February 18, 2025: Russia has lost most of its lucrative Western trading partners since its 2022 invasion of Ukraine. Western sanctions and the cost of the war in Ukraine have depleted the Russian treasury to the point where only developing profitable trading partners will enable Russia to keep its economy going. Russia still trades with China, but the Chinese cannot freely trade with Russia because doing so would have Western trade sanctions imposed on them. Trade with the United States and Europe is a major pillar of the Chinese export economy.

This leaves Russia with only two alternatives. One is North Korea, which has a feeble economy with a GDP of only $30 billion and has long been subject to economic sanctions. The other alternative is Iran, which is also sanctioned but has oil to export and a GDP of over $400 billion.

Russia already has a heavily used north-south trade route to Iran but wants to improve it with road and rail connections. Railway connections are a problem because Russia and Iran railroads use different railroad gauges. That can be overcome by building parallel Iran/Russian rail lines and establishing depots where cargoes, especially standard shipping containers, can be transferred between Russian and Iranian trains. Road building bypasses the rail gauge problem. While trucks have long transported shipping containers, it is three times more expensive to ship by road than by rail. Shipping by sea is less than 20 percent the cost of rail transport. The road and rail lines are essential for getting cargo to inland destinations. But most of the tonnage is moved the longest distances by ship. For this reason Russia has long maintained a water route from Russia to Iran via the Caspian Sea and a series of canals. In 2023 Russia brought in dredging equipment for a major, and overdue, dredging of the heavily used Volga-Don Canal that enables ships to get from the Caspian Sea to the Black Sea. Because of the war in Ukraine, and Iran supplying weapons and equipment to Russia, canal traffic was up 15 percent in 2022 over the previous year. In 2023 traffic increased by another 4.5 percent and increased further in 2024.

Since 1952, a 101 kilometers long canal, linking the Don and Volga rivers, gave the Caspian Sea access to the Black Sea and the world's oceans. However, ships that can use the canal cannot displace more than 5,000 tons, be no more than 140 meters long, 17 meters wide, and have a draft of no more than 3.5 meters. Normally the canal moves over 12 million tons of cargo a year. About half of that is oil or oil products. In 2021 Russia agreed to allow Iran to use the Volga-Don Canal so that Iranian ships can reach the Black Sea from the landlocked Caspian Sea. This is the first time Russia has ever given a foreign nation free access to the canal. Russia and Iran are now using each other’s Caspian Sea ports heavily for trade and getting Iranian weapons to Russia. Both nations have agreed to establish a joint-shipbuilding operation in the Caspian Sea and cooperate in dredging the canal, something that has not been done since 1991. The prolonged lack of dredging has made portions of the canal shallower and forced ships to carry less cargo.

The 13 locks on the canal connect the Volga River, the longest in Russia that empties into the Caspian, and the Don River which empties into the Sea of Azov, which is connected to the Black Sea via the Kerch Strait. The Caspian is the world's largest lake, at 371,000 square kilometers. It is about a thousand kilometers long and 430 kilometers wide. It's saline but is only about a third as salty as ocean water. The Caspian has a 7,000-kilometer-long coastline, with the largest chunk, 1,900 kilometers, belonging to Kazakhstan.