President of the Islamic Republic of Iran Dr Hassan Rouhani gifted an animated version of Kalila Wa Demna (Farsi translation of the Panchtantra) and a copy of the Mahabharat in Farsi to Prime Minister Narendra Modi
Substantive discussions’ between Prime Minister Narendra Modi and Iranian President Hassan Rouhani during his three days visit to New Delhi in mid February have taken Indo-Iranian relations to a higher level. Nine agreements were signed, including avoidance of double taxation, Chabahar, terrorism and so on. The two sides exchanged instruments to ratify an Extradition Treaty signed in 2008.
However, it is the agreement relating to Chabahar that was the highlight of Rouhani’s visit. Under this deal, India will lease the Shahid Beheshti Port at Chabahar for a period of 18 months. India has committed $85 million towards developing Chabahar port, strategically located just 90 km from Pakistan’s Gwadar port, which is being operated by a Chinese company. It was only a few months ago that India began using Chabahar port to ship wheat to Afghanistan, providing a boost to its overland trade with Afghanistan, Central Asia and beyond. India and Iran have taken their co-operation now to the next level. With India now operating a part of the Chabahar port, it has a stronger presence at the mouth of the Straits of Hormuz, through which much of India’s oil from the Gulf passes.
The operationalisation of Chabahar port, west of the Gwadar port developed by China, after Indian ratification of the International Road Transport (TIR) convention is going to be a game-changer in India-Afghanistan-Iran relations. In the next three years, India is committed to laying a 600-kilometre railroad from Chabahar port to Zahedan, which will provide seamless export of Indian goods and humanitarian assistance to Afghanistan via the Zalranj-Delaram axis without interference from Pakistan.
Zalranj in Nirmuz is connected to Chabahar while Delaram in Farah province has access to the Herat-Kandahar highway in Afghanistan. Pakistan will do its utmost to play spoilsport is evident from the fact that Taliban looted two of the 25 containers of wheat, sent to Afghanistan from Kandla port last October, near Mazar-e-Sharif.
The development of the Chabahar port with the trilateral trade and transit agreement between India-Iran-Afghanistan will also open the international north-south transport corridor all the way up to Central Asia, Russia and Europe.
In short, if India presses the accelerator and delivers on time, this route has the potential to rival the Chinese one-belt-one-road (OBOR) initiative. Time is of the essence as it took 15 years for India and Iran to operationalise the Chabahar port after it was first proposed during the NDA under Atal Bihari Vajpayee. While New Delhi put the project on the backburner due to its impact on international sanctions against Tehran at that time, the latter also proceeded slowly based on its own priorities.
During President Rouhani’s visit, there were positive developments towards India having a stake in the Farzad B gas field in the Persian Gulf. With the Iran-Pakistan-India pipeline not working out due to Islamabad’s intransigent attitude, the other option is to have a deep-sea pipeline via Chabahar or Bandar Abbas to Kandla port in Maharashtra to extract natural gas from Iran.
From the Indian perspective, apart from Chabahar and the trade corridor, the Iran visit is also a part of New Delhi’s efforts towards bridging the Shia-Sunni divide in West Asia. Before he hosted President Rouhani, Modi cemented ties with UAE and Oman. India’s ties with West Asia will further be boosted when King Abdullah of Jordan arrives in New Delhi on February 28.
India-Iran-Afghanistan MoU and plans have committed at least $21bn to Chabahar-Hajigak corridor, including $85m for Chabahar port development by India, $150m line of credit by India to Iran, $8bn India-Iran MoU for Indian industrial investment in Chabahar Special Economic Zone, $11-billion Hajigak iron and steel mining project awarded to seven Indian companies in central Afghanistan, and India’s $2bn commitment to Afghanistan for developing supporting infrastructure including the Chabahar-Hajigaj railway, with potential for several times more trade via connectivity to 7,200-km-long multi-mode North–South Transport Corridor (INSTC) connecting to Europe and Turkey, R297 Amur highway and Trans-Siberian Highway across Russia, and planned Herat to Mazar-i-Sharif railway providing access to Turkmenistan, Uzbekistan, Tajikistan and Kyrgyzstan. Chabahar Port also provides direct access to India’s Farkhor Air Base in Tajikistan. Chabahar route will result in 60 per cent reduction in shipment costs and 50 per cent reduction in shipment time from India to Central Asia.
India and Iran first agreed to plans to further develop Shahid Beheshti port in 2003, but did not do so on account of sanctions against Iran. As of 2016, the port has ten berths. In May 2016, India and Iran signed a bilateral agreement in which India would refurbish one of the berths at Shahid Beheshti port, and reconstruct a 600-meter long container handling facility at the port. The port is intended to provide an alternative for trade between India and Afghanistan. This port is 800 kilometers closer to Afghanistan than Pakistan’s Karachi port. The port handled 2.1 million tons of cargo in 2015 to be upgraded to handle 8.5 million tons by 2016, and to 86 million tons in the future.
In July 2016, India began shipping $150 million worth of rail tracks to Chabahar to develop the port container tracks and build $1.6 billion Chabahar-Zahedan railway built by India’s Ircon International for which India pledged additional $400 million and Iran allocated $125 million in December 2016, thus taking the total allocation to $575 million (out of $1.6 billion needed for the rail route) till the end of 2016.
The trilateral transit agreement signed by India, Iran and Afghanistan allows Indian goods to reach Afghanistan through Iran. It links ports in the western coast of India to the Chabahar port and covers the road and rail links between Chabahar and the Afghan border.
The bilateral agreement between India and Iran gives India the right to develop two berths of the Chabahar port as agreed in 2015 and allows them to be operated for 10 years by India Ports Global, a joint venture between Jawaharlal Nehru Port Trust and Kandla Port Trust, in partnership with Iran’s Aria Banader. India Ports Global has guaranteed handling of 30,000 TEUs by the third year of operations, and aims to eventually handle 250,000 TEUs.
The berths will be developed at a cost of $85 million over the course of 18 months. Under the agreement, India Ports Global will refurbish a 640 meters (2,100 feet) long container handling facility, and reconstruct a 600 meters (1,970 feet) long container handling facility at the port. India Ports Global will modernize ancillary infrastructure by installing four rail-mounted gantry cranes, sixteen rubber-tire gantry cranes, two reach stackers, two empty handlers, and six mobile harbor cranes.
As per the deal, India will also be developing various industries, including aluminum and urea production plants, in the Chabahar economic zone attached to the port.
Iran’s ambassador to Pakistan, Mehdi Honardoost stated that Pakistan and China had both been invited to contribute to the project before India, but neither China nor Pakistan had expressed interest in joining.
On 29 October 2017, the trilateral transit trade and rote was implemented when first shipment of wheat was sent from India to Afghanistan via Chabahar.
In August 2017, Indian Union Minister of Ports, NitinGadkari, informed at an event in Iran that the civil work at Chabahar port developed by India is complete, and the Indian government is ordering INR 400 crores ($63 million) worth of mechanised equipment and cranes, and the port will be operational in 2018 to export Indian wheat to Afghanistan. After meeting Iranian President Hasan Rouhani, “now, we are building a railway line in Iran from Chabaharto Afghanistan, Uzbekistan and Russia”, he said.
In August 2017, India Global Ports Limited (IGPL) had applied for the permission to run the Chabahar port in the interim, while Iran has already completed the construction of jetty and IGPL will build two new terminals, one for the containers and another for the multi-purpose ships. In October 2017, IGPL had already started constructing the terminals after placing order for the construction equipment.
On 29 October 2017, the first shipment through the port was sent from India en route to Afghanistan. To demonstrate the viability of the route, seven shipments of wheat as aid to Afghanistan were sent by India by the end of January 2018.
American policy analyst Rorry Daniels has characterized both the Indian investment in Chabahar and the Chinese investment in Gwadar as generating perceptions of “strategic encirclement”. According to her, China fears encirclement by the US, India by China, and Pakistan by India. The respective countries see all of these encirclements as “containment strategies”, which they attempt to break out of. Indian news commenter Shishir Gupta described India’s Chabahar Port deal as “a counter to the China-Pakistan Economic Corridor,” as it has “broken through the strategic encirclement by China and Pakistan.”
Scholar Neil Padukone however disagrees that India has a goal of encircling Pakistan. India needs access to iron from Afghanistan’s Hajigak mine and other natural resources from the Central Asian countries of Kazakhstan, Turkmenistan, and Uzbekistan, which is made possible by the Chabahar port. But, in the long run, the pipeline-to-road-to-rail-to-sea-to-road shipment costs through Chabahar should be circumvented by direct transit through Pakistan. So far, Pakistan has been reluctant to provide such access. The US State Department does not currently see military cooperation between Iran and India as part of the Chabahar project, although it has cautioned India to remain within the legal parameters with respect to collaboration with Iran. The US also sees the Indian presence in greater Central Asia beneficial for spreading the soft power of democratic and friendly regimes. India hopes to see the Western countries use the Chabahar route to link to Afghanistan and reduce their dependence on Pakistan. Comments in the Chinese Press have indicated that China is unlikely to see India’s efforts as strategic competition and that India’s contribution to the infrastructure development in Central Asia will also benefit Chinese multinational corporations.
Padukone agrees that India has need for establishing a “naval counterweight” to China’s presence in Gwadar, as India sees the Gwadar Port as a manifestation of a strong China–Pakistan alliance that seeks to choke Indian investments in the Indian Ocean region. Scholar Christophe Jaffrelot states that Gwadar gives the Chinese a key listening post to monitor US and Indian naval activity in the Persian Gulf as well as a dual-use civil-military base for Chinese ships and submarines. India perceives a direct threat and its response has been to help build the Chabahar port.
Iran has stated that Chabahar is not a rival to Pakistan’s Gwadar and invited Pakistan to join in its development. Pakistani analysts have endorsed the view, stating that Gwadar has an advantage by being a deep-sea port and the expansion of Chabahar would in fact expand trade through Gwadar. Larger vessels that cannot dock at Chabahar could dock at Gwadar and the cargo transshipped to Chabahar. Pakistan’s foreign policy advisor Sartaj Aziz has signalled that Pakistan may link the Gwadar port to Chabahar, which is a remote possibility.
However, Pakistani military commentators have characterised the alliance between India, Iran, and Afghanistan as a “security threat to Pakistan”, and it had “ominous and far-reaching implications” to the region. Segments of the Pakistani press bemoaned the country’s increasing “isolationism”.
Calling for an “immediate end to all support and sanctuaries enjoyed by terrorist groups,” India and Iran said that “states that aid, abet and directly or indirectly support terrorism should be condemned.” On the face of it, this statement suggests that Iran is endorsing India’s position on Pakistan’s sponsoring of anti-India terrorism. However, this may not be the case. India should not see this joint statement as indicating Iranian support to India on terrorism emanating from Pakistan. The statement did not name Pakistan and could be referring to Iran’s troubles with terrorism emanating from Saudi Arabia.
Rouhani’s India visit happened amidst looming problems for Iran. With US President Donald Trump opposed to the 2016 nuclear deal with Iran, there is a possibility of economic sanctions being re-imposed on Iran. Tehran is looking to India for investment and other support. India should avoid taking sides in the face-off between Iran and the US. The Modi government has shown that it can be friends with all sides in West Asia’s many conflict situations. Only recently, the prime minister showed that it is possible to strengthen ties with Israel, even as India participates in Palestine’s development. Just as we are managing well our growing relations with Saudi Arabia and Iran, so also it is possible for us to navigate through waters roiled by the tumultuous US-Iran relationship. India must make it clear to the Trump administration that it wants strong relations with Iran. Its ties with Iran should not be determined in Washington.
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