K.C. Singh | Chabahar deal: Unreal hopes amid twin wars
The Iranian port of Chabahar, crucial for Indo-Iranian trade & regional connectivity, is up for major upgrades under a new 10-year agreement
The Indian Ocean-facing Iranian port of Chabahar, the only Iranian port outside the Straits of Hormuz, is back in the news. A 10-year agreement between India and Iran to further develop it, worth $370 million, was signed earlier this week, on May 13.
The basic concept for the joint development of Chabahar was first mooted during the 2003 state visit to India by then Iranian President Muhammad Khatami. There was then close strategic convergence between India and Iran. Both saw Pakistan’s active political interference in Afghanistan as detrimental to their interests. Consequently, both backed the Northern Alliance led by Ahmad Shah Massoud, who opposed Pakistan-backed Pashtun elements seizing control of much of the country. Thus, the joint development of Chabahar, located strategically on Iran’s Indian Ocean coast, was a natural corollary to the Indo-Iranian partnership.
With India’s preoccupation with the nuclear deal with the United States, while Iran was being sanctioned after its clandestine nuclear activities were discovered in 2003, Chabahar fell off the main agenda. In fact, Iran resented India, a non-signatory to the Nuclear Non-Proliferation Treaty, being mollycoddled, while Iran was singled out for harsh treatment for its clandestine nuclear programme. It ignored the distinction between a signatory, that is Iran, breaching the treaty’s terms, compared to a conscientious objector like India, which rejected it as a discriminatory convention. Eventually in 2015, a bilateral agreement was signed to develop the port. During Prime Minister Narendra Modi’s Iran visit in 2016, a trilateral agreement was also signed between Afghanistan, Iran and India to establish an International Transport and Transit Corridor. Chabahar was seen as providing a safe route to Afghanistan and the Central Asian nations, bypassing the existing link via Pakistan’s ports.
In 2018, the Indian company India Ports Global Limited set up a subsidiary to run Shahid Beheshti Port, one of the two terminals at Chabahar. The present agreement is part of the Iranian scheme for its four-phase development, lifting its annual cargo-handling capacity from the existing 2.5 million tonnes to 82 million tonnes. At present, Bandar Abbas, Iran’s main port on the Gulf, handles 85 per cent of Iran’s maritime trade. This has caused serious congestion and time delays.
In principle, this sounds logical and achievable. But nothing involving Iran is ever that simple or straightforward. Iran is ranged against Israel and the United States, and is seen as stoking the Gaza hostilities. Iran, for the first time ever, directly launched a massive missile and drone attack on Israel in retaliation for the Israeli bombing of Iranian diplomatic premises in Damascus. Israel also symbolically responded by a calibrated attack on Iranian anti-missile sites near its nuclear facilities. With Israel’s Rafah operation now underway, despite repeated American objections, the US obviously was unlikely to be pleased by any India-Iranian hand-holding.
Vedant Patel, the deputy spokesman of the US state department, warned that India “needs to be aware of potential risk of sanctions”. The US has already imposed sanctions on 600 Iranian entities or individuals. So far, India has been able to obtain a US exemption regarding Indian activities in Chabahar, arguing that the port was critical to keep humanitarian assistance flowing to Afghanistan, especially when it came under Taliban control, after the US withdrawal in August 2021. Now, however, the port is being advertised as also a transit corridor running via the Caspian Sea to St. Petersburg. This underscores the Iran-Russia bonhomie and cooperation, both nations seen to be joining the Chinese attempt to reconfigure the global order.
The North-South Corridor via the Caspian is not a new idea. It was seriously in play when this writer was the Indian ambassador to Iran (2003-05). However, it faced a number of hurdles. One was the extremely high Iranian charges for transshipment of containers from the Gulf to the Caspian Sea. That covered unloading at Bandar Abbas port, transportation overland and reloading on ships at the Caspian. Next came the money demanded by the Russian mafia on the arrival of the cargo at Russia’s Caspian ports. Finally, because of an imbalance of trade, the containers got stuck in Russia as there were not enough products to send back to Asia from the Russian end.
The China factor is also significant in any deal with Iran. The India-Iran deal is being justified as a strategic counter to China’s Belt and Road Initiative (BRI). China has invested heavily in the China Pakistan Economic Corridor (CPEC), terminating at Gwadar, which is barely 200 km from Chabahar. China is thus keen to keep a foot in the door at Chabahar, to remain informed about its development and possible challenge to Chinese interests in Pakistan. China had earlier signed a 25-year cooperation agreement with Iran worth $400 billion. It is unclear what if any of that China proposes to invest in Chabahar. In any case, China’s first priority would be to safeguard its investment in Gwadar as the entrepôt for Central Asia. Chabahar having an identical purpose, in addition to feeding the North-South Corridor leading to Russia, creates for China conflicts of interest.
Interest in the North-South Corridor has now revived due to the regional impact of the Gaza conflict. The US-envisioned India-Middle East-Europe Economic Corridor (IMEC), planned to run from India to Europe via the United Arab Emirates, Saudi Arabia and Israel, is now defunct in the immediate future due to the Gaza hostilities. The Suez Canal transit route has the Houthi threat disrupting it. Thus, an alternative route via the Caspian and Russia seems plausible. But this ignores the Ukraine war and the Western sanctions against Russia. How can St Petersburg be a practicable European end of the corridor with the hostilities in Ukraine persisting?
Iran shall always be a difficult partner for fashioning a new security and trade paradigm in West Asia. It values strategic independence like India. As a Shia power it vies with Saudi Arabia for the leadership of the Islamic world, with major influence over the Shia crescent of nations running from Iran to the Mediterranean. It is also seen as a prominent member of the Russia-China-led group of nations defying US hegemony.
Until the two wars in Gaza and Ukraine come to an end, India’s Chabahar plans will see incremental growth rather than strategic leaps. Balancing interests in a conflict-laden world shall remain a challenge for Indian diplomacy.