Russia’s role is complementary. The INSTC offers a route from Mumbai to Moscow via Iranian rail links, a path that, if fully operationalized, would give Chinese goods another overland alternative to maritime shipping.

More immediately, Russia’s diplomatic cover complicates any US effort to pressure Pakistan or other neighbors into closing their borders to Iranian trade.

The central question for Washington is whether maritime piracy can achieve what missiles and airstrikes failed to deliver. After the US-Israeli strikes on Iran on February 28, it became clear that bombing alone would not bring down the country to its knees.

The blockade represents a shift to economic suffocation aiming to squeeze Iran’s oil revenues. But the strategy carries costs. Global oil prices remain elevated near $120 per barrel, stoking inflationary pressures across the US, Europe and beyond.

More fundamentally, the blockade’s success depends on land routes remaining closed. Pakistan’s activation of the transit corridor, Russia’s support, and China’s quiet integration of Gwadar into its supply chain collectively suggest that Tehran is building an overland escape hatch that the US Navy cannot interdict under any circumstance.

“Whenever there are sanctions or blockades, there will also be workarounds, whether informal channels or other flexible arrangements,” Wang Yiwei, director of Renmin University’s Institute of International Affairs, told The Straits Times. “The key question we should be asking is: can this blockade actually be sustained?”

For now, the answer appears uncertain but with each new overland corridor, Iran is proving impossible to seal and China unlikely to be starved.

Source: Press TV

“Frontier market” economies—a cluster of mostly middle-income economies regarded as the proving ground for the next generation of economic superstars—have largely failed to live up to their potential in recent decades, a new World Bank study has found. On average, investment growth per person in the 2020s so far has been less than half the rate in the 2010s. Yet the experience of the top performers among frontier markets reveals lessons for the 56 economies currently in the cluster.

For global investors looking for opportunities beyond high-income economies, frontier markets constitute the middle of the range: they are generally less tightly integrated into global financial markets than emerging markets but more so than other developing economies that belong to neither the “emerging” nor the “frontier” classes. The creation of these two asset classes in the 1980s and 1990s—an initiative that was greatly aided by the World Bank Group’s International Finance Corporation—helped channel significant private investment flows into developing countries.

“Excluding a handful of economies that have become investment grade over the past 25 years, frontier markets may well be the biggest disappointment in economic development,” said Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President for Development Economics. “People in frontier markets are, on average, better educated and live longer than those in other developing economies. The quality of their policies and institutions is better. Some of them are rich in natural resources. But they haven’t converted these advantages into advancement—and they remain the developing world’s lowest-hanging fruit.

Frontier markets today are home to 1.8 billion people—a fifth of the world population—and they are expected to add nearly 800 million more over the next 25 years, more than the rest of the world combined. More than a third of frontier markets are in Sub-Saharan Africa. Many frontier markets are rich in minerals that will be needed for new technologies concerning renewable energy, telecommunications, and consumer electronics. They often boast stronger institutions than other developing economies. In addition, they hold a special appeal for investors: over the past 25 years, stocks in frontier markets have moved largely independently of global financial conditions, which have explained only one in eight of the ups and downs in frontier-market stocks, far less than in advanced economies or emerging markets.

“These economies will play an important role in addressing the jobs challenge facing developing economies—they will account for nearly a fifth of the 1.2 billion young people in developing countries who will reach working age in the next decade,” said M. Ayhan Kose, the World Bank Group’s Deputy Chief Economist and Director of the Prospects Group. “The top-performing frontier markets have followed different paths. But they’ve converged on some common strategies—growth-friendly policies, investment-supporting infrastructure, better fiscal management, and an institutional environment that attracts private investment. The payoffs have been large: per capita income in the top quarter nearly quadrupled over the past 25 years.”

The typical frontier-market economy, however, has made little progress in attracting investment since 2000. Over the past 25 years, the growth rate of investment per person in these economies has ratcheted down, dropping to just 2% in the 2020s, less than half the rate in the previous two decades. Frontier-market economies today account for just 3.1% of global capital inflows, and less than 5% of global economic output.

Measured by laws on the books, frontier markets have made substantial progress in opening up their financial markets the past 25 years: they are now about half as open as advanced economies, up from about one-fifth as open in 2000. Actual financial-market development, however, has been sluggish. Domestic-currency markets, for example, remain relatively underdeveloped and domestic banks and financial institutions tend to lend less to private households and businesses than they do in emerging markets.

Greater fiscal discipline will be key to frontier markets delivering on their potential in the years ahead. Government spending as a share of GDP has been rising, but revenues have remained flat. The result has been a surge in debt burdens—and debt defaults. Today the typical frontier market spends more on net interest payments on its debt—about 2.5% of GDP—than is the case among emerging markets or other developing economies. Nearly 40% of frontier markets defaulted at least once between 2000 and 2024. Since the COVID-19 pandemic, frontier markets have recorded more defaults than all other countries combined.

Even so, some frontier markets have done better at navigating such pitfalls. Viet Nam, one of the world’s poorest countries at the turn of the century, now ranks among the 10 fastest-growing economies of the past 25 years. Rwanda emerged from civil war in the 1990s to become one of Sub-Saharan Africa’s biggest economic success stories, relying heavily on tourism and other services. In addition, four frontier markets—Bulgaria, Costa Rica, Panama, and Romania—have attained high-income status since 2012. To make the most of their potential, these economies will need to do much more than simply open up their markets. They will need to develop them and create the institutional safeguards needed to manage them.