Setting the precedent of surging ahead in the
pursuit of overcoming the barriers of connectivity, India formally took over
operations of the Chabahar port on December 24th. The historic
moment which can be reckoned as major foreign policy milestone have boosted
India’s efforts of rebuilding war-torn Afghanistan. India’s joint venture
company, India Ports Global company began functioning from its offices at
Shaheed Behesti Port Chabahar. Soon Joint Secretaries of all the three
countries-India, Iran and Afghanistan held first follow-up committee meeting
for implementation of the trilateral Chabahar agreement. They agreed on the
routes for trade and transit corridors between three countries and finalisation
of the protocol to “harmonise transit,
roads, customs and consular matters”. They even discussed measures to
decrease logistics costs. Second round of meeting will be held on February 26th
2019 to promote and popularise the port.
Pakistan denied land access to Indian goods
crippling India’s trade with Afghanistan and Central Asian countries. Ever
since India has been exploring ways to bypass Pakistan. Giving a major fillip
to India’s connectivity, Prime Minister Modi on his visit to Iran signed
trilateral agreement for Establishment of International Transport and Transit
in 2016. India even signed a MoU with EXIM Bank which extended a line of credit
of $150 million for refurbishing the port and $85 million towards development
of two berths at Chabahar.
In 2003 NDA-I regime headed by Prime Minister
Atal Bihari Vajpayee realised the strategic significance of the Chabahar, the
only Iranian port along the Makran coast which has direct access to Indian
Ocean. Indian government subsequently initiated talks with Iran government. But
with Iran coming under sanctions regime in 2005, talks on Chabahar talks took a
back seat. Incidentally, against the backdrop of Iran signing a Joint
Comprehensive Plan of Action (JCPOA) or widely known Iranian Nuclear Deal with
P5 countries and Germany, when all economic sanctions were lifted on Iran,
India finalised the Chabahar deal. After
President Trump unilaterally pulled out from the JCPOA in May 2018 a fresh
round of US sanctions kicked off from November 4th. A gloom of
uncertainty loomed over Chabahar port agreement. Subsequently India held talks
with American officials seeking waiver of port from US sanctions.
India relentlessly worked towards reconstruction
of Afghanistan by offering unstinted financial support, training Afghanistan
security forces and in capacity building. Last year when Afghanistan was hit by
drought India shipped 1.1 million tonnes of Wheat through Chabahar port. This
move not only paved way for operationalisation of the port but expanded the
trading opportunities with land-locked Afghanistan. Pakistan by refusing
transit of Indian goods through its territory tried to consolidate its control
over Afghanistan through Taliban. India steadily worked towards exploring the
alternate access to Afghanistan through Chabahar. Simultaneously, India opened
air-cargo corridor to Afghanistan to overcome Pakistan barrier for trade. In
2017, Iran offered India a proposal to manage phase I for two years,
subsequently Tehran gave India approval for operating two berths and few
terminals in Phase II for ten years. In the meanwhile, China intensified its
efforts to develop the Gwadar port 76 nautical miles from Chabahar. Going by
the pace of Chinese construction, observers believed that Chabahar would face
stiff competition from Gwadar located in Baluchistan province of Pakistan. Back
then Union Minister for Shipping, Road Transport and Highways Nitin Gadkari
announced that Chabahar operationalisation would start by end of December. America which is fighting war against in
Afghanistan for the past 17 years appreciated India’s efforts. Trump
acknowledged India’s role in his South Asia strategy. Last
month America announced its exemption for Chabahar port and added
that, “it relates to reconstruction
assistance and economic development of Afghanistan. These activities are vital
for the ongoing support of Afghanistan’s growth and humanitarian relief”.
India’s fervent efforts finally bore fruit and formal operations began this
week.
Chabahar besides providing alternate sea access
to Afghanistan will play a pivotal role in bolstering India’s attempts to
buttress connectivity with Russia. India is planning to construct a railway
line to Zahedan which can connect to International North-South Corridor.
Currently Indian shipments to Afghanistan are transported on the Delaram-Zaranj
road constructed by New Delhi. Road from the Afghan-Iran border to Chabahar
already exists. Afghan
Permanent representative to UN welcomed America’s decision, “The Chabahar port remains an important
gateway for providing commercially viable access to the sea linking the Indian
Ocean with Afghanistan, Central Asia and beyond. In this regard we appreciate
the collaboration and flexibility of our strategic partner, the United States
to work with Afghanistan, Iran and India towards exempting the port from its
sanctions”.
Challenges
India’s venture in the Gulf region through which
nearly 70% of the imports flow to the rest of the World is a real game changer.
India leasing operationalisation of Chabahar for a decade from Iran at the
height of US-Iran rivalry is replete of several challenges.
India Ports Global (60:40 joint venture between
Jawaharlal Port Trust and Deen Dayal Trust, Kandla) is a private entity. Now
government of India is slowly obtaining shares of the company else the private
company which face the threat of getting black listed for doing business with
Iran as per American sanctions. In 2016, Indian Ports Global signed an
agreement Aria Banader Iranian port to run the container and multi-purpose
terminal at Shaheed Behesti port. Iran even demanded a Euro-denominated bank
guarantee in 2016 to generate minimum business at the port. Since fresh round
of US sanctions, Iran has come down. As per latest estimates the port is
assured of annual business worth $22.95 million. Weeks before final operations
are to begin at Chabahar, armed Sunni-group Ansar a-Furquan carried out a
suicide bomb attack that killed two people and left 43 injured. This reminded
India of complex discord in the region. Besides the exemption on Chabahar port,
America sanctioned waivers to eight countries including India for importing oil
from Iran till March 2019. India prefers Iranian crude for its 60-day credit,
free shipping and insurance. Iran is the largest supplier of oil to India. To
overcome sanctions barrier, India and Iran have signed an agreement in November
2nd for oil payment in rupees and 50% of these funds had been
earmarked for exports. India is exploring the possibility of similar payment
mechanism with Russia, Venezuela. Iran couldn’t risk the possibility of zeroing
of imports from Iran considering its ever-increasing demand for oil which make
up for 83% of India’s total imports. Aside energy security good ties with Iran
are extremely important for India to over Pakistan barrier and to bolster its
trade and commerce with Chabahar serving as the connectivity hub.
Indo-Iranian
Ties
India’s ties with Iran are several centuries old.
In contemporary times strengthened the North Alliance to overthrown the Taliban
regime in Afghanistan. Iran, western neighbour of Pakistan is always at logger
heads with Islamabad rooted in sectarian differences. Going by the old logic of
enemy of an enemy is a friend India renewed friendly ties Iran to hedge against
Pakistan in this multipolar world.
Despite the convergence over Afghanistan issue
in 1990s there are several irritants in Indo-Iranian relations. In 2005, India
supported the International Atomic Energy Agency report backed by American at
the UNSC leading to imposition of multilateral sanctions against Iran for its
stealth nuclear infrastructure and nuclear ambitions. Angered by India’s stand,
Iran cancelled LNG exports to India. Indian Space Agency, ISRO launched an
anti-Iranian Israeli spy satellite in 2008. India and Iran had serious
differences over the ONGC explorations in 2010 and the much-touted oil pipe
line between India and Iran never took off.
On the other hand, Iran extended financial
support to Kashmiri insurgents fighting government of India during the 1987-elections.
Similarly, in 2012 Iran is alleged to have sponsored attacks against Israeli
diplomats in New Delhi. While Iran stayed away from making an issue out of
strengthening Indo-Israel relations, India never interfered in sectarian
Iran-Saudi Arabia rivalry in the Gulf region. Both countries did tough
balancing act, made several adjustments to prevent relations from deteriorating
beyond point of no return.
Notwithstanding the sanction regime prior to the
finalisation of JCPOA, during Obama regime, India continued to import oil from
Iran by making payments in rupees. India thus made every effort to sustain the
energy partnership. But now the precarious Indo-Iranian relations are
challenged by the burgeoning US-Iran confrontation.
Geopolitical
Ramifications
Unilateral withdrawal of American from the JCPOA
and subsequent imposition of sanctions has left the country in a lurch.
Prospects of a slippery financial situation frustrated the Iranian public who
have been bearing the brunt of growing inflation, stalled incomes and
unemployment. Protests erupted across the country. People rebelled against the
Hassan Rouhani government that painstakingly negotiated nuclear deal with the
west. Fundamentalists and Iranian clergy lashed out at America for reinstating second
round of sanctions on Iran. Trump’s relentless attacks on Iran pushed into
Russian orbit. Iran and Russia having fought Syrian on the same side are now
seeking to strengthen their ties. Given, Iran’s importance for energy security
and strategic geographic location in its global connectivity initiative, China
ramped up cooperation with Tehran. Javad Zarif, foreign Minister of Iran,
invited China to invest in Chabahar before unilateral American sanctions.
Considering the ongoing the trade conflicts between China and America, Chabahar
wouldn’t have be granted exemption had China invested in the port development.
On the contrary, pestering Afghan war is making
America desperate. Trump administration is losing patience. It openly
castigated Pakistan for failing to rein in on Taliban. Unlike in the past when
Iran and Russia were on the opposite sides, Tehran is now on same page with
Russia, China and Pakistan with respect to Taliban. Indian interests find
congruence with those of America with respect to Afghanistan. Essentially
Trump’s disruptive foreign policy decision and growing rift with Iran steadily
changed the geopolitical power equations.
Win-Win
Scenario
By seeking waiver of sanctions, India asserted
the strategic importance of Chabahar port in its efforts to revive war-torn
Afghanistan and for enhancing prospects of trade and commerce with Central
Asian countries. Through operationalisation of port, India ensured that Iran
could partake some economic returns providing much needed succour. In the
process, New Delhi sent a message that despite its robust defence cooperation
and growing ties with America, India will not make comprises on its strategic
interests.
While Iran might be miffed by India cutting the
oil imports from Iran to zero by March end, relentless anti-Iran campaign by
America will increase India’s leverage. Iran will be forced to expedite the
conclusion of agreement for use of local currencies in trade. This can prove
beneficial for India’s agricultural exports as well. Incidentally, India and
Iran are close to finalisation of Preferential Trade Agreement (PTA) that would
reduce tariffs on identified 80 to 100 products purchased from other country.
Chabahar is India’s first foreign port
investment which has potential to shore up India’s trade potential. This is a
huge opportunity to Iran as unlike the Bandar Abbas port which opens into Gulf
of Hormuz, Chabahar is a deep port and opens directly into Indian Ocean.
In the first week of December, in response to
Iran’s test firing of a medium range-ballistic missile capable of carrying
multiple war heads, America deployed Nimitz class aircraft carrier USS John C
Stennis as a deterrence and task force that can support America’s fight against
IS in Syria and war in Afghanistan. Iran had also deployed an anti-aircraft
stealth destroyer in Straits of Hormuz. Thus, it its maiden foray into the
Middle East, India will inadvertently witness and experience the intense
confrontations in the region.
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