The intricate deal of Chahbahar port

By K N Pandita

At a time when India, after a temporary halt, resumed and accelerated work at Chabahar seaport in the Gulf of Oman, the Iranian Foreign Minister gave an intriguing statement that made observers raise an eyebrow. Speaking to the audience at an event in Raisina Dialogue 2021 in the second week of April, Javad Zarif said, ” We have made very clear to our Indian, Chinese friends that Chabahar is open for cooperation for everybody. It is not against China …. is not against Gwadar…..”
In 2015 India agreed to collaborate with Iran in developing Iran’s Chabahar Port and connecting it by a railway line with Afghanistan. Owing to Pakistan’s long hostility, India needed a dependable link with Afghanistan bypassing Pakistan. The link envisaged connectivity with the Central Asian region also.

Historically speaking, India has had friendly relations with Afghanistan; it has substantially contributed to the development of some vital infrastructure in the landlocked country. Even during the years of war and insurgency and at times under serious risk India has not failed to fulfil her commitment to the Afghans.

Prompted by the Pakistan army and its intelligence wing that harbour a political agenda in the war-torn state, the Taliban of strong pro-Pakistan Haqqani group attacked Indian installations and interests several times including the Indian embassy in Kabul with the tacit purpose of scaring the Indians away and destabilizing their outreach in Afghanistan.

In May 2016, Indian Prime Minister Narendra Modi visited Iran. and signed an agreement pledging USD 500 million for the development of Chahbahar port. An MoU was signed between Indian Railways IRCON and Iranian Railways’ CDTIC for the construction of the Chabahar – Zahedan –Sirakhs (Turkmenistan) railway project covering a distance of 628 km from Chabahar to Zahedan and 1000 km from Zahedan to Sirakhs (Turkmenistan)

Indo-Iran relations have remained overcast by uncertainties and scepticism because of deep tension between the Ayatollah regime in Iran and the United States. US imposition of sanctions on Iran adversely affected India’s oil imports from Iran which were to the tune of one-third of her total oil requirements.

The US was not very happy with India cosying up for the Chabahar development project. Nor were the Saudis and Israelis realistic about India’s energy concerns. However, the US did not stonewall it as was the case with the Iran-Pakistan-India (IPI) gas pipeline. Thus although the Trump administration allowed India the “Afghanistan Reconstruction” exception from Iranian sanctions, India largely stopped work on the project of rail link until late 2020 while Teheran kept insisting on India to speed up the task.

The independent Congressional Research Service (CRS) recently submitted a 100-page report to the individual Congress lawmakers to take an informed decision on the Chabahar development project in Iran. The report says that “India has accelerated work in early 2021 and the port is expected to be declared operational no later than May 2021.”The report further says, “Iran’s economy is highly integrated into those of its immediate neighbours in South Asia and India cites the UN Security Council resolutions as its guideline for policy towards Iran.” After sanction easement in 2018, India’s oil imports from Iran rose to 800,000 BPD in July 2018. India paid Iran the 6.5 billion dollars it owed for oil purchased during 2012-2016.

It has to be understood that there are cogent reasons for India delaying the completion of Chabahar on one hand and the Chabahar-Zahidan-Sirakhs railway project on the other. As regards Chabahar, although Indian diplomats and mission could manage to obtain some exemption from the US sanctions regime yet the difficulty was that some western countries whom India had approached for specific heavy machinery needed for building ports, were not forthcoming to sell it for use at Chabahar because they would not defy the sanctions on Iran. And about the railway line, the agreement with IRCON stipulated that under the linework like demarcation, earthmoving and surfacing etc. would be done by the Iranian side and upper structure meaning laying the rails, raising station structure, providing all super-structure etc. would be undertaken by the IRCON. However, despite reminders, the Iranian side did not complete the part of the work they were expected to do.

In July 2020, the New York Times revealed that China and Iran were about to sign a major economic, agreement with $280 billion going to the security deal at an important moment “that presents a serious challenge to Indian foreign policy. The immediate end has been the end of the road for the important Chahbahar rail project, which was aimed to open up Indian connectivity to Afghanistan.” International energy media reported that the deal involves Chinese investment in Iran of $400 billion over 25 years, with $280 billion going to the oil and gas sector and the remaining $120 billion to other core sectors of the Iranian economy. China is to get long-term energy contracts plus discounts of more than 30 % and first refusal rights on all major energy projects in Iran.

Growing Sino-Iranian relations have important strategic implications for the entire Gulf region and particularly for India. From a Chinese perspective, Iran could become a key node in the ambitious Belt & Road Initiative of China. Again, China finds Iranian connectivity an alternative to the choked Indo-Pacific passage as a result of US military action. Iran has already hinted that Chabahar is not opposed to China but more than that Iran has not hidden the ambition of linking up Chabahar with Gwadar along the Makran coast already developed by China.

Not only that. China and Iran are envisaging deepening of bilateral cooperation in military and intelligence spheres which includes weapons developmentas well. Two new Iranian ports adjacent to the Strait of Hormuz, through which Iranian oil will flow to China are also under contemplation for development. Keeping in mind the closeness between the two countries, it is but natural that the Iranian Foreign Minister had to give a cart blanch to China in his Raisina Dialogue 2021 In New Delhi. We should not overlook that there has been opposition to the 25-year deal not only in Teheran but in other major towns of Iran. Among the prominent critics of the deal are former President Ahmadinejad and the outstanding religious leader Matahari. Some have called the deal a “sell-out to China and akin to the Turkmenchay deal with Russia in which the Kajar rulers had ceded Southern Caucasus to Russia.”

In political circles the debate goes on that because of US sanctions, Iran has fallen into the lap of China. Her economy is not strong and she is feeling the sting of isolation and would like to wriggle out of it. President Biden did indicate that talks on the revival of the Joint Comprehensive Plan of Action (14 July 2015) could be held but Iran put the pre-condition of withdrawal of sanctions for any dialogue. Thus a stalemate persists.

Chabahar port and related overland connectivity have been under India’s consideration as early as 2003. But aware of strained relations between Iran and the US in the aftermath of the Iranian Islamic Revolution India had many reservations. The US openly opposed the IPI gas pipeline project although India had remained undecided on the issue of cost production as well as that of security of the pipeline passing through Pakistan territory. Indo-Iran relations have remained in the doldrums first owing to US sanctions on Iran and their consequences on a global level and second because of Iran’s intrinsic capricious behaviour.

India envisaged Chabahar a major trade and connectivity hub on Iran’s coast that would give her an alternative route to Afghanistan bypassing Pakistan. But more importantly, in the words of a commentator, “Chahbahar port has the potential to provide an Indian strategic counter to Pakistan’s Gwadar port being developed by China. The Chinese trade zone could be an important weigh station for India’s energy imports and food and material exports from Kandla and Mundra ports. The railway would give an independent corridor not only to Afghanistan but also to Central Asia and Russia.”

The ground situation demands that India play a deft role in forging an equitable balance of interest in the Persian Gulf region which is of immense strategic importance to both world trade and world security. Without putting the Quad interaction into any jeopardy, Indian diplomacy must put its front foot forward and help reduce Iran-US misapprehensions germane to ushering in an era of peace and development for the region. Care has to be taken that in the context of Chahbahar, Iran-India friendship should not become the source of collateral damage in a large proxy war between the US and China.
(The writer is the former Director of the Centre for Central Asian Studies, Kashmir University, Srinagar).

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