Why the Chabahar Port agreement kills two birds with one stone

  • Shishir Gupta
  • Updated: May 25, 2016 11:58 IST
With the Chabahar Port agreement, Prime Minister Narendra Modi has not only engaged with India’s long-term ally Iran but has broken through the strategic encirclement by China and Pakistan. (PTI Photo)

Atmospherics and verbal commitments may make for great photo-ops but the real litmus test of any foreign policy lies in getting down to brass tacks in terms of implementation. For Prime Minister Narendra Modi, this has been an article of faith. This is why when he took over in 2014, he reviewed India’s commitments to projects in the neighbourhood, particularly in Afghanistan and Bhutan with a view to getting them up and running. Cost over-runs and delays plagued many of them, particularly the Punatsangchu Hydroelectric Project in Bhutan. While the strategic significance of this cannot be underestimated, two other projects hobbled by the same problems caught his eye — the Chabahar Port in Iran and the Salma Dam Project (42 MW) at Herat in Afghanistan.

Situated 72 km west of the Pakistan-China joint venture Gwadar port and on the mouth of the Persian Gulf, the Chabahar Port made its first appearance on the India-Iran bilateral map during the previous NDA regime in 2003.

The Manmohan Singh government understood the significance of the Chabahar Port. But it was shackled by fear of the US sanctions and its impact on the 2005 civilian nuclear agreement. It approved India’s investment only about a decade later when the Iran-US rapprochement became a real possibility. Modi inherited these impediments when he took office. To complicate matters, the Iranians tried to change the joint-venture partner which had been approved by the UPA.

Read | 3-nation Chabahar port pact to be signed as Modi visits Iran next week:

To get the project moving, Modi set up the NDA government’s first informal group of ministers comprising finance minister Arun Jaitley, transport and shipping minister Nitin Gadkari and petroleum minister Dharmendra Pradhan with the National Security Adviser, Ajit Doval, as its coordinator. Last May, Gadkari sealed the Chabahar Port MoU with the Iran Ports and Maritime Organization, promising $85 million direct investment and $150-million credit for its development.

Today, one year later, Modi will sign the Chabahar Port contract and a Trilateral Transit Trade Agreement with Iranian President Hassan Rouhani and Afghanistan President Ashraf Ghani. The contract promises an enviable number of benefits from the development and operation of two terminals and five multi-cargo berths at the Chabahar Special Economic Zone. This could become India’s trade, transport and energy hub in the coming decade. Incidentally, Modi will dedicate the Salma Dam Project in Herat next month, which is part of a rehabilitation and reconstruction project announced in 2001.

Read | India responds to a changing West Asia

The Chabahar Port will be a game changer for India because it will provide connectivity to Afghanistan, Iran and Eurasia, strategically outflanking an intransigent Islamabad. It is also a counter to the China-Pakistan Economic Corridor (CPEC). Foreign minister Sushma Swaraj’s interest in connecting Iran’s Mashhad, near the Caspian Sea, with Zahedan, next to the Afghanistan border, via an India-built 900-km rail line with the Chabahar Port will unlock a new gateway to Central Asia and Europe, bypassing the Pakistan-China arc.

Through a Tripartite Trade and Transport Agreement, India plans to link with the Afghan highway through the Zahedan-Zaranj-Delaram route in Nimroz province to shore up Kabul and also open trade routes with Central Asian (CA) republics, particularly Tajikistan.

Read | India to invest $20 billion in Iran’s Chabahar port development

During his trip to the five Central Asian republics last year, Modi laid the foundation for India’s entry into the Oman-Iran-Turkmenistan-Uzbekistan Ashgabat Agreement, a multimodal deal, for transporting natural gas to the Chabahar Port, and from there through LNG ships or pipelines for energy-hungry India.

Modi intends to bring back more than the port agreement from Iran. He may also sign a contract to invest more in the Farzad B gas field, which has a potential of 9.7 trillion cubic feet of gas, which could fire the joint-venture urea fertiliser plants in the Chabahar SEZ.

India can also join the North-South Transport Corridor (NSTC) through Mashhad for trade connectivity to Russia and Europe via the Baltic states. According to NSTC studies, this route saves 60% time and 50% cost compared to the traditional sea route from India to Europe.

The Chabahar Port fits as much into Modi’s plans for energy security as with his maritime security grid with the port sitting astride the vital sea lanes of communication that supplies nearly 55% of the hydrocarbon needs of the South-East and North Asian countries, including China and Japan.

Modi’s reached out to US President Barack Obama, Russian President Vladimir Putin and Japanese Prime Minister Shinzo Abe to address India’s maritime security concerns in the Indian Ocean and the Pacific, particularly in the contentious South China Sea.

India plans to extend its maritime reach in the area between the Persian Gulf and the Pacific with the proposed development of a deep sea port in the Andaman and Nicobar Islands with Japan’s help and the logistics support agreement with US.

Foreign policy should be the driver for economic development and this is what has been achieved with regional connectivity on India’s eastern board: Last June, New Delhi signed the Bangladesh-Bhutan-India-Nepal trade and transport agreement as part of the Saarc connectivity initiatives, even though ties with Kathmandu are yet to overcome the legacy of the previous UPA regime.

The outreach to Pakistan was based on pushing regional connectivity and a trade transit corridor to Afghanistan via the Khyber Pass. But what would have been an economic win-win for both countries has yet to fructify thanks to the fact that Pakistan Prime Minister Nawaz Sharif’s decision is still at the mercy of the army and the terror groups it backs.

Public sentiment often drives India’s Pakistan policy. But Modi, unlike his predecessor, grasped the nettle and reached out to Sharif by travelling to Raiwind in Pakistan in December. It was a brave bid to normalise ties. This was done after India supplied four Mi-25 attack helicopters to Afghanistan after mulling over what its ramifications could be for over a decade.

Instead of talking about a pan-Asian trade connectivity, Pakistan is refusing to cooperate on the terror issue.

With the Chabahar Port agreement, Modi has not only engaged with India’s long-term ally Iran but has broken through the strategic encirclement by China and Pakistan. If the future of strategic discourse hinges on maritime trade and security, India is sailing in fairly calm waters for the moment.

Views expressed are personal.

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