RSTV: THE BIG PICTURE- CHABAHAR PORT AND US SANCTIONS
Introduction:
The strategic Chabahar port project, being developed by India in Iran, is a separate exception and will not be impacted by US President Donald Trump’s decision not to renew exemptions that let eight countries including India to buy Iranian oil without facing tough American sanctions. The Chabahar port, considered a gateway to golden opportunities for trade by India, Iran and Afghanistan with central Asian countries, is located in the Indian Ocean in the Sistan and Baluchistan province of Iran. The port, which is easily accessible from India’s western coast, is increasingly seen as a counter to Pakistan’s Gwadar Port which is being developed with Chinese investment. A US State Department spokesperson said that the operation of Chabahar Port is a separate exception. President Trump, in a move that could have implications on India’s energy security, on Monday decided not to grant sanctions exemptions to any oil customers of Iran, further squeezing Tehran’s top export commodity. The US move, seen as an escalation of the Trump administration’s “maximum pressure” on Iran, comes after it gave temporary 180-days waiver to eight countries, including India.
Chabahar Port:
The Chabahar Agreement was signed in June 2015 and approved by Iran’s Guardian Council in November 2016. Chabahar is being seen as a gateway for trade by India, Iran and Afghanistan with Central Asian countries.
Where is Chabahar port?
Iran’s Chabahar port is located on the Gulf of Oman and is the only oceanic port of the country. The port gives access to the energy-rich Persian Gulf nations’ southern coast.
Why Chabahar port is crucial for India?
The first and foremost significance of the Chabahar port is the fact that India can bypass Pakistan in transporting goods to Afghanistan. Chabahar port will boost India’s access to Iran, the key gateway to the International North-South Transport Corridor that has sea, rail and road routes between India, Russia, Iran, Europe and Central Asia.
Chabahar port will be beneficial to India in countering Chinese presence in the Arabian Sea which China is trying to ensure by helping Pakistan develop the Gwadar port. Gwadar port is less than 400 km from Chabahar by road and 100 km by sea.
With Chabahar port being developed and operated by India, Iran also becomes a military ally to India. Chabahar could be used in case China decides to flex its navy muscles by stationing ships in Gwadar port to reckon its upper hand in the Indian Ocean, Persian Gulf and Middle East.
With Chabahar port becoming functional, there will be a significant boost in the import of iron ore, sugar and rice to India. The import cost of oil to India will also see a considerable decline. India has already increased its crude purchase from Iran since the West imposed ban on Iran was lifted.
Chabahar port will ensure in the establishment of a politically sustainable connectivity between India and Afghanistan. This will in turn, lead to better economic ties between the two countries.
From a diplomatic perspective, Chabahar port could be used as a point from where humanitarian operations could be coordinated.
Why exemptions are given to Chabahar Port?
- US accepting that this project is not a strategic interest to India or Iran alone but importantly it is strategically important for Afghanistan because Afghanistan is a landlocked country which depends on Pakistan for trade and Pakistan denies transit to Afghanistan for trade with India.
- Chabahar port opens up a permanent alternative route for trade with Afghanistan and Central Asia, given the hurdles in the direct route through Pakistan.
- The Chabahar port will also set up India’s road access to four cities in Afghanistan.
- It facilitates India’s role in Afghanistan’s development through infrastructure and education projects.
- It gives India’s bilateral ties with Iran, a major oil supplier and potential trade market for India, a big fillip.
- The Chabahar port will cut transport costs/time for Indian goods by a third.
- Chabahar port will reduce Afghanistan’s dependence on Karachi port and, hence, will translate to less Pakistani leverage over Kabul.
- Chabahar also provides a link to the planned International North-South Transport Corridor.
- This way it also loops in Russia and countries in Central Asia and Europe as beneficiaries.
- According to some estimates, the Chabahar route plus INSTC could boost trade to a total of US$ 170 billion from India to Eurasia.
- Chabahar is a rare example of a project in the region which is a win-win for all stakeholders
Benefits of imports from Iran to India:
- No supply of oil from Iran would mean sourcing the same from other countries which may not provide the same benefits as provided by Iran in the form of price and credit facility.
- The alternate suppliers such as Saudi Arabia, Kuwait, Iraq and the US do not offer benefits like 60-day credit, free insurance and shipping as Iran does.
- Our refineries are geared to handle Iranian oil.
With Chabahar, India has done well to keep a place in the intricate connectivity network of the region. Given all the competing interests over Chabahar, it will require sustained and nuanced diplomacy to stay ahead in this game.
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