Analysis: How Chabahar Survived US Sanctions?

By  Shoaib Rahim

STOCKHOLM,  Nov. 28 (Greenpost)–The United States imposed new sanctions, dubbed as toughest ever, on Iran on November 5. However, Afghanistan and India have received certain waivers from these sanctions. The exemptions allow India to continue to develop Chabahar port and construct its related railway link to Afghanistan’s border. Further, both Afghanistan and India would continue to import petroleum products from Iran. The exemption of Chabahar was stated to be related with the economic development, reconstruction assistance and humanitarian relief of Afghanistan. However, there are many reasons beyond Afghanistan factor that made the waivers less of a surprise.

In 2003, India agreed with Iran to make investment and develop Chabahar port in Iran on Gulf of Oman. However, the project was crawling owing to the US sanctions on Iran. In spite of US dissent, India went on to spend $135 million to construct Zaranj- Dilaram highway that links Kabul– Hirat highway with Chabahar port and completed it in 2009. In August 2015, sanctions on Iran were eased while tri- lateral agreement was signed among Afghanistan, India and Iran in May 2016.

The continued, albeit bumpy, progress on Chabahar port is not a surprise given its strategic significance. Chabahar occupies unique geo- political and geo- economic status in the light of regional and global politics. Chabahar competes with Chinese funded Gawadar port on the lines of strategic encirclement theory as well as provides gateway to India to reach Central Asia as part of its competition with China. Despite this, China has remained a strong supporter of the port due to its close political and economic ties with Iran. On the other hand, while US has continued to tighten the noose around Iran, it has had to show flexibility towards the project. This is mainly because these projects have potential to strengthen India geo- economically and geo- politically in line with its strategy to support India vis-à-vis China.

At present, President Trump’s Afghanistan and South Asia strategy announced in August 2017, underscored increased role for India in Afghanistan, which was warmly welcomed by both Kabul and New Delhi. Given the fact that India’s land route access to Afghanistan is barred by Pakistan, it is Chabahar that would provide a gateway to India to reach Afghanistan and ensure its desired economic and development assistance. In turn, Afghanistan would provide India land route access to Central Asia. These interventions align with the maneuvers to increase India’s influence in Central Asia to counter that of China in the region.

An important aspect in the India- US relations is the Russian factor. India has maintained delicate balance in its relations with Russia and the US. Despite close strategic bonding with the US, India has managed to preserve its historical economic, military and diplomatic ties with Russia amid turbulent US- Russia relations. For instance, the pendulum of India’s multi –billion- dollar arms trade with both countries swings either sides in spite of changing political- economic dynamics. Moreover, it was mainly Russia that pushed for the membership of India in Shanghai Cooperation Organization (SCO), an important regional platform. Therefore, any decision of the US that would restrict economic gains of India might affect India’s presence in current US orbit.

The waiver on oil imports granted to India also revolves around Chabahar. India is one of the top four oil importers world- wide while Iran ranks third on its list of suppliers. Therefore, in response to US pressure to cut oil imports from Iran to Zero by November 4, India made its intentions clear to defy and go against them, almost one month ahead of the deadline. Further, India’s stance to continue to buy oil from Iran at this critical juncture has implications for strengthening relations of the two countries and pave the way for long term partnership, including smooth implementation and operationalization of Chabahar.

Alternatively, India could have moved to other countries to meet its oil demand. However, Iran had already threatened that if India shifted to other countries as a consequence of sanctions on its oil trade, it would lose special privileges at Chabahar port. On the other hand, Afghanistan relies on Iran for transit route and imports including oil. The sanctions would might have disrupted trade and transit tries leaving a struggling Afghan economy in tatters. Hence, the exemption gives the country a sigh of relief.

Here, it is worth mentioning that China has expressed its support and interest in Chabahar from time to time. If Iran is frustrated with India at any stage and consequently engages China in Chabahar, it would severely dent the planned strategic gains of India around the project.

The unique strategic status of Chabahar earns it exemption from the toughest ever sanctions of the US.  However, the remaining sanctions would plague Iran’s economy. Therefore, while the project survives the sanctions, it would be hard for an economically weakened Iran to accelerate the pace and work together with India to fully operationalize the port and reap its economic gains.

Shoaib Rahim (Development Economics 2012) is an Afghan, Macro-economist, University Lecturer, TedX Speaker and Youth Activist. He founded ‘Gaheez – The Rising Afghanistan’, an initiative to engage youth in the development of Afghanistan.

The views expressed here only represents the view of the author.

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