Chabahar: Which Way Are The Scales Tipping?

In recent years, Asia’s coastal countries have made considerable efforts to have the largest slice possible of the economic benefits deriving from regional connectivity by developing ports, with China and India being the most glaring examples of this phenomenon. By triggering the so-called Great Game, they have shaped Gwadar and Chabahar into maritime hubs. India has invested US$500 million in Chabahar, which it also calls as the Golden Gate, situated in Southeast Iran, on the shores of the Gulf of Oman and in the gateway of the Strait of Hormuz. New Delhi believes that with the help of the port it can introduce resource-rich Afghanistan and Central Asia into the economic bloodstream of the country, while it can also limit China’s expansion in the region. Donald Trump’s decision to withdraw from the Iran nuclear deal may cloud India’s ambitions, and may even tip the scales in China’s favour.

Priorities Of India’s Foreign Policy Under Narendra Modi

For decades after achieving independence in 1947, the official foreign policy of India was non-commitment, that is, nonalignment with major powers and military blocs. With the change of the world order, however, the political aspirations of the country accounting for almost 18 per cent of the world’s population, has also transformed. On its way to a major power position, becoming a regional major power has become its most important pursuit. Although strategic goals have never been summed up in one single document, there are several official statements available that, combined with the nature, timing and results of Modi’s diplomacy, present a clear picture of India’s foreign policy priorities. They can be summarized as follows.

Within the framework of the “Neighbourhood First” policy, New Delhi seeks to pursue closer political, economic and diplomatic ties with its immediate neighbours and the island nations of the Indian Ocean. This is an attempt to implement a higher-level of connectivity and deeper integration with these countries, serving India’s economic development. With this, New Delhi wants to promote a model of India-led regionalism, also acceptable for its neighbours. After coming into office, Modi actively started to develop his “Act East” policy, renaming the “Look East” policy launched by Narasimha Rao in 1991. The name change indicates the strategic goal of the new foreign policy: India’s extended influence on Asia, and to create a stable, multi-polar balance of power in the Indo-Pacific region. This “old-new” priority of foreign policy is driven by fears of a growing Chinese influence, to which India is responding by expanding its footprint in Asia.  The two components of the effort are boosting trade relationships and creating and enhancing defence cooperation.

The China factor is one of the major elements not only of the “Act East” policy but of India’s foreign policy in general. The relationship between the two countries is ambivalent. As one side of the coin, the relationship between New Delhi and Beijing can be characterized by increasingly diversified bilateral cooperation and the increase of trade volume. China is India’s number one trading partner, and Beijing

The route of China’s “String of Pearls” policy

has invested significant amounts into India’s industry and high-speed railway infrastructure. Despite this growing cooperation, however, the other side of the coin is that the relationship between the two countries is full of tension, rivalry and hostility. Apart from mutual distrust, the territorial disputes over Aksai Chin and Arunachal Pradesh remain unresolved, and border skirmishes – for example, over the Doklam plateau or Ladakh – are frequent.

China’s continuously growing presence in the Indian Ocean is another source of tension, making India feel surrounded by Beijing. China’s strategy is based on the hypothesis that the one who rules entire Asia can dominate the Indian Ocean. The basis of this assumption is the fact that 70 per cent of the world’s oil trade transported on sea routes and 61 per cent of the world’s container traffic passes through this region. As the Chinese economy is heavily dependent on the trade routes of the Indian Ocean, it is self-evident that China – even by military force – seeks to ensure the security of these routes. In order to increase its presence, China pursues the String of Pearls policy, which means establishing a military, commercial and communications network from mainland China to Port Sudan.

As part of the New Maritime Silk Road, Beijing has spent US$20 billion within a year on purchasing foreign ports and has been investing a significant amount in infrastructure development itself. Despite China’s claim that the ports serve exclusively as logistics bases, a warship always tends to appear in the region. Without being exhaustive, the most expensive pearls include Gwadar in Pakistan, Hambantota and Colombo in Sri Lanka, Malé in the Maldives, Payra in Bangladesh and Kyaukpyu in Myanmar. Gwadar is the shiniest of all, playing a key role in shaping China’s maritime dominance. If the port once becomes a naval base, the Chinese People’s Liberation Army will not only rule the Indian Ocean, but can keep an eye on the oil-rich Persian Gulf and the Strait of Hormuz.

Thus, China’s increasing presence in the Indian Ocean itself poses a serious security challenge to India, which is further aggravated by the China-Pakistan relationship. China is working on building the US$62-billion China-Pakistan Economic Corridor (CPEC), a flagship project of the Belt and Road Initiative (BRI), which seeks to link China’s Xinjiang province to Pakistan’s Gwadar port through roads, railways, oil and gas pipelines and optic networks in order to facilitate Beijing’s regional connectivity.  As a section of the corridor traverses through the disputed territories of Gilgit-Baltistan and Kashmir, currently controlled by Pakistan, India, on the ground that Pakistan is challenging its sovereignty and breaching its territorial integrity, objects not only the project but – out of fear of Chinese influence – the entire BRI. This was expressed by Modi at the summit of the Shanghai Cooperation Organisation in June, 2018.

China’s investments in Pakistan, however, are is just the tip of the iceberg in the relationship between India and Pakistan. The relations of the two countries have been volatile since their independence, but are basically very hostile. Delhi and Islamabad can sit down at the negotiating table, if necessary, but high-level negotiations result in tranquillity in the short term only and do not prevent Pakistani rebels from engaging in armed conflict in Kashmir, over which the two countries have already fought four wars. On the ground of another serious source of conflict, the support of terrorism by the government in Kabul, India seeks to isolate Pakistan, and for this end, tries to make strategic partnerships with Iran and Afghanistan following the “my enemy’s enemy is my friend” logic.

Establishing relationships with various countries and building social capital can be interpreted as the fourth priority of India’s foreign policy. In recent years, India has been undoubtedly pursuing closer ties with the United States of America and its allies, Saudi Arabia and Israel, while also fostering good relationships with Russia and Iran on the other side. In the relations, political rapprochement as well as security considerations play an eminent role. It is embodied not only in defence and military agreements, but also in arms sales, which is used by the USA as a tool of choice to build partnerships, and which is accepted happily by India to counterbalance the “China threat”. In the last five years, the number of weapons imported from the USA grew by 550 per cent compared to the previous period of 2008-2013. Although Israel has also become an important arms supplier of India, two-thirds of the arms are still imported from Russia, standing on the side of another alliance, by New Delhi.

Armaments are an element of achieving a major power status, which is India’s fifth foreign policy priority. For the present, the country is not a shaper of the rules of the international system, and despite its efforts and economic might, it is not a permanent member of the UN Security Council, either. However, it takes steps to be an increasingly significant actor on global governance platforms.

Summing up its foreign policy, India, on its path towards achieving a major power status, seeks to be recognised as a regional power that is the guarantor of security in the Indian Ocean region. However, there are several limits to its strategic vision. These include China’s growing economic and military presence, its constructions in India’s neighbouring countries, the issue of Pakistan isolating India from Central Asia, and the insufficiency of India’s trade integration. In this context, the question as to what role Chabahar may play in overcoming the limits and achieving the goals arises.

 Chabahar’s Role In India’s Foreign Policy


The significance of the location of Chabahar port in reaching Afghanistan and Central Asia

The strategic location of Chabahar makes its role more valuable, and enhances the chances of realizing several, inseparable foreign policy priorities in certain contexts. The deep-sea port means a direct link with the Indian Ocean, and since it is situated near landlocked Afghanistan and Central Asian countries, it is a key element of the “Neighbourhood First” policy, aiming at connectivity and integration.

Pakistan, due to which India has no common border with Afghanistan and Central Asia, keeps New Delhi isolated from the region, which is sometimes consciously played up by Pakistan with temporary border closures – the one in 2017 for example, lasted for 50 days. India has high hopes for accessing these areas through Chabahar, evading Pakistan’s isolating policy. The only way to get India more involved in Afghanistan’s economic development is through Chabahar, Barnett Rubin, a former advisor to the United Nations argues.

Creating connectivity has geostrategic and economic considerations.  The former one is aimed at isolating Pakistan and counterbalancing China, and the latter one is aimed at, the world’s fastest growing economy, India’s need for markets, sources of raw materials, that is, more effective and integrated trade relations. Chabahar – especially after lifting sanctions – gives India greater access to Iran’s economy and Afghanistan, with which bilateral trade has not by far reached its full volume yet, despite its geographical proximity.

India lags far behind China, Russia, and Turkey in trade volumes with Central Asia because of access limitations. As an essential node of a multi-mode transport network, Chabahar will result in a 60-per cent reduction in shipment costs and a 50-per cent reduction in shipment time from India to Central Asia. By the last phase of developments, the port is expected to be capable of handling 20 million tons of trade, compared to the present capacity of 2.5 million tons, as a result of which India has the potential to reap up to US$450-500 billion in trade. New Delhi would primarily export cars, computers, IT-related and agricultural products, mainly rice and sugar, to Iran, Afghanistan and Central Asia. Import would mainly focus on energy sources as Chabahar allows India, the world’s third largest energy consumer, to access Iran’s crude oil reserves of 150 billion barrel and gas reserves of almost 34 trillion cubic metres. Turkmenistan and Kazakhstan could also be considerable sources of these two raw materials; the latter one also holds uranium and coal reserves. India can hope for iron ore from Afghanistan and natural gas from Russia through Chabahar.


International North-South Trade Corridor vs. traditional trade routes

 India, by promoting energy security, could thereby cut its dependence on the Trans-Afghanistan pipeline and ultimately from hostile and unstable Pakistan.  According to plans, the pipeline will transport natural gas from Turkmenistan via Afghanistan and Pakistan to India, but New Delhi is concerned about the safety and predictability of supply, as the prosperity of India’s economy conflicts with Islamabad’s interests, and it has no unquestionable capacity to guarantee the security of the pipeline. Chabahar and the related transport routes, however, could diversify India’s supply, and New Delhi would have the opportunity to keep an eye on the Strait of Hormuz, through which the shipments of its oil importers, Iran, Iraq and Saudi Arabia, also pass on their way to India.

Chabahar’s strategic importance is increased by the fact that it makes trade with Europe easier by bypassing the Suez Canal and alleviating dependence on it. In the long term, the port is a key node –  and also the starting point – of the new International North-South Trade Corridor, being constructed now, which is an alternative to routes traversing through the Suez Canal, the Mediterranean and Baltic Sea.  The objective of the multi-mode network connecting India, Iran and Central Asia with Russia and Eastern Europe, and encompassing road, ship and rail routes is to cut transport time of goods to Europe by 40 per cent and their transport cost by 30 per cent, and to increase connectivity between states. For India, it means new chains of integrated economies, that is, a new market of Indian export and faster access routes to energy resources.

Road Transport and Shipping Minister Nitin Gadkari claims that Chabahar will be a gateway to golden opportunities, providing a direct route to and export opportunities with Russia. The International North-South Trade Corridor, and its vital part, the port may rekindle the long relationship between India and Russia as Moscow has recently expressed its dissatisfaction about the US-India cooperation becoming closer. Furthermore, Chabahar represents a kind of message conveying that Pakistan cannot be any longer a hurdle to India’s economic growth, and also a signal to China that India is ready to develop its own regionalism model, as an alternative to “One Belt, One Road”.

Thus, Chabahar is an important element of the strategic competition with China. Although it is denied on higher levels, the port can be interpreted as a rival to and as a rivalry with Gwadar port, developed by China and lying at a distance of only 72 kilometres. Chabahar serves to limit the cooperation between China and Pakistan, to counterbalance China’s String of Pearls policy, to promote regional stability and to increase India’s influence. The port is a good example of how India seeks to underpin its regional leader’s role positioning itself as a leading lender of South and West Asian infrastructure projects.

Chabahar’s Significance To Afghanistan And Iran

For landlocked Afghanistan, the most important thing is to cut Kabul’s dependence on Pakistan in seaborne trade. Until now, every trade route from or to Afghanistan have passed through Pakistan’s port, Karachi. Islamabad, however, tends to intervene in other affairs of Afghanistan, may it be the reconciliation with the Taliban or trade with India. An example is the introduction of new customs tariffs and the closure of trade routes, which are usually used as an asset by Pakistan.  The situation has deteriorated to such an extent that Afghan President Ashraf Ghani has threatened Pakistan with blocking Islamabad’s access to Central Asia if Afghanistan is not allowed to trade with India through the Wagah-Attari border.

In this environment, Chabahar, as an alternative route, offers an excellent opportunity to Kabul to cut its dependence on Pakistan and build capacities and develop its connectivity with the region. Afghanistan has redirected 80 per cent of its maritime trade in goods from Karachi to Chabahar and Bandar-Abbas. Analysts claim if Chabahar starts to feed the International North-South Trade Corridor, Afghanistan will direct sea trade of a value of US$5 billion into the port. Kabul, taking advantage of Chabahar and the infrastructure investments implemented by India, may initially export agricultural produce, such as pomegranates and grapes, and later minerals. Thomas Lynch, a former advisor to the Joint Chiefs of Staff Committee on South Asia Policy claims that for Afghanistan, the lifeline runs through Chabahar.

Proceeding to Iran, the port has a symbolic significance for Teheran. Since it has launched a shared project with several other countries, it conveys the message to the international community that the country cannot be isolated any more. On the other hand, Chabahar helps to transform Iran’s geostrategic position by promoting trade and an economy that is less vulnerable to international pressure. One of Iran’s strategic weaknesses is its lack of deep-water ports. Bandar Abbas port, which handles 85 percent of Iranian seaborne trade, can only receive 100,000-ton cargo ships. Since most shipping is conducted via 250,000- ton cargo vessels, cargo must first be offloaded in the United Arab Emirates and then sent on smaller ships which can dock in Bandar Abbas. Aside from the millions of dollars lost, Iran is also vulnerable to a UAE closure of its seaborne trade in the case of conflict between Iran and the UAE or its GCC and Western allies.

Chabahar, located further east of the Straits of Hormuz, subject to constant US naval patrol, means a way out of this disadvantageous situation, and is the only Iranian port with direct access to the Indian Ocean. Chabahar is Iran’s first and only deep-water port that meets modern shipping standards and can receive 250,000-ton cargo vessels. By also increasing its own trade, Iran can turn into the key transit link for trade between Central Asia and the Indian Ocean as well as between Europe and the Indian Ocean, especially if new transport routes ensuring a link between the International North-South Trade Corridor and Afghanistan and Central Asia, with Chabahar as their outlet, start their operation.

In addition, industrial development around the port strengthens the economy subjected to sanctions. It is particularly needed in Sistan-Baluchestan Province as – with regard to the fact that 90 per cent of the Iranian population is concentrated in the Western part of the country – this region is the least developed. The project in Chabahar is not limited to port development, but includes other infrastructure investments, the construction of roads, railways, schools, power grids, petrochemical complexes and the establishment of a free trade zone, which raises high hopes for Iran’s economic growth. For the petrochemical industry, for example, the government has designated an area of 1,100 hectares, which is expected to expand to 3,000 hectares and include sixteen complexes which will produce urea, ammonia, methanol, polypropylene, olefin and dimethoxyethane by the end of the third phase of development. The successful implementation of this US$80-billion project and the entire Chabahar project – almost irrespectively of who the investors are – is Iran’s number-one interest.

The Cooperation Backing Chabahar

Since the 1990s, when Iran engaged Indian companies to develop the port, India has a central role in the project. Currently, Chabahar has two port complexes, Shahid Kalantari and Shahid Beheshti. The two countries first agreed on their development in 2003, for the reasons already detailed, that is, to have access to landlocked Afghanistan and Central Asia. Sanctions, which have limited trade, investments, business activities and financial transactions with Iran and been continuously renewed and expanded since the Iranian Revolution, have prevented the development of the port.

On 6th May, 2015, however, when India’s Minister for Shipping and Road Transport & Highways visited Tehran, negotiation on the construction begun between the two countries despite the fact that sanctions against Iran had not been lifted then. A memorandum of understanding (MoU) on equipping and operating Chabahar’s two berths was signed a year later, during Modi’s visit to Iran. It is financed by a capital investment of US$85.21 million and an annual expenditure of US$22.95 million deriving from the incomes from a ten-year lease. The implementation of the first phase of the project – which, under the agreement, must start within 18 months after the MoU was signed – will be executed by a joint venture company consisting of Jawaharlal Nehru Port Trust and Kandla Port Trust in partnership with several other Indian and Iranian companies, with approval from the Iranian Ports and Maritime Organisation (P&MO) in the latter case. Under the agreement, India will equip the port with a 640-metre container-handling facility, which, following a ten-year or extended lease, will be transferred to Iran. Tehran has turned to EXIM Bank for a US$150 million credit line, which has been extended to 30 billion Indian rupees (approximately US$441 million) to import steel rails and build the port. India’s total commitment to develop Iranian infrastructure amounts to about US$635 million

In addition to bilateral cooperation, a trilateral partnership between Iran, India and Afghanistan is in place to promote regional connectivity. The trilateral agreement on the trade and transport corridor, with Chabahar being its gateway, was also signed in May, 2016.


The route connecting Chabahar and the Afghanistan Ring Road

India has already implemented several remarkable infrastructure projects to set up a multi-mode transport network, including a 217-km-long motorway, which connects Zaranj near the Iran-Afghan border to Delaram in Farah province; it was opened in 2009, and joins the 2,200-km-long, two-lane Afghanistan Ring Road passing through sixteen provinces and Afghanistan’s two largest cities, Kabul and Kandahar. The motorway, implemented from an investment of approximately US$88 million, seeks to connect the Indian subcontinent with Afghanistan and Central Asia via Chabahar. Plans include the construction of a railway used also for freight transport from Chabahar to Zhedan, close to Zaranj, as part of the International North-South Trade Corridor. India started to supply steel rails to Chabahar in July, 2016, so that the Indian Railway Construction International Ltd. (IRCON) could commence the project estimated to amount to US$1.6 billion. An extended version of this railway line is the 900-km route stretching from Chabahar to mineral-rich Hajigak, which provides India with a direct link with Afghan iron ore mines. Seven Indian companies have already been granted mining rights, thus it is not a coincidence that the Indian government has promised an infrastructure development of a value of a US$2 billion in addition to the US$11-billion mining project.

Apart from this kind of infrastructure investments, a free trade and industrial zone is being constructed around the port, for the development of which India promised Iran an US$8-billion investment. 26 per cent of the area, divided into nine functional regions, is targeted to trade and the services sector, 49 per cent on industry and 25 per cent on housing and tourism. In addition to developing the petrochemical industry, India is considering investing in the automotive, the pharmaceutical, the textile industry and food processing, but a strong need for investments in education, in IT and business management in particular, has also arisen.

As a result of efforts, the first consignment of 13,000 tons of wheat dispatched from Kandla, India arrived in Afghanistan via Chabahar on 29th October, 2017. After that, in December, India’s President announced at a ceremony attended by the representatives of seventeen countries that the first phase of the port construction had finished. Chabahar’s annual capacity is expected to grow from the current goods traffic of 2.5 million tons to 20 million tons.  India has guaranteed handling a container traffic of 30,000 TEUs by the third year of operations of Shahid Beheshti and aims to eventually handle 250,000 TEUs. The latest news is that India Ports Global Private Limited was given the operational rights of the port terminal for eighteen months in February, 2018.

Consequences Of The Changes In Geopolitical Dynamics

In recent years, the development of Chabahar, on which India has spent more than US$500 million, has accelerated. Timing was right for the work, as signing Iran’s nuclear agreement and the lifting of sanctions have given new impetus to the progress of the project. Furthermore, India’s efforts have been in line with the Trump administration’s new strategy on Afghanistan, which encourages an increased Indian presence in the country, especially in economic development initiatives. Donald Trump’s decision to pull the United States of America out of the Iran nuclear accord and to re-impose sanctions against the regime, is a source of great concern for New Delhi. Despite former United States Secretary of State Rex Tillerson’s remark that Washington will not impede legitimate business activities between Iran and India, by reinstating sanctions the USA is exerting intense pressure on India to reduce investments. This could undermine India’s geopolitical interests and efforts to build an economically dominant role in Central and South Asia, even if leadership seeks to separate themselves from sanctions.

At his meeting held with Iran after the withdrawal from the nuclear deal, India’s External Affairs Minister Sushma Swaraj said that India’s would not make its foreign policy under pressure from other countries, therefore India abides only by UN sanctions but not country-specific ones.  In June, at the Iran-India meeting held on the sidelines of the 18th summit of the Shanghai Cooperation Organisation, India’s Shipping Minister announced that they would start interim development operations of Chabahar Port despite the reinstatement of sanctions. Nonetheless, the leadership perceives that President Trump’s decision has put New Delhi in a vulnerable position. As a senior Indian diplomat said, the US president had brought New Delhi back to the drawing board and India would have to renegotiate terms and conditions on using Chabahar.

Regarding concerns about the port, the sanctions may make Iran face its greatest financial crisis ever. While under the deal Iran gained access to more than US$100 billion in frozen assets, doubled its oil export and stabilized its foreign currency market, now the riyal is facing considerable loss of value, financial and trade transactions are limited, economic growth seems to be slowing down, and unemployment, especially among young, college-educated people, is around 36 to 50 per cent. Owing to measures imposed on shipping, the operators of ports and the transactions of the central bank, Chabahar is also concerned by the issue.

This has led many analysts to wonder if India will be able to invest more in the port to alleviate cost bearing. India, however, is busy with its own economic growth, and does not have a satisfactory economic structure to be able to support sanctions-stricken Iran financially.  New Delhi is seeking to attract foreign investors for its own infrastructure projects; its industrial park has been built form a US$20 million Chinese investment and its Mumbai-Ahmedabad high-speed railway, together with other infrastructure projects, was funded from a loan of US$35 billion from Japan. Doubts have been raised whether India has enough capacity to support the port with considerable capital, especially if oil prices continue to rise due to US sanctions.

The withdrawal from the nuclear deal jeopardise not only the viability of the port, but also the implementation of projects promoting connectivity with Afghanistan and Central Asia, and India’s access to them. The United States will not let Iran use the multi-mode network, as the USA is aware that trade with Central Asia facilitates Tehran’s nuclear programme and the development of ballistic missiles, and contributes to Iran’s increased military footstep in Syria, Iraq, Lebanon and Yemen.

The USA’s policy on Iran, owing to increasing inflation and unemployment, is likely to compel people to protest against the government in Tehran – as they did in last December – and the United States will extend support to the protesting people to create political instability and weaken the power of the regime. Furthermore, some anti-Iranian hawks, such as National Security Adviser John Bolton, have advocated a military attack on Iran. Although this kind of scenarios must be handled with reservation, the possibility of proxy wars – for example in Syria – should not be ignored, not only because of the United States, but because in the case of such confrontation Israel and Saudi Arabia are very likely to increase efforts to curb Iran’s influence in the region.

This geopolitical game is also threatening India’s strategic autonomy. Although New Delhi has been successfully manoeuvring between the United States, Israel and Saudi Arabia and Iran and Russia, the region’s current geopolitical turmoil makes strategic partnerships maintained simultaneously with the two opposing blocks difficult. This reduces confidence in India, which makes Chabahar a delicate issue. Despite developments, India is not given a privileged place in Iran’s foreign policy, which is becoming ever more obvious with the attempt to adapt to changes in the geopolitical environment. In order to prevent Pakistan from pivoting openly to the regional block led by hostile Saudi Arabia, Tehran has assured Islamabad that it will not let New Delhi or any other country use the port against Pakistan. Furthermore, the possibility that Pakistan could join the project in the future has also been raised. In May, 2016, the same year as Iran signed a trilateral agreement on Chabahar with Afghanistan and India, Iran’s ambassador to Islamabad said that the agreement had not been closed, that is, it was open to other states. Then he added that Iran regarded Pakistan as its friend, and China was also welcome. During his three-day visit to Islamabad in March this year, Iranian Minister of Foreign Affairs Javad Zarif invited the two countries to participate in the Chabahar project.

Iran’s offer to the two countries that are hostile towards India to join Chabahar reflects its trust deficit with New Delhi. On the one hand, Iran is afraid that India will cease developments under US pressure, which is a likely scenario if the USA forces New Delhi to choose. On the other hand, even if this did not happen, Iran seeks to prevent India, enjoying support from the USA, from obtaining any kind of monopoly, therefore it tries to dilute New Delhi’s influence by inviting Pakistan and China.

Islamabad has been pleased to receive the offer, which also suggests linking the two ports with sea and land routes. The Chairman of Gwadar Port Authority said that the two countries are already discussing a new ferry service that would link Chabahar and Gwadar, and there is a memorandum of understanding to promote the further convergence of the two “sister” ports, the objective of which is to make better connectivity and the economic cooperation under the umbrella of the China-Pakistan Economic Corridor mutually beneficial for both countries.

Inviting China is even more important than cash-trapped Pakistan, especially in the light that Indian developments and the amounts promised have been continuously in delay in recent years, and New Delhi is unable to give a completion date. There is also a two-year dispute over whether India would pay US$30 million of excise duties on port equipment imported into Iran. Moving closer to China makes sense for Iran, which wants to ensure Chabahar is an economic success. Beijing is Iran’s number one trading partner and largest foreign investor, filling the funding vacuum caused by US sanctions. China has already implemented several infrastructural projects successfully: it has built the metro network in Tehran, provided US$1.5 billion for the electrification of the Tehran-Mashhad railway line, provided a US$10 billion credit line to Iranian banks, and the China Development Bank signed preliminary deals with Tehran for US$15 billion in infrastructure and production projects. Iran is an important player in the almost US$1 trillion “One Belt, One Road“ initiative, thus it is not surprising that Beijing seeks to increase its presence in the country. The Asian giant has already indicated its intention to cooperate with Tehran despite sanctions, as it is interested in replacing American products with Chinese ones.

Although China has not as yet given an official response to the invitation, which also includes participation in the construction of free trade zones and the Zahedan-Chabahar railway line, it is known that China, Pakistan and Iran have already started discussions about the Chabahar project through trilateral dialogue, which was attended by diplomats, scholars and officials. If realised, it will lead to the weakening of India’s position, since Chabahar’s role in gaining access to Central Asia may diminish for New Delhi, especially if Tehran joins the China-Pakistan Economic Corridor, in which it has been taking growing interest. India would lose influence not only in Chabahar but also in the Indian Ocean region, from Sri Lanka and the Maldives to Nepal and Bhutan. India can hardly compete with Chinese investments and expansion, and Beijing, which is aware of New Delhi’s emerging claims for power, is playing into that. Although the Chinese economy is well ahead of the Indian one, the Asian giant seeks to bring New Delhi under supervision – even though not to keep it away from Central Asia – by involving it in the “One Belt, One Road initiative dominated by China.

Those who can see Chabahar as a rival to Gwadar are possibly too optimistic. Gwadar’s natural layout and depth enable the ships of such sizes to dock there which Chabahar is unable to receive. There are significant differences regarding goods traffic: whereas the maximum planned capacity of Chabahar is 20 million tons per annum, that of Gwadar will be 400 million tons once it reaches complete capacity, outstripping all of India’s 212 ports that collectively handle 500 million tons a year. In order to develop the capacity of the port, China plans to equip the port with 100 berths till 2045 – by comparison, Chabahar currently has ten. Developments are not limited to the port itself; without being exhaustive, the construction of an oil refinery, a floating liquefied natural gas facility, a hospital, an international airport and the Gwadar Special Economic Zone have been already completed or are currently underway. China invests much larger amounts into Gwadar, an important hub of the CPEC, than India does in Chabahar. In addition, the port has been officially leased to China until 2059, which does not only mean that China can ensure its energy import more easily, but can also observe the naval manoeuvres of the USA and India in the Indian Ocean and the Persian Gulf. By contrast, there are no signs of military presence or an Indo-Iranian naval cooperation in Chabahar.

Two other aspects of the changes in geopolitics, also working to Beijing’s advantage, are worth highlighting. One of them is the relations between Russia and China, and Russia and Pakistan. In recent years, Russia has tried to pursue closer ties with Beijing by several strategic agreements, although it would be of key importance for India that Moscow should stand with them in a dispute with China. Moving closer to Beijing involves selling weapons systems, which is much more dangerous than selling natural gas for thirty years and poses an imminent and direct threat to India’s security. Moscow and Islamabad’s security partnership is becoming an increasingly visible phenomenon in the South Asian geopolitical environment. In addition to the sales of weapons and anti-terrorism military operations, the two countries have also held a joint military exercise, and Pakistan happens to support Afghan peace talks intermediated by Moscow.

This leads to the other issue, Afghanistan. This is not only about the cynics’ claim that the Zaranj-Delaram motorway, built by India, is now being mainly used by the Taliban, and Afghanistan’s political and security instability poses a threat to the success of developments, but also about Pakistan’s footstep increasing in Afghanistan due to the withdrawal of the nuclear deal. It is very possible that Iran will put more pressure on the Afghan government to bow down to the regional vision of a power-sharing deal with the Taliban to end the Afghan conflict. In addition to the Taliban’s support, economic sanctions threatening the success of Chabahar are also favourable to Islamabad, which means that Afghanistan will have to lean on Pakistan again to gain access to the international market. Under such a scenario, Kabul is not likely to perceive enough economic benefit from Chabahar to retain its interest also in this project amidst Chinese temptations and the CPEC. Thus, Chabahar’s success depends on a more complex geopolitical game, thus India is in a very difficult position to make use of the port to serve its own geopolitical interests and major power aspirations.


Creating connectivity and economic integration with landlocked Afghanistan and Central Asia is a cornerstone not only for India’s economic growth, but also for its stability, New Delhi’s regional major power aspirations and a counterbalance to China. India sees a potential opportunity in Chabahar to bring about fundamental changes for its benefit in achieving foreign policy objectives. Its realisation, however, depends on a multi-player, broader geopolitical game, in which the United States does not back India. Donald Trump’s decision to withdraw from the Iranian nuclear deal has put New Delhi in a vulnerable situation, in which the assumption that Chabahar, by offering an India-dominated alternative, will once counter China’s influence exists only on paper. Although it is not worth drawing far-reaching conclusions, the withdrawal from the nuclear deal is expected to accelerate – even though not to trigger in itself – a process in which India is losing ground to China

The invitation of Pakistan and China to participate in the project reflects India’s diminishing strategic extension. Although New Delhi’s developments implemented so far should not be underestimated, rivalry with Gwadar mostly remains speculative. Although Tehran has not expressed the wish to join the CPEC yet, if once it decides so, Chabahar could also become part of the China-dominated corridor. This does not mean that India could not profit from the port and its benefits, but it would need some political fine-tuning. It would need a shift in which its geopolitical and geoeconomic goals complement rather than replace each other.

Author: Alexandra Mogyorósi


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