11 Aug 2024

INTRODUCTION

  • Marking a significant milestone in bilateral relations, India and Iran recently solidified their strategic and economic partnership through the signing of a 10-year contract for the operation of the Chabahar port in Iran.


INDIA IRAN AGREEMENT?

  • Details

    • India signed a 10-year agreement with Iran to develop and operate the Chabahar port.

    • India will invest $120 million and provide a $250 million credit facility.

    • The investment is aimed at further developing the Shahid Beheshti terminal and related projects.

  • Historical Context and Challenges:

    • Early Conception (2003):

      • The Chabahar port project was conceived in 2003 as part of India’s strategy to establish a trade route to Afghanistan and Central Asia, bypassing Pakistan.

    • Sanctions and Delays:

      • Progress was stalled for years due to international sanctions imposed on Iran by the U.S. and the UN over its nuclear program.

      • These sanctions limited Iran's ability to engage in international trade and restricted foreign investments in its infrastructure projects, including Chabahar.

    • Initial Agreements and MoU (2015):

      • Joint Comprehensive Plan of Action, JCPOA: In 2015, following a nuclear agreement between Iran and the P5+1 (the U.S., UK, France, Russia, China, and Germany), the U.S. eased some of its sanctions on Iran.

      • This easing allowed India to sign a memorandum of understanding (MoU) with Iran to develop the Chabahar port.

    • Contract Execution (2016):

      • In 2016, the formal contract to develop and operate the port was signed during Indian Prime Minister Narendra Modi’s visit to Iran.

      • This marked a significant step forward, with India committing to invest in the port's development.

    • U.S. Withdrawal from Nuclear Deal (2018):

      • In 2018, the U.S. unilaterally withdrew from the nuclear deal (the Joint Comprehensive Plan of Action, JCPOA) and reimposed sanctions on Iran.

      • This raised concerns about the viability of the Chabahar port project due to potential secondary sanctions on entities doing business with Iran.

    • Sanctions Waivers and Continued Development:

      • Despite the reimposition of U.S. sanctions, India managed to secure waivers that allowed it to continue work on the Chabahar port through ad hoc measures.

      • These waivers recognized the strategic importance of the port for Afghanistan’s development and for regional stability.


CHABAHAR PORT

(Chabahar port: Importance for India and counter to Pakistan Gwadar port - India Today)

  • It is Iran's only oceanic port, situated in Sistan and Baluchistan Province, on the Makran coast. 

  • It lies in the Gulf of Oman.

  • There are two main ports in Chabahar, the Shahid Kalantari port and the Shahid Beheshti port.

    • Iran had offered India the project of developing the Shahid Beheshti port which was well received by India.




STRATEGIC IMPORTANCE OF CHABAHAR PORT










































CHALLENGES FACING THE CHABAHAR PORT AGREEMENT

  • US Sanctions on Iran:

    • Economic Sanctions: US sanctions on Iran could impede the flow of investments and financial transactions necessary for the development and operation of the port.

    • Operational Challenges: Restrictions on banking and international transactions may hinder the smooth functioning of port activities.

  • Geopolitical Tensions:

    • Iran-US Relations: Ongoing tensions between Iran and the US can create an unstable environment, affecting the security and viability of the port project.

    • Regional Instability: Conflicts in the Middle East and South Asia could disrupt trade routes and port operations.

  • Pakistan and China Dynamics:

    • Gwadar Port Rivalry: The proximity of Pakistan's Gwadar Port, developed with Chinese assistance, poses competitive challenges. It may lead to geopolitical manoeuvring that could impact Chabahar's strategic advantage.

  • Security Concerns:

    • Terrorism and Militancy: The region surrounding the Chabahar Port is susceptible to terrorist activities and insurgencies, which could threaten the safety and security of the port and its infrastructure.

  • Economic Viability:

    • Investment Uncertainty: Fluctuations in global economic conditions and investor confidence may impact the necessary investments for port development.

  • Infrastructure and Development Challenges:

    • Logistical Hurdles: Difficulties in developing the necessary infrastructure, such as roads, railways, and storage facilities, could delay the port's operational readiness.

    • Technical Issues: Technical and engineering challenges in the port's

  • International Relations and Alliances:

    • Changing Alliances: Shifts in international alliances and partnerships may affect the strategic importance and support for the Chabahar Port project.

    • Global Trade Policies: Changes in global trade policies, tariffs, and regulations could impact the economic feasibility and attractiveness of the port.


WAY FORWARD

  • Navigating US Sanctions:

    • Diplomatic Engagement: India should continue engaging with the US to secure waivers for Chabahar Port, emphasising its importance for Afghanistan's development and regional stability.

  • Strengthening Geopolitical Ties:

    • Multilateral Cooperation: Strengthen ties with regional partners like Afghanistan, Central Asian countries, and Russia to build a coalition supporting the port project.

    • Balancing Relations: Maintain a balanced foreign policy to manage relations with both Iran and the US while leveraging partnerships with other global powers.

  • Enhancing Security:

    • Regional Security Cooperation: Collaborate with regional security forces to ensure the safety of the port and surrounding areas.

    • Anti-Terror Measures: Implement robust anti-terrorism measures and maritime security protocols to mitigate threats from militancy and piracy.

  • Boosting Economic Viability:

    • Incentives for Investors: Offer incentives to attract investors, including tax breaks, subsidies, and simplified regulatory processes.

  • Infrastructure Development:

    • Timely Completion: Prioritise the timely completion of essential infrastructure projects, such as the railway link to Zahedan, to fully operationalize the port.

    • Quality Standards: Adhere to high-quality standards in construction and development to ensure long-term sustainability and efficiency.

  • Leveraging International Alliances:

    • INSTC Integration: Actively promote and integrate the port into the International North-South Transport Corridor (INSTC) to enhance its strategic importance.

    • Global Trade Networks: Engage with international trade organisations and initiatives to position Chabahar as a critical node in global trade networks.


      SHORT TAKE

      • INTERNATIONAL NORTH SOUTH CORRIDOR

      (North South Transport Corridor (NSTC) - International North–South Transport Corridor - Wikipedia)

      • It is a 7,200-kilometre Multi-Mode Transit System that connects ship, rail, and road routes for moving cargo between India, Iran, Azerbaijan, Russia, Central Asia, and Europe.

      • It was launched on 12th September 2000 in St. Petersburg, by Iran, Russia and India for the purpose of promoting transportation cooperation among the Member States.

      • Since then, INSTC membership has expanded to include 10 more countries – Azerbaijan, Armenia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkey, Ukraine, Syria, Belarus, and Oman.


      • Joint Comprehensive Plan of Action (JCPOA)

        • Also known as the 2015 Iran Nuclear Deal.

        • It was the result of prolonged negotiations from 2013 and 2015 between Iran and P5+1 (China, France, Russia, the United Kingdom, the United States + Germany).

        • Under the deal, Iran agreed to significantly cut its stores of centrifuges, enriched uranium and heavy-water, all key components for nuclear weapons.

      The West agreed to lift sanctions related to Iran’s nuclear proliferation, other sanctions addressing alleged abuses of human rights and Iran’s ballistic missile programme remained in place.



CONCLUSION


In conclusion, the success of the Chabahar Port Agreement hinges on navigating political complexities, overcoming economic challenges, ensuring security, and fostering robust partnerships. By addressing these aspects effectively, India can realise the por