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India's Chabahar challenge: Is China putting paid to New Delhi's connectivity plans?

The Chabahar connectivity project envisages uninterrupted access and movement of goods and services via the sea route and road-rail facilities, making it cost-effective, convenient, and feasible for all parties and boosting the regional economy, writes Vishakh Krishnan Valiathan for South Asia Monitor 

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The geographical disadvantage, globally, for the landlocked countries, has been that of not having a seaport serving innate strategic interests. The Chabahar Port, in southeastern Iran's southernmost city, on the Gulf of Oman, is considered to be a golden gateway, which would not only pull Afghanistan out of its geographical impasse but also help India by connecting it with the uranium/gas-rich Commonwealth of Independent States (CARs). India’s development of the terminals at Shahid Beheshti port at Chabahar not only facilitates their strategic interests but also serves as an opportunity to access and expand its trade links to the far-fetched neighbourhood. 

The first consignment of wheat from India was transited in 2017 via the Chabahar Port to Afghanistan. Since then, there have been a few consignments in the last two years. Recently, India shipped consignments carrying medical supplies and 75,000 tonnes of wheat to support Afghanistan’s fight against the COVID-19 pandemic. Amidst these developments, the growing closeness between Iran and China seems to overshadow India’s aspirations in the region.

Since the tripartite treaty between India, Iran, and Afghanistan was signed in May 2016 for economic cooperation via the Chabahar Port, the journey experienced various hiccups but still seemed to be promising. There were many hindrances over time, be it the US sanctions, the tensions between the United States-Iran in the Strait of Hormuz, the Afghanistan peace process, and so on. However, the brighter side was that the US had exempted the port’s development from the sanctions  - keeping Afghanistan in mind - and even permitting India to purchase equipment for the facility amidst the situational crisis. 

Recently, India had smoothly completed 18 months of operations at the port. At the same time during the first week of July, Iran’s move towards linking Chabahar with the Free Trade Zone (FTZ) was also welcomed. The second phase of the rail project connecting Chabahar to Zahedan was decided to re-commence providing a boost to the connectivity up to Turkmenistan. Zahedan is the provincial capital of Sistan-Baluchestan region, and from Zahedan, the rail link is envisaged to go up to Sarakhs at the border with Turkmenistan and further to Zabul and Milak, bordering Zaranj in Afghanistan. 

The China factor 

In a surprising move, Iran dropped India from the Chabahar Rail Project, citing delay in funding. Instead, it would be using the $300 million from its development fund. It seems like Iran has roped China in for the project as reports are claiming that both have clandestinely signed a 25-year strategic pact. China plans to invest $ 400 billion in various areas including core petroleum and infrastructural projects in the Persian state’s economy. More importantly, China is considering investing militarily in Iran envisaging joint exercises, joint training, and even in the research and development of advanced weaponry.

This was expected at some point as the Iranian economy has been deteriorating since the re-deployment of US sanctions. With the pandemic hitting hard with falling forex and higher unemployment rates, Iran needed more investment in the private sector and the pumping of more liquid cash into the economy. In this scenario, any nation that could support the revival of Iran’s domestic economy would be China. In the last year or so, the bonhomie between the two has moved to a newer level as both have a common strategic challenge - the US. Being an oil economy, Iran’s only major customer since the sanctions was China and now, with the new pact, China would be assured of receiving oil and petroleum products at cheaper rates. 

Iran would also be a critical pivot for China’s plan of connecting Europe with the Belt and Road Initiative (BRI). China would be willing to invest in the Chabahar port as many companies have already shown keen interest in the FTZ and, later linking Gwadar Port in Pakistan with Chabahar, a distance of 170 km, hampering India’s hard work to date. The growing Chinese presence in Pakistan and southwest Asia is not a good sign for India, especially at a time when tensions are rising with both China and Pakistan.  

Dropping India from the rail project is a matter of grave concern, given that it is a promising project with larger ambitions of regional connectivity. Funding has been a drawback, although timely allocations were made, the delay in execution and utilization had been minimal. Over the years whenever Iran comes up with a proposal or any invitation regarding this project to other interested nations, India reminded its interest every time, either through a fund allocation or any technical execution in the short run. Moreover, Iran has shown patience with India over the projects, though it seems like they expected proper execution, which may have paved the way for China.

Connectivity setback 

If the rail link project is lost, India's ambition of a connectivity route to  Afghanistan and CIS would receive a setback. The Chabahar connectivity project envisages uninterrupted access and movement of goods and services via the sea route and road-rail facilities, making it cost-effective, convenient, and feasible for all parties and boosting the regional economy. A major loss would be that of connecting Afghanistan while bypassing Pakistan. The cost-effective route would have played a pivotal role in the possible expansion of India’s trade relations with the CIS - as previously it was possible only via China or Europe - reducing the logistics costs by 20 percent. However, hope should not be lost.

At a time when the world is fighting the pandemic, India is at the forefront by providing medical supplies and equipment at cheaper prices or as gifts, even delivering to Iran and Afghanistan. There is a conscious need to safeguard India’s regional strategic interests and to bank on more investments in the region, considering the challenges around its periphery in recent times. Indeed, there is still time to convince Iran and involve India back into the project by using diplomatic channels. 

India must know that in international relations and diplomacy, no country is a permanent friend. In the current era, all relationships are backed by financial and strategic motives. Being a promising project, undermining of India’s aspirations in the development of the port and related infrastructure may be an understatement, as there were larger strategic motives at stake. 

(The writer is a Research Assistant, Centre for Land Warfare Studies (CLAWS), New Delhi. The views expressed are personal. He can be reached at vishakh94@gmail.com)

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