View from Iran
Highlights
The Chabahar Port presents itself as an alternative route for India that circumvents Pakistan, thereby alleviating India's reliance on Pakistani transit corridors. India and Iran have been engaged in negotiations to implement the Chabahar project for several years since 2003 without much success so far. This comment, from an Iranian scholar, dwells on the reasons for the tardy progress on the project since last two decades.
There are at least four major factors that have slowed down India's engagement in the Chabahar Port: US sanctions, sociopolitical and economic upheavals within Iran, disagreement over arbitration clauses, security concerns emanating from ongoing resistance movements in Baloch majority regions straddling Iran and Pakistan, and last but not the least lack of sustained interest in Chabahar in India.
Maritime transport continues to play a significant role in global trade and economy, accounting for 80per cent of international trade in goods. Ports are the gateways to global commerce and play major roles in driving international trade and economy. Rapid geopolitics and economic changes have brought seaports like Chabahar into the limelight. India has a strong interest in developing the Chabahar Port1 as its access to Afghanistan and Central Asia has been contingent upon transit routes through Pakistan, resulting in significant dependence on Pakistan. This has created limitations for India to explore more trade opportunities in the region.
The Chabahar Port, however, presents an alternative route that circumvents Pakistan, thereby alleviating India's reliance on Pakistani transit corridors. This facilitates a better route for India to avail of the commercial opportunities in Afghanistan and beyond. Besides, India views the Chabahar Port as a strategic counterweight to China's Gwadar Port in Pakistan, which has been developed as part of China’s Belt and Road Initiative (BRI) and is partly controlled by the Chinese.
However, India and Iran have been engaged in negotiations regarding implementing the Chabahar Free Trade Zone project for several years since 2003.2 Yet, progress has been slow, mainly confined to few developments, discussions, and diplomatic visits.3 Hence, the question arises: Why has India been slow to move forward with this project?
Well, there are at least four major factors that have slowed down India's advancement in Chabahar Port, as discussed in the following way.
Firstly, the US sanctions on Iran pose a significant hurdle to India's progress in Chabahar Port. The US sanctions and threats have complicated India's involvement in the Chabahar Port over time. India's efforts to develop the port were cerrainly hindered by US sanctions on Iran in the past, with negotiations either slowing down or getting stalled under the threat of US sanctions. The initial talks between India and Iran on the port began in 2003, exactly around the time the Chinese decided to go the whole hog in developing Gwadar, but US sanctions prevented India from developing the port during that period. India resumed its interest after the April 2015 Iran nuclear deal, known as Joint Comprehensive Plan of Action (JCPOA), and its attention started flagging again when the US withdrew from the deal and reinstated sanctions in 2018.
It is true that in 2018, the US exempted Chabahar port from sanctions keeping its larger strategic goals in the region in mind and there was some progress in the port development activities. However, recent statements (2024) from US officials have made it pretty clear that any state engaging with Iran could be subject to penalties.4 This change in US policy has been accompanied by the US military withdrawal from Afghanistan in 2020, after which the US interest in the region stand diminished. Thus, the threat of sanctions poses a significant risk to India's financial transactions, investments, and diplomatic relations with the United States.
Secondly, sociopolitical and economic upheavals within Iran have also influenced India's approach to economic relations with Iran adversely. India seeks greater stability to ensure the success of the project. While Iran has offered reassurances regarding safety and security, India remains cautious and requires more than official and verbal commitments.
Thirdly, Chabahar's location in Iran's Balochistan, bordering Pakistan, might also be raising the concerns for India due to its enduring rivalry with Pakistan. India might also be apprehending threats of sabotage from Pakistan, and Iran may have to assure India that it would provide adequate security for its project and personnel.
Fourthly, India and Iran disagreed over arbitration clauses during negotiations for developing a mutual acceptable long-term contract. However, this issue has been resolved as the two sides reached an accommodation which allows for arbitration under rules framed by the UN Commission on International Trade Law (UNCITRAL).
Finally, there are naysayers and pessimists in India who do not pin much hope on Chabahar. While the recently signed 10-year contract (2024)5 for operation of the port speak volumes about the importance Indian government accords to the project, some Indian figures and institutions, such as political experts and parties, have expressed their concerns about investing in Iran, due to potential risks such as diplomatic complications with the United States. Some analysts believe that the ten-year agreement was signed against the backdrop of the ongoing conflict between Israel and Gaza, which may turn for the worse and this may not be in the long-term interests of India to deepen its relations with Iran. The threat of Israeli attack on Iranian territory looms large in the minds of many concerned Indians.
These analysts also suggest that the conditions surrounding the deal could create challenges for India and Iran in maintaining the agreement over the full ten-year period. Thus, the tensions in the region, coupled with the possibility of further escalations, could affect the stability of the project and create risks for India.
It is also true that India has not invested itself with as much interest as China, in Gwadar. There has been a gap in India’s commitments and actual work on the ground. India has long assured Iran to build the railway line to Zahedan and promised material and technical support from Ircon International Limited (IRCON); however, it has failed to deliver so far. Media reports say that even the $85 mn promised by India to develop Shahid Behesti terminal in Chabahar in 2016, has not been fully disbursed till now! This is strange especially when Indian state-run India Ports Global Limited (IPGL) running the Chabahar port has found that there has been a consistent growth in cargo traffic at the port in recent years as it has handled more than 6.56 million tonnes of bulk cargo, which included shipments from Australia, Bangladesh, Brazil, Germany, Russia and the UAE. The cargo handling capacity of the port is 8 million tonnes (mt) now and India has proposed to expand it to 18 mt in the next phase of expansion with additional investment.
In view of the above, it can be concluded that India and Iran may be starting yet another phase of coperation between them to develop Chabahar to its full potential. However, many of the challenges outlined in this comment remain unresolved and may continue to inhibit smooth implementation of the project in future. As it is indicated above, the commercial value of the project is immense and it will finally depend on the resolve of both India and Iran to develop ways of insualting their Chabahar engagement from the risks and challenges identified above and make the project a success.
Dr Ahmad Reza Taheri is a Faculty Member, in the Department of Political Science, Islamic Azad University, (Zahedan) & Head of Indian Subcontinent Department, Iranian Association of West Asian Studies in Tehran, Iran. He is an overseas member of International Centre for Peace Studies (ICPS). The views expressed here are his own.
Notes
- Chabahar Port is a seaport in Chabahar located in southeastern Iran, on the Gulf of Oman. It serves as Iran's only oceanic port and consists of two separate ports named Kalantari and Beheshti, each of which has five berths. It is only about 170 kilometers west of the Pakistani port of Gwadar.
- In fact, since 2002 India has been keen on utilizing Chabahar as a gateway to Afghanistan and Central Asia. In 2010, India completed the construction of a 218 km-long link road from Zaranj in Iran to Delaram in Afghanistan, connecting the highway network in Afghanistan. However, this route failed to live up to its potential due to ongoing violence in Afghanistan, largely fueled by Taliban militants.
- For more on the Chabahar Port agreement, see: Ashish Shukla. “The Chabahar Port and India Iran Agreement”. International Center for Peace Studies (21 May 2024).
- Hours after India signed a 10-year contract with Iran, the US issued a warning that potential sanctions could be imposed on any country engaging in business deals with Iran. This was immediately reported by the world media.
- After long negotiations, India and Iran finally signed a 10-year bilateral contract for the operation of Chabahar Port in 2024.
