Twenty-first century India and China are looking beyond their disputed state frontiers and competing to build road and rail links, or oil and gas pipelines, in foreign countries, and to keep a watchful eye on international sea routes. The lifting of international sanctions against Iran last January raised the curtain over the complex and expanding Sino-Indian great game in Asia.
Home to the world’s second largest gas reserves and one seventh of its oil, Iran, a West Asian power with a population of 80 million, has much to offer energy-hungry India and China. As it recovers from the adverse effects of several years of American-led economic sanctions, Iran welcomes foreign investment, technological support and infrastructure upgrades from India and China to sustain its economic revival.
Why is India thinking west – to Iran?
To counter its archrival China economically and politically, India is already “Acting East” by strengthening economic and defense ties with East Asian countries. A more recent concept, as S. Jaishankar, India’s Foreign Secretary, told a conference in New Delhi in early March, is that of “Thinking West.” ‘Normalization of the situation in Iran is particularly welcome’, he said. That underlined the construction by India of the Chabahar port in south-eastern Iran and strengthening trading ties with Iran.
The significance of the Chabahar project should not be underestimated, for India has not started any comparable ventures in Southeast Asia. Sino-Indian competition in the Arabian Sea has sharpened since 2013, when Pakistan gave China control over Gwadar port. China now has a permanent presence in the Indian Ocean and Persian Gulf and can monitor Indian and American maritime and naval activity in those international waters.
While India intends to use Chabahar primarily for commercial purposes its interest in constructing the port mirrors its wish to counter China’s strategic vantage point in Gwadar.
Chabahar and Gwadar now symbolize the Sino-Indian rivalry in the Arabian Sea, Indian Ocean and Persian Gulf.
Wanting to increase Iranian energy imports and involved with several projects in Iran, India hopes to make Chabahar fully operative by the end of this year. In May 2015 India and Iran signed a Memorandum of Understanding for India to construct the strategically important port which would pave the way for India to gain access by land and sea to Afghanistan and Central Asia.
India’s development of Chabahar suits Iran. Tehran’s fears that China’s Gwadar project would weaken Iran’s position as the entrance to Central Asia prompted it to develop Chabahar with India’s help.
The interest in Iranian energy shows why India accords great importance to economic and strategic connectivity. The fully functional Chabahar port would help New Delhi to ignore Islamabad’s refusal to grant India and Afghanistan transit facilities through Pakistan. This absence of transit rights is the main barrier to India’s trade, energy flows and economic ties with Afghanistan and Iran – and more generally to West and Central Asia. To cross this barrier India wants to build a road running from Chabahar via Afghanistan to Central Asia. This Iran-Afghanistan route could help India to improve access to energy-rich Central Asian countries.
Eventually India envisages that Chabahar could be linked through rail and road networks to the International North South Transport Corridor (INSTC), a multinational project started in 2000 by India, Iran and Russia. But the INSTC needs to be developed if it is to fulfill New Delhi’s hope that it will become the shortest and most economical route from India through Iran and Afghanistan to Central Asia and Europe. Transport costs and freight time from India to Central Asia could be cut by about a third via Chabahar. The port would also provide India with a transit route to Afghanistan. And it would give landlocked Afghanistan an outlet to the sea – an outcome that is favored by the U.S., which was once determined to isolate Iran. India sees its Chabahar project as a potential game changer in West and Central Asia, running parallel to China’s East-West Silk Road.
But China has a head start in Iran. Unlike India, China defied US nuclear sanctions on Iran and bought nearly half of its oil exports. Beijing’s courtship of Tehran saved Iran from international pariah status. That courtship enabled Chinese firms to occupy the space vacated by Western companies that had grown nervous about international pressure on Tehran. China gained uncontested access to Iran’s energy resources.
So when the US and other permanent members of the UN Security Council reached, in April 2015, a preliminary agreement to end sanctions on Iran, China was Iran’s largest trading partner. Bilateral Sino-Iranian trade stood at around $ 50 billion. In contrast, trade between Iran and India amounted to a mere $ 13.13 billion in 2014-15.
India faces tough competition from China in Iran. Beijing’s offer to Tehran last November to develop Chabahar – six months after the signing of the Indo-Iranian MOU – shows that China remains keen to outflank India in Iran.
China’s construction of the economic corridor (CPEC) with its ally Pakistan is one reflection of its wish to enhance its strategic and economic competitiveness in Iran. That worries India, partly because CPEC passes through the contested territory of Pakistani Kashmir, which was the launch pad for recent Chinese intrusions into Indian territory. China has invested $ 46 billion in CPEC. Some of this money is being used to build a new pipeline which starts from the South Pars gas field in Iran. When completed, this pipeline would extend to Multan in Pakistan. The pipeline could help Pakistan to reduce its crippling energy shortages. Most of the 1172 km-long pipeline will run through Iran, which has already completed the pipeline on its side of the border with Pakistan. The Pakistani section of the pipeline remains to be built– so China’s investment in the pipeline will enhance its prestige in Tehran. For Iran is interested in extending this pipeline to China.
India faces an uphill climb as it tries to outmaneuver China in Iran. But India’s determination to upgrade ties with Iran and develop Chabahar with a view to strengthening its ties/connectivity with Afghanistan and Central Asian countries highlights the expanding parameters of the Sino-Indian great game in the rest of Asia.