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Iran: Chabahar Port

February 1, 2019

Iran: Chabahar Port

Chabahar Port and Major Stakeholders

Chabahar, one of Iran’s most strategically-located ports, is situated in southeastern Iran on the coast of the Gulf of Oman. It is Iran’s only port that has access to an ocean, and is comprised of two separate ports: Shahid Kalantari and Shahid Beheshti. The port’s cargo capacity as of 2016 is 100,000 tons. While countries like Japan and South Korea have offered to invest in Chabahar, it is arguably the Indian investment in the port that plays the bigger role. In 2016, India, Iran and Afghanistan signed a trilateral agreement, also known as the Chabahar agreement. This historic agreement foresees the development of the strategic port by India enabling Delhi to build a transport-trade corridor through Afghanistan that could halve the time and cost of doing business with Europe.

Strategically, the Chabahar route enables India to bypass Pakistan and access global markets to counter China’s proliferating influence in the Indian Ocean region. In fact, India has been very pre-occupied with Chinese funding for a strategic port in Gwadar, neighboring Pakistan, which is one of the reasons why New Delhi began negotiations with Tehran about more than a decade ago to safeguard the Indian sphere of influence . Accordingly, India’s EXIM Bank offered a $500 million line of credit to fund railway construction projects linking to Chabahar. Meanwhile Ircon international, a public sector company, has agreed to build a $1.6 billion railroad from Chabahar north to Zahedan, which is located on the Iran/Afghanistan border. However, the projected route’s Afghanistan leg linking to India remains a security headache for India. This, despite the fact that India has injected more than 2 billion dollars in various development projects in Afghanistan since the 2001 U.S.-led overthrow of Taliban’s government. While this trilateral agreement has deepened the ties between Iran, Afghanistan, and India, it has been viewed with suspicion by Pakistan. A week after the signing of the trilateral agreement on May 23, 2016, Pakistan’s former defense secretary, Asif Yasin Malik, stated that the alliance between India, Afghanistan, and Iran was a security threat to the country”.

In October 2017, India’s first shipment of wheat (130,000 tons) to Afghanistan was carried out through the Chabahar Port. The CEO of Afghanistan’s Chamber of Commerce and Industries (ACCI), Atiqullah Nasrat, expressed interest that in the future many Afghan investors were most likely to use this route.

 

India Taking Over the Operations in the Port in 2018

 As of December 2018, Iran formally handed over the operations in the port to India during a first meeting of the follow-up committee for the implementation of the Chabahar Agreement between Iran, Afghanistan, and India in the port city of Chabahar. This is a historic step as it marks the first time India has operated a port outside its borders. The port is to be managed by the state-owned India Ports Global Limited (IPGL). In the context of unilateral American sanctions against Iran, it should be noted that Washington had already exempted Chabahar port from the American sanctions in November 2017.

After India took over the operations at the port, it also started conducting regular shipments to ports in Mumbai, Kandla, and Mundra. Accordingly, the first such shipment comprising 3700 twenty-foot equivalent units (TEU) of Indian goods reached Chabahar at the end of January.

 

By Vahid Yucesoy

 

*Such arrangements are becoming part of the de-facto  statecraft, substituting coercive economic/military measures with strategic economic arrangements. MENA will witness more as China approaches the Gulf region.