From Isolation to Integration

The recent ten-year agreement between India and Iran on the development and management of Chabahar Port marks a significant milestone with far-reaching implications for Afghanistan and the landlocked countries of Central Asia. This strategic port, located on Iran’s southeastern coast along the Gulf of Oman, offers a promising alternative to traditional trade routes, poised to enhance regional connectivity and facilitate faster deliveries of goods.

The Union Minister of Ports, Shipping and Waterways, Sarbananda Sonowal in a written reply in Lok Sabha on 26 July 2024 said that “The Government of India has undertaken to develop the Shahid Beheshti Port at Chabahar, Iran by equipping and operating General Cargo and Container Terminal for a period of 10 years, as per the Long-Term Main Contract, from the date of signing of the said Contract i.e., 13.05.2024.”

A total of Rs.400 Cr has been allocated from FY 2016-17 to FY 2023-24. The amount utilized so far for the development of Shahid Beheshti Port of Chabahar is Rs. 201.51 Crore. The port witnessed an increase of 43% in vessel traffic and a 34% rise in container traffic in 2023-2024. It is envisaged that there will be a substantial increase in maritime trade and commercial earnings once the port becomes fully functional.

Boosting Afghan Trade and Economy

A key development after post long-term agreement between India and Iran is the announcement of a railway connection from Chabahar to Afghanistan. The Afghanistan Rail Development Consortium has prioritized linking Kandahar to Chabahar via railway, planning approximately 5,000 kilometres of new tracks since the Taliban took power, TOLO news agency of Afghanistan reported.

Mustafa Rezaei, CEO of the consortium, announced that the Chabahar to Melk railway is expected to be operational by the first half of 2025-2026. Rezaei emphasized the importance of this railway for Afghanistan’s exports, noting that it is a standard line constructed within Afghanistan’s territory, offering substantial benefits aside from those provided by Iran. Shirbaz Kaminzada, head of the Afghanistan Chamber of Industries and Mines, echoed this sentiment, urging Afghan investment and support for the project to help the country emerge from its current economic challenges.

Economic experts and officials stress the urgency of accelerating the construction of the Chabahar-Kandahar railway connection which could significantly boost Afghanistan’s economy by improving trade links and reducing unemployment. Currently, Afghanistan has about 230 kilometres of active railway, facilitating daily transfers to various countries.

Central Asia’s Gateway

For Central Asian countries like Kazakhstan and Uzbekistan, which are rich in resources but landlocked, Chabahar offers a vital link to the Indian Ocean and beyond. The strategic location of Chabahar port enables these nations to access international markets more efficiently, bypassing the need to rely on Pakistani ports. This is particularly significant given the competition between India and China that continues to work on Gwadar port in Pakistan for regional influence.

Iranian officials have recognized the strategic importance of Chabahar. Qassem Askari-Nasab, Director General of Ports and Maritime Organization of Sistan and Baluchistan, stated to the local news agency that Chabahar is the best and least expensive route for transit to Central Asia, especially Afghanistan. The Iranian government plans to connect Chabahar to the national railway network through Zahedan by March 2024, further enhancing its role as a trade hub.

Reducing Dependence on Pakistan and China

The new trade route via Chabahar Port is set to significantly reduce the region’s dependence on Pakistan and China’s Belt and Road Initiative (BRI). Historically, Afghanistan and Central Asian countries have relied heavily on Pakistan’s ports, particularly Karachi and Gwadar, for their maritime trade. This dependence has often been fraught with political and logistical challenges, leading to delays and increased costs. By developing the Chabahar Port, India and Iran provide a viable alternative that bypasses Pakistan, offering more reliable and politically neutral access to international waters.

Moreover, China’s BRI, particularly through the China-Pakistan Economic Corridor (CPEC), which is considered disputed has been a dominant force in the region’s infrastructure and trade dynamics. However, there are growing concerns about the debt burdens and political influence associated with Chinese investments. Chabahar Port offers Central Asian countries a strategic alternative to the BRI, potentially reducing their reliance on Chinese funding and influence. This diversification of trade routes empowers these nations to negotiate better terms and maintain greater sovereignty over their economic policies.

India Overcoming Hurdles in Supplying Aid and Trade to Afghanistan

India has faced significant hurdles in supplying aid and trade to Afghanistan due to the geopolitical complexities of the region. The reliance on routes through Pakistan has often been problematic, with political tensions leading to disruptions in the flow of goods. This has had a direct impact on India’s ability to provide timely humanitarian aid and engage in trade with the people of Afghanistan, affecting the welfare of the Afghan people and the overall economic relationship between the two countries.

The Chabahar Port agreement changes this dynamic by providing India with a direct route to Afghanistan, circumventing the need to transit through Pakistan. This not only ensures a more reliable and efficient supply chain but also strengthens India’s strategic position in the region. The ability to deliver aid and trade goods directly via Chabahar enhances India’s role as a key player in Afghanistan’s reconstruction and development, fostering deeper economic and political ties. This development is particularly crucial in light of the current humanitarian needs in Afghanistan, offering a stable and secure route for delivering essential supplies and fostering economic resilience in the country.

The Kandla port in Gujarat stands as the nearest to the Chabahar port, with a distance of just 550 nautical miles giving a direct link through the sea, the route that once was used by the ancient traders through boats.

India’s Strategic Interests

For India, the development of the Chabahar Port is a strategic move to counter China’s influence in the region and bypass Pakistan. The port’s annual loading and unloading capacity of over 8.5 million metric tons presents a unique opportunity for Indian goods to access Afghanistan and Central Asia directly. This is part of India’s broader strategy to integrate Chabahar with the International North-South Transport Corridor (INSTC), providing a direct route from India to Russia via Iran.

The agreement signed in May 2024 between Indian Ports Global Limited (IPGL) and Iran’s Port & Maritime Organization (PMO) marks a shift from short-term contracts to long-term, stable arrangements. This 10-year pact, with automatic renewal provisions, ensures the continuous operation of the Shahid Beheshti terminal at Chabahar, encouraging shippers and investors to commit to the port.

US Concerns and Sanctions Impact:

The United States has expressed dissatisfaction with the India-Iran Chabahar Port agreement due to its broader geopolitical strategy and concerns over Iran’s suspected nuclear program. Following India’s signing of a 10-year contract with Iran, the US warned of potential sanctions for any country engaging in business deals with Iran. Over the past three years, the US has imposed more than 600 sanctions on Iranian-related entities.

In a May 2024 press briefing, State Department Deputy Spokesperson Vedant Patel reiterated that US sanctions on Iran remain in place and that entities considering deals with Iran face potential risks of sanctions. The US aims to curtail Iran’s nuclear ambitions and limit its regional influence, and these sanctions have hindered the development of Chabahar Port in the past by deterring international businesses and investors.

The US views the Chabahar Port project as undermining its efforts to isolate Iran economically and politically. By strengthening economic ties between India and Iran, the port provides Iran with a crucial economic lifeline, potentially emboldening it to reduce economic pressure. The port also enhances India’s influence in Central Asia, a region of significant strategic interest to the US.

Regional and Global Implications

The Chabahar Port Agreement is expected to transform regional trade dynamics. Iran’s Minister of Roads and Urban Development, Mehrdad Bazrpash, announced plans to propose a joint shipping company between Iran and India to further expand transit routes in the region. The existing transit container line between Iran India and other countries has already seen significant growth, with transit volume increasing by over 154% last year.

The agreement is also good news for exporters and importers across Iran, Central Asia, and the Caucasus, as emphasized by Iran’s Deputy Foreign Minister for Economic Diplomacy, Mehdi Safari. With measures in place to facilitate the transit of goods, including the use of trucks until the railway becomes operational, the Chabahar deal is set to enhance trade and economic cooperation across the region.

The Chabahar Port agreement between India and Iran is a landmark development that promises to unlock new economic opportunities for Afghanistan and Central Asia. By providing a direct and efficient trade route, and now speed work going on to have a network of railways, it has the potential to significantly boost regional trade, reduce logistical costs, and foster economic growth, thereby transforming the economic landscape of these landlocked nations.

The mission that India entered an agreement to develop the strategically important Chabahar port, close to Iran’s border with Pakistan, in 2016 finally is unfolding with the signing of a long-term deal with Iran to develop it further. India’s shipping minister called it a “historic moment in India-Iran ties”.

The author is National Editor

Greater Kashmir