Chabahar and India: Securing Regional Interests

07 Jun, 2016    ·   5054

Anu Abraham explores what the Chabahar deal means for India, the New Delhi-Tehran bilateral, and the region

The Chabahar deal and the India-Iran-Afghanistan trilateral dialogue that took place during Indian Prime Minister Narendra Modi’sMay 2016 visit to Tehran have generated much debate. While there is a larger focus within the country on India’s foreign policy push, it is also being viewed with much suspicion in Pakistan and with interest, in Iran and Afghanistan.

India’s larger objectives in reviving the relationship with Iran, its investment in Chabahar port and whether the latter is pursued as an alternative or competition to Pakistan’s Gwadar port, are interesting questions to address.

Iran: Reviving the Relationship
India has been looking forward to renew its relationship with Iran, especially as the bilateral has faced some serious challenges in the recent years. Particularly, following the US-India Strategic Partnership and the Indo-US nuclear deal, there were some developments that impinged on New Delhi’s relationship with Tehran. The recent nuclear deal with Iran has provided India an opening for India.

India’s transfer of USD 6.4 billion – part payment of total sum owed to Iran that was held up due to sanctions– earlier this year could be as a stepping stone for the bilateral relationship. The May 2016 dialogue – the first New Delhi-Tehran bilateral meeting in 15 years – signifies a clear strategy for India’s interest in Iran.. Tehran has been New Delhi’s friend and the revival of the bilateral depended on the lifting of sanctions.

As a part of the recent agreements, India has promised investment worth USD 50 million towards setting up of industries including aluminium and urea plants; exchange of cultural programmes, speakers, interactions between think-tanks, encouragement of foreign trade; and cooperation in science and technology. The highlight, however, has been the understanding on the Chabahar port.

Importance of Chabahar
Chabahar is a strategic port from the perspectives of India, Pakistan, Iran and Afghanistan. Other than the easy access from the western coasts of India, it plays several significant roles. Firstly, by having a access to the port, India can save one-third of its time to reach Central Asia.

Secondly, the link between Afghanistan and India could be built bypassing Pakistan, which could help in building up the already set relationship between Kabul and New Delhi on security ties and economic interests.

Thirdly, if Iran builds Chabahar as a transit hub for immediate access to markets in northern regions of the Indian Ocean and Central Asia, it would help India in gaining access to those markets directly.

Fourthly, India’s previous relationship with Iran with New Delhi being the second largest buyer of Iranian oil will work as an add on to fasten the process.

Fifthly, through Chabahar India can use the road access to four cities in Afghanistan - Herat, Kandahar, Kabul and Mazar-e-Sharif. This will help India further develop its trade with Afghanistan.

Chabahar: Competitor for Gwadar?
There have been numerous concerns in Pakistan that India is using Chabahar to thwart Gwadar. Situated in the Makaran coast, parallel to Chabahar, Gwadaris being developed by China. If Chabahar functions in full swing, Gwadar would take a back seat.

India taking the Chabahar port seriously can also reflect on the Sino-Indian relationship. Via Gwadar, China can monitor the US and Indian naval activity in the Persian Gulf and Arabian Sea while Pakistan as a proxy can control the energy routes from there.

Will a fully functional Chabahar port challenge Chinese investments in Gwadar? If China and Pakistan bear such perceptions, a competition (and perhaps even a dispute) between the two ports could commence in the future.

To conclude, India is Iran’s second largest crude oil importer after Beijing. Iran exported oil to India at a subsidised rate even during problematic times. Iran also wanted to help India during the Gujarat earthquake.India unfortunately pursued a few strategies against Iran during the sanctions period. Under the pressure from the US, India even voted against Iran at the IAEA. India also backed out from the pipeline project.

India seems to be rebooting its ties with Iran now. The recent agreements signed between the two countries during Prime Minister Modi’s visit are beyond just investing in Chabahar port. However, there are challenges for India’s pursuit of such a reboot as well. Will this create new tensions with China? This is a question New Delhi has to address, and adopt strategies accordingly, so that there are no negative side-effects.