Foreign Affairs: Exercising the Iran option

India has signed an MoU with Iran to develop the latter’s Chabahar port that will provide an option to rebuild trade ties with Afghanistan and Central Asia

Hardnews Bureau Delhi 

India quickly revived its commitment to invest in Iran’s strategically important Chabahar port in April —on cue to leverage the likely success of negotiations to curtail Tehran’s nuclear programme and Iran’s pariah status in the West.

If the negotiations do come to fruition, Iran is likely to emerge as a regional power, so Surface Transport and Shipping Minister Nitin Gadkari’s quick trip to Tehran to sign a memorandum of understanding for the project was also a message to China and Pakistan. In some ways, the Chabahar port is a counterpoint to Beijing’s decision to invest in Pakistan’s Gwadar port and build a 3,200-km industrial corridor to link it with Kashgar in Xinjiang province.

The name “Chabahar” comes from the Hindustani words ‘char’, which means four, and ‘bahar’, which means spring. The port is located in Sistan and Baluchestan province of Iran. Historian Alberuni identifies Chabahar by its earlier name, Tiz, as the starting point of old India.

In a way, he is not wrong. Before India was partitioned in 1947, these locations seemed closer. British civil servant Olaf Caroe in his book, Wells of Fire, makes a compelling case for managing the turbulent Middle East from India.

The creation of Pakistan in some ways served this imperial project, as Islamabad’s army was used for providing security in the UAE, Saudi Arabia, Bahrain, Qatar and so on. The creation of Pakistan and its poor relations with India also ruptured the normal land routes that sustained the economies of Afghanistan and Central Asia. As livelihoods in these traditional societies were disrupted, tribal rivalries and conflicts with the central authority began to animate the history of
these parts.

In 1965, the Afghanistan government signed the Afghan Transit Trade Agreement, which compelled Afghan exports (and Indian imports to Afghanistan) to be routed through Karachi port. This agreement was held responsible for increasing smuggling. A successor agreement brokered by the US government and supported by UNCTAD came into effect in 2011 under the rubric of the Afghanistan-Pakistan Trade Transit Agreement (APTTA). This agreement increased access of Afghan goods to more ports in Pakistan and also improved ease of travel for truckers and other transporters. The agreement was premised on the assumption that it would open up the road links to Central Asia.

Due to its manifest insecurities, however, Pakistan kept India out of its ambit. Afghan goods could be brought to the Indian border post, but Indian goods could not be sent through Pakistan to Afghanistan.

During his maiden visit to Delhi in April, Afghan President Mohammad Ashraf Ghani candidly and forcefully stated that his government would not allow Pakistani goods access to Central Asia if Pakistan did not allow India to become part of APTTA.

India, which is keen to join the trade agreement, heartily welcomed the move. India’s Ambassador to Kabul told the media, “Pakistan’s policy issues have hindered Afghanistan’s access to the key Wagah border post.” But China’s announcement of its huge $46 billion investment in the 3,200-km Gwadar-Kashgar industrial corridor amply conveyed to New Delhi that we do not really matter in Beijing’s scheme of things. New Delhi would not be granted access to Central Asia through Gwadar. And India should not bother attempting to gain access to Central Asia through another route.

Having invested about $2 billion in the development of Afghanistan’s public projects, India knows it could face major losses after the withdrawal of the US troops from Afghanistan if that results in extension of Islamabad’s military hegemony there.

The looming changes in Iran provide an important opportunity to India to reorder its foreign policy options. What New Delhi must ponder is the kind of power Iran will emerge as, once the P5+1 negotiations are successfully concluded and all the sanctions against Tehran lifted. Despite the pressure that is being brought on it by Israel and Saudi Arabia, all indications are that Iran will be a regional power. With ample oil and gas resources, a strong educational infrastructure and a trained army, it should quickly regain the status it lost in the years since the US made it a pariah State following the 1979 Islamic Revolution. Already, Iran’s Arab neighbours view this resurgence as a given.

Once almost shelved under pressure from the US, Chabahar port’s development could now be the first firm move Delhi could make to take the sheen off the Gwadar-Kashgar corridor and the China-Pakistan effort to close India out of Central Asia.

Just 940 km from Mundra, Gujarat, Chabahar would link India to Iran and other Central Asian republics, as well as allow New Delhi to fulfil some crucial strategic objectives in Afghanistan. On its part, Iran has already built world-class road infrastructure from Chabahar through Iranshahr and Zahidan to Milak on its border with Afghanistan. Across the border, India has built the Zaranj-Delaram Highway to seamlessly connect with this road network.

In addition to providing access to Central Asia, Iran could help India access the International North-South Trade Corridor (INSTC), easing shipments to Europe. This route is about 40 per cent shorter and 30 per cent cheaper than the current sea route through the Red Sea, Suez Canal and the Mediterranean.

Iran has also offered the Indian Railways $10 billion worth of contracts for electrification of existing railway lines and in some cases building new tracks on a government-to-government basis, which means no bidding is required. It’s a potentially very lucrative deal for Indian Railways. The only problem is whether the Indian government has the money to invest in such a huge project, for which the Iranian government is willing to provide sovereign guarantees.

US Department of State official Wendy Sherman cautioned India against dealing with Iran until the nuclear issue is settled. But the view in strategic affairs circles is that New Delhi has displayed speed in clinching the 10-year-old Chabahar project after its clearance by Washington. “A few months ago, there were reports that India may just abandon this project. So the visit of two cabinet ministers in rapid succession to Tehran is a major improvement,” said a source from the strategic affairs community.

West Asia is displaying a kind of volatility not witnessed before, much of it linked to Iran’s pending emergence in the global order after the nuclear issue is resolved. Saudi Arabia’s attack on Yemen as well as the creation of a Sunni Arab coalition, for instance, are both meant to create a force to balance Iran. In this context, it would be in India’s interest to invest wisely in projects and act quickly to exploit opportunities that the shake-up is providing to offset the great game played by China.