Chabahar Port – A Gateway to Golden Opportunities.

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Context: India has formally taken over operations of Iran’s strategic Chabahar Port.

Relevance:
Prelims: Current events of national and international importance.
Mains: GS II-

  • India and its neighborhood- relations. Bilateral, regional and global groupings and agreements involving India and/or affecting India's interests Effect of policies and politics of developed and developing countries on India's interests, Indian diaspora.

Where is Chabahar port?

  • It is located on the Makran coast, Chabahar in southeastern Iran.
  • Its location lies in the Gulf of Oman. This coast is a relatively underdeveloped free trade and industrial zone, especially when compared to the sprawling port of Bandar Abbas further west. Also, it is the only Iranian port with direct access to the ocean.

Chabahar and India A History:

  • Historically India and Iran (then Persia) have a great shared cultural history.
  • Before partition, Iran was very close to India. Later on, due to ongoing animosity with Pakistan India failed to get a proper foothold in Iran and relations drifted apart.
  • In 1970, the then Shah of Iran planned to construct a naval base and signed an agreement with Americans.
    • But in 1977 due to a rift within OPEC Iran was strapped of cash and later on due to the 1979 Iranian Revolution the Americans left midway.
  • Though the strategic significance of the port was realized during the Iran-Iraq war of 1980 and many vied for completing the Port but it was not until 2003 that India-Iran signed an agreement to develop two additional berths at the port and saw it as purely a trading port but never took off due to the geopolitical climate of that time the project only got a new lease of life in 2016
  • India signed a new agreement to refurbish two of the berths and construct a new cargo facility there and India has realized its potential only after the perceived threat of the $45billion Gwadar-Kashgar economic corridor(CPEC).

Why this port is of interest to India?

  • Geo-Political Importance:
    • Chabahar geopolitical significance rises considerably as it is also a gateway to INSTC (International North-south Transport Corridor).
    • It will boost India's presence in the region and hence this strategic project has been pursued by India in the right earnest.
    • Chabahar port will also act as a check for increasing Chinese presence in the Arabian sea as China is heavily involved in the construction of the Gwadar, a deep seaport in the Balochistan area of Pakistan.
    • The location of Chabahar and Gwadar ports in close vicinity of each other underlines the intense competition between India and China in the region with Pakistan siding with the Chinese.
    • India's spirited efforts in the development of Chabahar port underscores the point that on the strategic chessboard of geopolitical competition India is not to be left far behind.
    • The chances of an extension of ties to Indian Iran military cooperation is also possible and will be highly beneficial to counter the Chinese navy in the Indian ocean too.

  • Economic Importance:
    • Costs of imports of products like iron ore, oil, sugar, and rice to India will be significantly lowered.
    • A study commissioned by the Ministry of Commerce has found that the cost of imports via Chabahar port along with INSTC is 30% cheaper than those via Mediterranean-Suez route.
    • Economic ties between India and Afghanistan which were in limbo due to political uncertainty will significantly improve once Chabahar is completely operationalized.
    • India will link Chabahar port to Zaranj-Delaram highway in Afghanistan and is keen on developing a rail link there with the cooperation of Iran.
    • India will also be developing various industries(aluminum and urea plants) in the Chabahar Economic Zone.
    • The port will allow India to bypass Pakistan to transport goods to Afghanistan and Central Asia using a sea-land route.
    • Chabahar Port lies in the Persian Gulf in Iran and will help India in expanding its maritime commerce in the region.
    • It also provides opportunities for Indian companies to penetrate and enhance their footprint in the region.

  • Diplomatic Importance:
    • Chabahar port can be used by India to launch humanitarian operations in Afghanistan and also in Horn of Africa regions.
    • The Zaranj-Delaram highway constructed by India can be an access point to four major cities in Afghanistan namely Kabul, Heart, Kandahar, and Mazar-e-sharif which can be accessed via the Garland highway in Afghanistan.
    • Keeping this geostrategic significance India s transport minister Shri Nitin Gadkari has termed the port as 'a gateway to golden opportunities'.

International North-South Transport Corridor (INSTC),

  • It is multi-modal transportation established on 12 Sep 2000 in St. Petersburg, by Iran, Russia and India for the purpose of promoting transportation cooperation among the Member States.
  • This corridor connects the India Ocean and the Persian Gulf to the Caspian Sea via the Islamic Republic of Iran and then is connected to St. Petersburg and North Europe via the Russian Federation.
  • The INSTC was expanded to include eleven new members, namely: the Republic of Azerbaijan, Republic of Armenia, Republic of Kazakhstan, Kyrgyz Republic, Republic of Tajikistan, Republic of Turkey, Republic of Ukraine, Republic of Belarus, Oman, Syria, Bulgaria (Observer).

 

Trilateral Agreement:

  • India, Iran and Afghanistan sign a three-way land transit agreement on Iran’s strategic southern port of Chabahar.
  • Under the agreement, India will invest up to 500 million dollars in a deal to develop a strategic port in Iran.
  • It can spur the unhindered flow of commerce throughout the region and its economic fruits will expand trade, attract investment, build infrastructure, develop industry and create jobs.
  • India will get sea-land access route to Afghanistan bypassing Pakistan which will open opportunities for Indian companies to explore Afghanistan’s mineral wealth.

US Sanctions:

  • US has imposed unilateral sanctions on Iran after pulling out of the P5+1 deal.
  • US is also threatening other nations who import oil from Iran and have links with Iran.
  • India is looking for an exception on the Chabahar project as it is strategically important to India.
  • US had granted an exception for the development of Chabahar port.

New India-Afghanistan Trade route launched:

  • Afghanistan has launched a new export route to India through the Chabahar Port of Iran.
  • This route allows both India and Afghanistan to engage in trade bypassing Pakistan.

Benefit to Iran:

  • As India is Iran’s largest customer hence the memorandum will help to increase economic growth and investment.
  • It will provide regional growth and prosperity by employment generation and GDP growth.

What are the concerns?

  • Sanction waiver :
    • The Chabahar port has received a temporary waiver from the U.S. sanctions on Iran.
    • But these concessions could be withdrawn any time, given the constant upheaval in the U.S. administration.
  • Security:
    • The possibility of the withdrawal of U.S. troops from Afghanistan will add to security concerns for Afghanistan and impact on the Chabahar route as well.
  • Pakistan Factor:
    • The reconciliation process with the Afghan Taliban is likely to see the regional powers and the countries like U.S. and Russia engaging Pakistan more.
    • This could give Pakistan a space to play spoiler in Chabahar, which sees it a rival water port to the Gwadar port in Pakistan.
  • Trade diversion :
    • The Afghanistan government is also hedging its bets on trade via Chabahar.
    • In recent months, Afghanistan has opened special cargo corridors with China, Kazakhstan, Turkey, Europe, Russia, the UAE, and Saudi Arabia.
    • This shows that more trade was diverted through these countries than with its traditional partners such as Pakistan and India.
    • With Chabahar, India has done well to keep a place in the intricate connectivity network of the region.
    • However, it will require sustained and nuanced diplomacy to stay ahead in this game.

Conclusion:

  • On October 29, 2017, India shipped the first of its six installments from Kandla to Afghanistan via Chabahar. The shipment was part of India s commitment to send 1.1 million tons of wheat to Afghanistan on a grant basis which was signed in 2016.
  • On the whole, the Chabahar agreement represents an open door towards more future cooperation on issues such as security, energy, trade, culture, etc.
  • For Iran, the development of Chabahar port will have a multiplier effect on the growth of its economy and boost foreign investments in the country via trade and infrastructure growth.
  • Thus, it can be safely concluded that despite the challenges Chabahar indeed will serve as a Gateway to Golden opportunities especially once it is linked to INSTC.



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