The recent news is filled with discussions regarding Iran’s Port and Maritime Organisation (PMO) reaching out to India in need of locomotives and signalling equipment for the Chabahar-Zahedan railway line. The difficulty lies in the sanctions imposed by the USA, preventing Iran from procuring these resources directly. To further complicate matters, Iran has asked India to activate a credit line worth USD 150 million that was offered during the Iranian President’s visit in 2018.
About the Chabahar Port
Chabahar Port plays a significant role in this matter. Located on the Gulf of Oman, it is just 72 kilometers away from Pakistan’s Gwadar port, developed by China. The port, housing two separate establishments – Shahid Beheshti and Shahid Kalantari, is Iran’s only oceanic port.
The Background
The roots of this issue trace back to May 2016 when India, Iran, and Afghanistan signed a trilateral agreement. This pact intended to establish a Transit and Transport Corridor among these three nations, using Chabahar as one of the regional hubs for sea transportation. The project also involved the construction of a railway line from the Chabahar port to Zahedan along the Afghanistan border as an alternate trade route to Afghanistan and Central Asia. For this purpose, IRCON, owned by Indian Railways, signed a Memorandum of Understanding (MoU) with the Iranian Rail Ministry.
Reasons for Excluding India: Different Perspectives
However, the tide changed in July 2020 when Iran decided to proceed with the rail line construction independently, referring to delays from the Indian side. India, on the other hand, claimed to have completed the inspection and feasibility report and was waiting for the Iranian side to appoint a nodal authority. Moreover, India expressed its hesitation in dealing with a construction company linked with the Islamic Revolutionary Guard Corps (IRGC), which is under sanctions.
Significance of Chabahar Port for India
From India’s perspective, the Chabahar Port carries significant potential. It serves as a gateway for trade opportunities with Central Asian countries, given Pakistan’s denial of transit access to India. It could also counter the Gwadar Port of Pakistan, developed with Chinese investment. The Chabahar Port can enhance India’s connectivity with Russia and Eurasia in the future.
Evolving Scenarios
With the USA elections’ outcome, both India and Iran are hopeful about possible sanction relaxations, thereby increasing engagements. Meanwhile, India is closely monitoring the negotiations on a strategic cooperation agreement between China and Iran worth USD 400 billion, which could influence India’s strategic ties with Iran.
The Farzad-B Gas Field Saga
Located in the Persian Gulf (Iran), the contract for the exploration of the Farzad-B gas field was signed by an Indian consortium in 2002. Following the declaration of commerciality, the contract expired in 2009. The disagreement arose over the deal’s specifics, but a sizeable portion of the deal was finalized in May 2018. However, when the USA announced sanctions on Iran, it further complicated matters, prompting Iran to declare its intent to develop the field independently.
Way Forward
This situation demands a careful balancing act from India between the USA and Iran. Given that other countries, especially China, stand to gain from these projects, India must protect its interests. Being an emerging power, India cannot afford to be confined to South Asia and should look at the extended neighbourhood for trade and energy security, crucial for its superpower aspirations.
