COPYRIGHT INFRINGEMENT NOT INTENDED

PICTURE COURTESY:  INDIAN EXPRESS

Context

The revocation of the sanctions waiver for Chabahar Port by the US administration has put India's strategic ambitions in the region under severe pressure. This waiver, granted in 2018 under the Iran Freedom and Counter-Proliferation Act (IFCA), allowed India to develop the port.

Chabahar Port

Location

Chabahar is a deep-water port located in the Sistan-Baluchistan province of Iran, on the Makran coast, near the Gulf of Oman. It lies outside the Strait of Hormuz, offering direct open-ocean access.

Significance

It is Iran’s only deep-sea port with direct access to the Indian Ocean, making it strategically vital for trade and maritime operations.

Terminals

The port consists of two main terminals: Shahid Beheshti and Shahid Kalantari. India has been actively involved in developing the Shahid Beheshti Terminal.

Development and Management

Chabahar Agreement (2016): India, Iran, and Afghanistan signed this trilateral agreement to establish the International Transport and Transit Corridor, making Chabahar a key node.

Indian Involvement: Indian Ports Global Limited (IPGL), through its subsidiary India Ports Global Chabahar Free Zone (IPGCFZ), took over operations of the Shahid Beheshti terminal in December 2018.

Operational Performance (Prior to Sanctions Revocation)

Facilitated the trans-shipment of 2.5 million tonnes of wheat and 2,000 tonnes of pulses from India to Afghanistan.

Supported humanitarian aid, including during the COVID-19 pandemic.

Supplied 40,000 liters of Malathion (environment-friendly pesticide) to Iran in 2021 for locust control.

Strategic Significance of Chabahar for India

Alternative Trade Route

Provides India with a secure, direct, and uninterrupted sea-land access to Afghanistan and resource-rich Central Asian Republics.

It bypasses Pakistan, eliminating India's dependence on unreliable neighbors for overland trade.

Ensuring Regional Connectivity

Serves as a vital western gateway to the International North-South Transport Corridor (INSTC), a multi-modal network connecting India to Russia and Europe via Iran and Azerbaijan.

Reduces transit time by 40% and trade costs by 30% compared to traditional Suez Canal routes for goods reaching Europe.

Offers landlocked nations (like Afghanistan and Central Asian countries) access to the Indian Ocean and Indian markets.

Economic Benefits

Strengthens India’s trade ties with Iran, Afghanistan, and Central Asia, diversifying trade routes.

Facilitates energy security by potentially easing access to Iranian oil and gas, as well as Central Asian energy resources.

Humanitarian Assistance

Acts as a crucial entry point for humanitarian aid, food supplies, and reconstruction materials to Afghanistan, especially important given the ongoing challenges in that country.

Geopolitical and Strategic Influence

Counters China's Gwadar Port: Provides India with a strategic counterweight to China's development of Gwadar Port in Pakistan (part of the China-Pakistan Economic Corridor, a component of the Belt and Road Initiative - BRI), which lies just 72 km away.

Projecting Power: Enhances India’s strategic presence in the Arabian Sea and the broader Indian Ocean region, strengthening anti-piracy capabilities and maritime security.

Implications of Revoking Chabahar Port’s Sanctions Waiver on India

Strategic Setback

Undermines Regional Leverage: Limits India’s ability to project influence and effectively counterbalance Chinese activities in the region.

Disrupts INSTC Integration: Creates hurdles for the full operationalization of INSTC, a key pillar of India's Eurasian connectivity strategy.

Impact on Afghanistan & Central Asia: Severely restricts India's economic and strategic engagement with Afghanistan and Central Asia.

Economic and Trade Ramifications

Trade Disruption: India’s exports to Iran and Afghanistan (including textiles, engineering goods, pharmaceuticals, and food products) face significant disruption.

Investment at Risk: India's substantial investments of $120 million (already deployed) and commitments of $250 million for Chabahar's development are now in jeopardy.

Trade Talks Pressure: The revocation comes amidst ongoing India-US trade talks, potentially being used as leverage, especially concerning duties on Indian labor-intensive goods.

Geopolitical Strain

India-US Relations: The decision places considerable pressure on the India-US strategic partnership, highlighting potential divergences in regional interests.

Humanitarian Aid Impediment: Hampers India's ability to provide crucial humanitarian aid and support reconstruction efforts in Afghanistan, a key foreign policy objective.

Way Forward for India

Diplomatic Engagement: Actively engage with the US administration to explain the project's strategic and humanitarian importance, seeking a permanent or renewed waiver.

Explore Diversification: While challenging, explore alternative payment mechanisms or involve other nations not subject to US sanctions to keep the port operational.

Focus on INSTC: Continue to prioritize and develop other viable segments of the INSTC that do not involve Iranian territory or directly face US sanctions, to maintain momentum for Eurasian connectivity.

Bilateral Engagement: Strengthen direct bilateral trade and connectivity initiatives with Central Asian republics to reduce dependence on a single route or gateway.

Self-Reliance in Infrastructure: Promote indigenous capacity for infrastructure development and logistics management to reduce reliance on external entities vulnerable to sanctions.

Conclusion

Chabahar Port is crucial for India’s trade, connectivity, and regional influence, requiring persistent diplomatic efforts to secure access amid geopolitical challenges.

SOURCE: INDIAN EXPRESS