Geo-political implications of Chabahar Port

India to have commercial gains with opening of Chabahar port in Iran

Business & Politics

December 6, 2017

/ By / New Delhi



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The Chabahar port is being seen as an important corridor for India to enter into the Afghanistan and Central Asian markets. But while the Indian Prime Minister has been investing in the development of the project, it should be interesting to see how he balances the act with the United States of America (US), who has bitter relations with Iran.

The Chabahar port in Iran, which is seen as a route of strategic and economic importance for India, was opened on December 3, 2017. The port will allow India to bypass its neighbour Pakistan and reach land-locked Afghanistan and other Central Asian countries for trade purposes.

Iran’s only oceanic port, Chabahar consists of two separate ports — Shahid Kalantari and Shahid Beheshti, with the latter now expected to receive 8.5 million tonnes of cargo, a three-time rise from its previous 2.5 million tonnes. The port will now also be able to accommodate 100,000-tonne ships, which India feels will pose competition to the Gwadar port- a China-Pakistan economic corridor, just 80 kilometres (km) from Chabahar.

Lately, the Indian capital New Delhi has been viewing the project as a strategic response to China’s development of the Gwadar port in Pakistan and their relentless pursuit of the Belt and Road Initiative.

With the opening of the port, Indian goods are now anticipated to reach Central Asian markets. An agreement has been signed between India, Iran and Afghanistan, to grant preferential treatment and tariff reductions at Chabahar to Indian goods headed toward Central Asia and Afghanistan.

The corridor is being eyed as an increasingly important one for its linkage to resource-rich regional countries. No wonder then,  Indian Prime Minister Narendra Modi, committed an investment of USD 500 million for the development of Chabahar. As part of a strategic push, beyond a monetary investment, India’s plans have also been to develop a network of roads and railways at a cost of USD 15 billion.

The project, work on which started in 2007 at an estimated cost of USD 1 billion, has had India’s backing from as far back as 2003; but after Modi initiated trade talks with Iran, the US had questioned India of risking violations of international sanctions.

The US President Donald Trump accused Iran of being a threat to countries across the Middle-East. On a deal between Iran and six major world powers restricting Tehran’s nuclear programme in exchange for lifting sanctions, Trump had commented that it was “the worst deal ever negotiated”.

For more than a decade, India had been pushing for the development of the Chabahar port in order to strengthen its trade links to the resource-rich countries of central Asia and Afghanistan – countries to which entry was previously hindered due to bitter relations with Pakistan.

But while the port is being seen to reinforce mutual and regional cooperation between Iran and India, it is yet to be seen how India’s relations  with Washington will be affected by this, which has had a financial embargo on Tehran. Restrictions on trade between  US and Europe to Iran continue and are credited to issues such as human rights and terrorism.

However, India’s relationship with Iran is being highlighted as primarily focused on economic and energy issues, with the US administration having recognised India’s need for a trade route. There has been no sign of any military cooperation, that might be of concern to the US.

India has already sent its first shipment to Afghanistan via Chabahar. This was even before the route was officially inaugurated, and was monitored via video conferencing by the External Affairs ministers from both sides, Sushma Swaraj and Salahuddin Rabbani, indicating the importance of the route.

Once the project is complete, Chabahar will be linked with the International North-South Transportation Corridor (INSTC), which currently stretches from the Iranian port of Bandar Abbas in the Gulf to Russia, Eurasia and Europe.

The Chinese corridor

China might not take this pill down easily as it has been heavily investing in Gwadar, as part of the USD 50 billion China-Pakistan Economic Corridor (CPEC), which it has on lease from Pakistan for a period of 40 years.

Surface transport to Afghanistan was impossible until now without crossing Pakistan, but with India having two berths at Chabahar port that have been leased to India by Iran for 10 years, India can access the markets without joining the China-promoted ‘One Belt, One Road’ (OBOR).

India has been criticised for not being part of OBOR, but it says that the purpose the China-backed initiative fulfills can be achieved by other means also. A significant part of the OBOR is also the CPEC, which passes through Pakistan-occupied Gilgit and Baltistan, thus preventing India from endorsing it.

The CPEC has also been facing opposition from Pakistan, which says that the project terms are biased in favour of China; thus giving India the opportunity to speed-up the completion of its berths at Chabahar, which were due to be functional by 2018 but are now open for use.

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