In February, the government of India allocated funds from its foreign aid budget to support the development of a new deep water port in Iran. This has implications for the Indo-Iranian strategic relationship.
Over the past year, in light of the deal announced by Iran and the five permanent members of the United Nations (UN) Security Council plus Germany in July 2015 to curb the Iranian nuclear weapons programme in exchange for UN, US and European Union sanctions relief, the governments of India and Iran have worked to strengthen their bilateral ties.
Political efforts to this end include the Chabahar project, which involves the construction of a port and industrial complex in Iran’s free trade zone located on the Makran coast of the Persian Gulf, in Iran’s Sistan-Baluchestan province. The project, which had been on standby for years because of the sanctions discussed above and bureaucratic lethargy on all side, is now deemed a priority, albeit for different reasons, by both countries.
The government of Iran sees the Chabahar initiative as a way to developing its first deep-water port, capable of berthing larger ships than Bandar Abbas (which cannot receive ships exceeding 100,000 tons and therefore creating an alternative to the latter which is currently responsible for 85 percent of the country’s shipping, according to the World Maritime News media organisation. By virtue of geography, the project also constitutes a way for Iran to gain direct access to the Indian Ocean given that the port is positioned to the east of the Strait of Hormuz, particularly useful should this chokepoint be blockaded during a conflict. Moreover, the project could help increase the prosperity of the Sistan-Baluchestan province in eastern Iran, currently one of the least developed in the country.
The Indian government, on the other hand, views the Chabahar initiative as a way of monitoring Pakistan’s naval activities as well as the People’s Republic of China’s (PRC) expanding presence in the Arabian Sea. This is particularly the case since the port will be located only a few kilometres away from the Pakistan port of Gwadar, on that country’s southern coast, which is operated by the PRC’s China Overseas Port Holding firm, and which constitutes a vital part of the China-Pakistan Economic Corridor.
Furthermore, the Chabahar project provides an opportunity for both India and Iran to strengthen the Afghan government. This is because land routes between Afghanistan and Iran could be established to serve the port, allowing the Afghan and Indian governments to outflank the de facto Pakistan restrictions on the transit of Indian goods by land through Pakistan to Afghanistan.
During his visit to Tehran in May 2016, Indian Prime Minister Narendra Modi announced a plan to invest $500 million towards the project. This commitment was renewed in February 2017, when the India government allocated, for the first time, funds (about $20 billion) from its foreign aid budget to the Chabahar project, in addition to the commitment made by Mr. Modi in May 2016.
It remains to be seen, however, whether the two governments will commence the Chabahar project. The latest developments indicate a delay in the release of the allocated funds by India, mainly due to the fact that the Iranians have not submitted the paperwork necessary to release the funds, for no apparent reason. Should these challenges be overcome, there are still security threats to the project: sites along the area in which Chabahar will be built have suffered attacks by Jundallah, a militant organisation based in Sistan-Balochestan. Given the situation, it continues to be unclear when the project will be completed and the port finally opened.