India and Iran: Clock’s ticking for Chabahar’s eternal autumn
India may be zealous in its attempts to gain a foothold on the coastline of the north Arabian Sea but the dramatic corollaries of Iran’s policies are already undermining its ambitious plan to make the Chabahar seaport functional by 2019.
Progress has been slow compared with Gwadar, the rival Pakistani port less than 100 kilometers away, which is teeming with development projects. In all likelihood, Iran’s sales pitch will not extend beyond India, which has earmarked a paltry $500 million for the project — compared with China’s $50 billion investment in the Pakistani port and the economic corridor linking its western region.
On the face of it, Delhi’s plans for Chabahar are relatively modest: it seeks to equip and operate two berths in phase 1, with capital investment of $85 million and annual revenue worth $23 million for the decade-long lease. The port’s operational deadline of the end of 2018 seems to have to been revised and moved forward by a few months. Iran has chosen to be an active player in India’s stratagem to bypass Pakistan in reaching Afghanistan, and Tehran is constructing a vital rail link to Zahedan at a cost of $1.6 billion. Last November, India’s maiden shipment of 15,000 tons of wheat reached Afghanistan through Chabahar.
Unlike Pakistan’s Gwadar port, investor interest in Chabahar has been frosty. POSCO Engineering & Construction, a South Korean company with 38 percent Saudi stakes, dealt a major blow in February when its board of directors forbade the management from investing $1.6 billion as detailed in a memorandum of understanding signed with Pars Kohan Diar Persian Steel. In 2016, the Koreans had committed to establish a state-of-the-art plant using cheap iron ore and non-coking coal to produce steel at reduced cost and with lower carbon emissions.
Seoul ranks among Tehran’s key trade partners but cannot withstand Washington’s opposition. Though a few European leaders did visit Tehran after the signing of the Joint Comprehensive Plan of Action (JCPOA) in 2015, the so-called Iran nuclear deal, the country’s image after the lifting of nuclear-related sanctions did not get the expected boost. In addition to Trump’s punitive rhetoric, followed up by his suspension of the nuclear deal, Iran’s deadly role in Syria, Yemen and Iraq has deterred foreign interest in the country, including at Chabahar.
Over the past decade, Gulf Cooperation Council (GCC) states have attempted to slowly but steadily diversify their economies by investing in successful corporations worldwide. In all likelihood, the POSCO fiasco is the first but not the last disappointment for Iran’s Chabahar port.
Since India remained Iran’s loyal customer, after winning a sanctions waiver from then US President Barack Obama despite the United Nations Security Council (UNSC) sanctions in force at the time, it is easier to pick threads and strengthen ties. With the handing over of Chabahar to India Ports Global Limited during President Hassan Rouhani’s Delhi visit in February, Tehran at least has Delhi by its side. Both of the fierce negotiators are ambitious, revivalist states. While Russia firmly stands by Iran, investment by China in Chabahar will be India’s nightmare. Since Beijing does not carry out business in US dollars, it finds there an opportunity to invest in Iran, at least until UNSC sanctions are revived following the latest developments regarding the nuclear deal. Yet Beijing, too, cannot risk losing its commercial partners in the Middle East, Europe or South America just to capture projects in Iran.
As Iran sides with India against Pakistan and China, hostilities in the North Arabian Sea are rising to extraordinary levels.
Naveed Ahmad
As Iran sides with India against Pakistan and China, hostilities in the North Arabian Sea are rising to extraordinary levels. Ahead of the projected maritime traffic rush, naval activities are shifting into higher gear, with Chinese naval vessels, including submarines, sighted in Pakistani waters and docking at its naval bases.
Beijing welcomed the Delhi-Tehran deal for Chabahar Port with caution, expressing hope that the launch “is conducive to regional peace and stability.” The saga of arrested Indian spy Kulbushan Jadhav and alleged attempts to stoke insurgency in Balochistan highlight the impending risks for Pakistan and China alike. Ambitious Iran might not find it easy to keep India’s desperate strategic and maritime ambitions in check.
Even during the Obama presidency, India’s acquisition of Chabahar Port did not receive explicit US approval. The Trump White House, however, is in no mood to give any exemptions, explicit or otherwise, to EU states or India to bypass US sanctions after it suspended the JCPOA. The scenario becomes even bleaker if Iran fails to win concessions from the EU and ends its compliance with the nuclear deal. To India’s chagrin, Europe will not forsake America for Iran. Thus, Delhi will find itself hitting a dead end on its Iran ambitions. India’s diplomats have reportedly been lobbying on Capitol Hill in Washington, pointing out that Chabahar offers an alternate route into Afghanistan and helps reduce the dependency on Pakistan. Cognizant of Tehran’s material support for the Afghan militancy, this sales pitch will not win any subscribers.
Even with US sanctions alone, taking operational control of the Iranian port will come at a huge price for India. As much as Delhi would be required to adhere to the sanctions, Tehran will expect India’s continued partnership.
Delhi’s policy incoherence amid Prime Minister Narendra Modi’s diplomatic offensive becomes ever starker as it juggles the US, Iran and Israel on one hand, and the GCC Arab states on the other. As much as Chabahar can potentially help India encircle Pakistan’s maritime frontiers and challenge China’s entry into the Arabian Sea, Delhi’s geo-economic ambitions are far-fetched. Unlike Gwadar, Chabahar’s success depends on peace and security in the Arabian Gulf and Pakistan, as well as Afghanistan.
India cannot foresee what lies ahead for Iran amid its hybrid and proxy warmongering. A new set of western sanctions is imminent in response to Tehran’s sponsorship of militias in the Middle East and elaborate missile program backed by aggressive rhetoric. Anxiety over Iran’s likely return to the clandestine nuclear program is becoming real, potentially alarming the European states as well as South Korea and Japan, and warning them against investment. India’s national interest is best served by freezing the development work in Chabahar by October and waiting for the storm to wither away.
- Naveed Ahmad is an investigative journalist and academic based in the GCC with a career in writing on diplomacy, security and governance. Besides other honors, he won the Jefferson Fellowship in 2000 and UNAOC Cross-Cultural Reporting Award 2010. Twitter: @naveed360
