A deepwater port in Iran is threatening to become an explosive issue in India-US relations. Why is Washington mad? And why is New Delhi ready to take the risk of pissing its buddy off?
What is this Chabahar port?
It’s all about location, location, location. It is Iran’s only deepwater port that sits pretty on the gulf of Oman.. Look at where Chabahar sits:
Chabahar’s twin: is the Gwadar—a deepwater port in Pakistan. The ports are almost equidistant from the Pakistan-Iran border:
The port that really matters: is Kandla in Gujarat ,which is only 550 nautical miles from Chabahar:
Okay, and why is Chabahar important?
Chabahar is a deepwater port—which means it can handle very large cargo ships. If developed, it could make Iran a critical hub for global trade. Reminder: Shipping accounts for 80% of the world’s trade. But why does India care so much about Chabahar?
The backstory: New Delhi’s interest in Chabahar dates back to 2002—when Atal Bihari Vajpayee was PM. India’s economy was liberalising and we were suddenly very concerned about global trade. For India, Chabahar opens two new critical shipping routes.
Route #1: Right now, Pakistan blocks India’s access to Pakistan and the Central Asian countries. The only route that bypassed Pakistan and directly accesses that region runs through Chabahar:
Route #2: Chabahar also gives India an alternative route to Europe—via Russia (which is happily friends with both Tehran and New Delhi). This what that route—marked in red would look like:
Okay so that’s what this deal is? To build these routes?
Well, New Delhi has been cutting many deals—in various configurations to set up these routes. But they have usually stalled out—or crawled along for decades.
Agreement #1: In 2003, Vajpayee and Iran’s Syed Mohammad Khatami signed the ambitious New Delhi Declaration—which included Chabahar. But George Bush’s war on terror and the ‘axis of evil’—which included Tehran—put a spanner in the works. Chabahar became a casualty of US sanctions against Iran. India didn’t abandon the project—but didn’t work on it either:
While India spent about $100 million to construct a 218-km road from Delaram in western Afghanistan to Zaranj on the Iran-Afghan border to link with Chabahar, the port project itself progressed at a glacial pace.
Also a problem: India’s track record in executing ambitious infrastructure projects:
India has traditionally had trouble implementing ambitious infrastructure projects in its neighbourhood — an editorial in The Indian Express in 2020 noted: “From Nepal to Myanmar, Sri Lanka and Iran, Delhi has made commitments on building power projects, highways, railways, and other infrastructure. Each proceeds slowly or not at all.”
Agreement #2: In 2015, the US made an uneasy peace with Iran under President Barack Obama. The sanctions were lifted—and the door to Chabahar was open once again. This time it was a tripartite deal inked in 2015 between India, Afghanistan and Iran—under the aegis of PM Modi. The Afghans were interested in rebuilding their economy, the Iranians needed relief from crippling US sanctions—and India was reasserting itself as a global power. There was a sudden flurry of activity.
Hurrying New Delhi on: China’s big plans for Chabahar’s twin—the Gwadar port in Pakistan:
China has invested billions in trade route infrastructure projects known as the "China-Pakistan Economic Corridor" under the Belt and Road Initiative. China is investing in the Gwadar port to serve as Beijing's gateway to global markets via the Indian Ocean.
Agreement #3: India’s plans extend far beyond Central Asia. The bigger prize is access to the big fat European market. Chabahar is a key piece of the proposed International North-South Transport Corridor (INSTC). The 7,200-km trade corridor links India to the Caspian Sea via Iran—and onward to northern Europe via St Petersburg in Russia. Yup, it’s a version of route #2:
INSTC was proposed in 2000 by Russia, Iran and India—and ratified in 2002. And once again, it was stymied by US sanctions on Iran. This is ultimately why India wants Chabahar so badly:
INSTC consists of sea routes, rail links, and road connections that connect Mumbai in India to Saint Petersburg in Russia, passing through Chabahar. The INSTC is projected to reduce transit time by 40%, shortening it from 45-60 days to 25-30 days. Additionally, it is expected to decrease freight costs by 30% in comparison to the Suez Canal route.
That’s huge for burgeoning global economic power. You can get a sense where Chabahar fits into the grand plan below (though it doesn’t show Kandla for some reason):
The other reason: Access to oil. With the war on Gaza expanding to the Gulf of Yemen (explained here), India is increasingly anxious about its oil supplies:
India is the third-largest consumer of crude oil in the world and imports 85% of its total requirement. Hence, any major disruption in the country's oil trade will not only impact supply but will also have adverse effects on its foreign exchange reserves and the value of the rupee. "Keeping in mind the precarious economic situation in West Asia over the Israel-Hamas war and attacks by Houthi rebels in the Red Sea, the Chabahar Port will act as a saviour to India's oil trade."
Ok, so what have we done about it?
Things have gathered speed in recent years. There are two ports in Chabahar: Shahid Beheshti and Shahid Kalantari. India has ploughed $500 million into the first since 2016.
The new deal: New Delhi took the biggest step this week—when it inked a 10-year deal with Tehran—that clearly lays out India’s role. We will take over the management of Shahid Beheshti—which will mark the first time India has ever operated a foreign port. And we will invest $370 million in development and financing of the port.
But, but, but: Washington offered this ominous response when asked about the deal:
US State Department spokesperson Vedant Patel conceded that India was free to pursue its own foreign policy goals. However, he did not rule out the possibility of ramifications. "Broadly, you've heard us say this in a number of instances, that any entity, anyone considering business deals with Iran, they need to be aware of the potential risk that they are opening themselves up to and the potential risk of sanctions," Patel said.
What India said: External Affairs Minister S Jaishankar urged Washington not to take a “narrow” view of the deal. Some experts expect New Delhi will go ahead irrespective of what Washington has to say:
Given India's recent history of consistently purchasing oil from Russia despite Western sanctions, it's probable that India will proceed with the project whether it receives approval from the US or not. It remains to be seen how India will use the port to facilitate India’s trade with Iran and Central Asia.
India is likely tying its hopes to Washington's past record. In 2018, it exempted the port from sanctions to allow the flow of goods and fuel to Afghanistan.
Point to note: India was okay losing out on Chabahar as long as it was promised a juicy prize called the India-Middle East-Europe Economic Corridor (IMEC). At the G20 summit in Delhi, Saudi Arabia, UAE, plus the EU, France, Germany, Italy and the US all signed on to create a global corridor that looks something like this:
As you can see, the route runs through Israel. But then Hamas attacked Israel—and Tel Aviv decimated Gaza. And IMEC became a pipedream. Hence, Chabahar.
The bottomline: The US has repeatedly blocked India’s dreams of Chabahar. This time, it may not be as easy to get its way.
Reading list
Indian Express has more on the diplomatic delays that blocked Chabahar. The Diplomat and ORF look at the rivalry with China. Deutsche Welle reports on US pressure—Deccan Herald explains why India may still move forward. CSIS is best on the geopolitical stakes for India. The Print has mind-numbing detail on the same—highly recommended for foreign policy geeks.
