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Chabahar: A Game Changer In Eurasia? – Analysis

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By Ashok Sajjanhar

The first phase of expansion of the Chabahar port, in south east of Iran, was inaugurated by Iranian President Hassan Rouhani on December 3, 2017. Located on the Gulf of Oman, it serves as Iran’s only oceanic harbour and consists of two separate ports named Shahid Kalantari and Shahid Beheshti, each of which have five berths.

The inauguration came just 18 months after the agreement to expand and upgrade the port was signed by Prime Minister Modi with Iranian President Hassan Rouhani in May last year. On the same occasion, a trilateral Trade and Transit Agreement between Iran, Afghanistan and India was also signed in the presence of leaders of the three countries.

To signify India’s keen interest in the early completion of the project, External Affairs Minister Sushma Swaraj made an impromptu stop-over in Tehran earlier this month, and met her counterpart, on way back from Sochi, Russia where she had gone to participate in the meeting of Heads of Governments of member countries of Shanghai Cooperation Organisation.

It is gratifying that the project that was taken up just about a year and a half ago has progressed at a brisk pace. Completion of the first phase implies that the capacity of the first berth has been increased from 2.5 million tons per year to 8.5 million tons. Capacity to handle ships has been increased from 40,000 tons haulage to 100,000 tons. This has provided a significant uplift to the handling capacity of the port. Critics and doubters who often express skepticism at the huge gap between commitment and delivery by India in completing projects have been momentarily silenced. People who are well- informed of the developments in the case inform me that more work was accomplished over the last 18 months than was done over the last 13 years! Need of the hour today is to continue apace with the same momentum to complete the rest of the project.

Background

The development of the port was first proposed in 1973 by the last Shah of Iran, though development was delayed by the 1979 Iranian Revolution. The first phase of the port was opened in 1983 during the Iran–Iraq War as Iran began shifting seaborne trade east towards the Pakistani border in order to decrease its dependency on ports in the Persian Gulf which were vulnerable to attack by the Iraqi Air Force.

India and Iran first agreed to further develop the Shahid Beheshti port, one of the two ports in Chabahar, in 2003, but did not make much progress on account of sanctions against Iran. As per the bilateral Agreement signed last year, India would refurbish one of the berths at Shahid Beheshti port, and reconstruct a 600 metre long container handling facility at the port. The port is ideally suited to provide an alternative for trade between India and Afghanistan as well as with Central Asia. This port is 800 kilometers closer to Afghanistan than Pakistan’s Karachi port. The terrain is also more even and easily navigable. The port handled 2.1 million tons of cargo in 2015, which has been upgraded to handle 8.5 million tons now. It will be increased to 86 million tons in future when all the ten berths are upgraded and expanded.

Current Status

In July 2016, India began shipping $150 million worth of rail tracks to Chabahar to develop the port container tracks and construct the $1.2-1.6 billion Chabahar-Zahedan railway. This is being  built by India’s Ircon International for which India pledged an additional $400 million and Iran allocated $125 million in December 2016. This took the total allocation to $575 million (out of $1.6 billion needed for the rail route) till the end of 2016. In October 2017, India’s first shipment of wheat to Afghanistan was sent through the Chabahar Port.

Chabahar has been termed a game changer by several strategic analysts and commentators. There are however many cynics who suggest that India will not be able to meet its commitments in the given time frame. In addition, it will not be able to compete with the Chinese juggernaut unleashed under its Belt and Road Initiative which is spreading its tentacles through Central Asia, Iran and up to Gwadar port via the so-called China Pakistan Economic Corridor (CPEC). India has proved these detractors wrong. The challenge is to continue to maintain the pace.

A game changer?

Renovation and operationalistaion of Chabahar will allow India to side-step Pakistan to reach Afghanistan and Central Asian countries. Thus far India has not been able to exploit the full potential of its ties with these countries as well as with Iran because it does not share a contiguous border with these countries. Pakistan refuses access to India by land to Afghanistan. It does not allow trucks and cargo from Afghanistan or Central Asia to come to India. According to the Trade and Transit Agreement signed between Afghanistan and Pakistan in 2010, Afghanistan can transport its cargo by its own trucks only to Wagah border between India and Pakistan. Thereafter the cargo has to be off-loaded and transported to different cities of India by Indian cargo vehicles. The Afghan trucks are not permitted to carry Indian cargo back to their country and have to return empty. This makes the whole operation time-consuming, expensive and inconvenient. Opening up of Chabahar will provide a quick, easy, cheap, fast and seamless access to Indian goods and cargo to Afghanistan and Central Asia.

The distance between Chabahar and Zahedan is 650 km via road and currently takes a travel time of about 7 hours. India is constructing a rail connection between these two stations. The Iran-Afghan border is a further 250 kms northwards with Zabol on the Iranian side and Zaranj on the Afghan side. Milak is the closest Iranian town to the Afghan border. Zaranj is a Trading and Transit Hub in western Afghanistan.  Zaranj is connected well with all major cities and towns of Afghanistan. Connectivity with Kabul is provided through the Zaranj-Delaram Road constructed by the Indian Border Roads Organization in 2009 at a cost of $135 million. It is one of the busiest highways in Afghanistan.

Completion of the rail connection with Zahedan will significantly improve connectivity of Chabahar with Afghanistan. In later years, rail connection between Zahedan and Zabol could also be considered. This will take the railway connect to the door step of Afghanistan, next to Zaranj. This will provide multi-modal connectivity of rail and road to Chabahar with Mashhad in north Iran and also to Herat in west Afghanistan. Turkmenistan which is connected by rail as well as two road border check-posts with Iran will also become easily accessible to cargo from Chabahar. Other Central Asian nations viz Uzbekistan and Tajikistan as also Turkmenistan will become accessible through Afghanistan. Kazakhstan the largest and currently the most significant trade and economic partner of India will be accessible for two-way trade through railway connecting Iran with Turkmenistan and Kazakhstan that was inaugurated in 2014.

Chabahar hence enjoys the possibility and potential of connecting India through Iran with Afghanistan as well as with Central Asia. This is invaluable for India not only in economic terms but even more importantly, in strategic terms.

It would enable India to maintain its presence and advance its interests in Afghanistan and also enhance its political, security, economic and strategic engagement with Central Asian nations. It is imperative to ensure peace and stability in Afghanistan to preserve peace and security in India. Central Asia is a part of India’s extended neighbourhood. It is vulnerable to impact and influence of Islamic fundamentalism by Islamic State of Iraq and Syria/Daesh. It can also prove to be highly critical to India’s energy security as the region is well-endowed with huge mineral deposits and natural resources like oil, gas, uranium, coal etc.

Some cynics have raised questions about the economic viability of the Chabahar project including the rail connection up to Zahedan. In addition to the trilateral trade and transit Agreement between Iran, Afghanistan and India in May last year, India has also applied for membership of the Ashgabat Agreement which includes OmanKazakhstan and Pakistan, Turkmenistan, Uzbekistan, in addition to Iran. This will permit seamless and smooth movement of cargo from India to all these countries and beyond. Potential of undertaking projects and conducting trade in commodities and manufactured goods is immense.

In addition, Iran has the second largest reserves of gas in the world, next only to Russia. Manufacture of fertilizers for the Indian market will be a win-win proposition for both countries. It will be extremely cost-competitive to manufacture this commodity. Transportation by sea from Chabahar for Kandla, Nhava Sheva  or Mumbai port in India would be quick, easy and cost-effective.

Some Pakistani newspapers and commentators have gleefully stated that  Pakistan Shipping Minister was purposely positioned next to President Rouhani during the inauguration of Phase I of Chabahar port. This was designed to send a clear message to India that Iran will not allow the port to be used against Pakistan. A statement to this effect was also allegedly made by an anonymous Iranian official. All these comments appear to be gratuitous and superfluous. India is not interested in scoring points over anyone or using the facility against the interest of any third country, be it Pakistan or China. India is quite aware that Iran has bought heavily into the Chinese Belt-Road Project. Also, Iran shares a long 909 km border with Pakistan. Notwithstanding periodic tensions and hostilities between these two countries, Iran would like to have cordial and friendly relations with Pakistan to the extent possible. India does not harbour any intention to use this asset in any untoward manner against any country. Its principle objective is to overcome the obstacles and hindrances placed by Pakistan in India’s path to have direct and seamless access to Afghanistan and Central Asian States.

Comparison between Chabahar and Gwadar at this juncture will not be appropriate. Currently Chabahar can handle 8.5 million tons of traffic annually with only one berth in operation. As against this, Gwadar can handle just about 1 million tons of cargo every year! Moreover Gwadar is located in Balochistan province of Pakistan which is highly unstable and violence-prone. Potential of development of hinterland of Gwadar port appears dim. On the contrary, hinterland of Chabahar is being developed as an industrial zone by India and Iran at a cost of  $8 billion.

Reports have appeared about interest of Japan to invest in the Chabahar project. That will be a huge shot in the arm for this venture and will further strengthen the strategic partnership between India and Japan to ensure an open, free, inclusive and prosperous Indo-Pacific.

Chabahar and INSTC

Chabahar needs to be seen in conjunction with the International North-South Transport Corridor (INSTC) which will get inaugurated in the middle of January, 2018 with the first consignment of cargo going from India to Russia via Bandar Abbas port in Iran. INSTC will not only help cut down on costs and time taken for transfer of goods from India to Russia and Europe via Iran but also provide an alternative connectivity initiative to countries in the Eurasian region. India’s ratification of international customs convention TIR (Transports Internationaux Routiers -Convention on International Transport of Goods)  in June, 2017 will help boost trade through INSTC and other corridors. It will be India’s second corridor after Chabahar to promote security and access resource rich Central Asia and its market.

Both Iran and India are keenly committed to completing the project on time.  Iran intends to give an impetus to the eastern part of the country, which is comparatively less prosperous, by development around Chabahar port, with a free trade zone, and road and rail links northwards. It plans to use Chabahar port as gateway to Central Asia and maintain Bandar Abbas port, which currently handles 85% of Iran’s seaborne trade, as a hub for trade with Russia and Europe.

Chabahar coupled with INSTC can indeed be a game changer for India’s strategic and economic goals in the Eurasian region. It will be a win-win proposition for all countries. Iran will be able to emerge as an even more influential player and play a pro-active role in promoting peace, security and stability in the region. All countries need to act in unison — Iran, Afghanistan, India, Japan, Central Asian States et al —  so that the rest of the Chabahar project, including renovation and construction of the other berths, railway track from Chabahar to Zahedan and beyond to Zabol, construction and development of the Economic Zone in the hinterland of Chabahar etc, are completed at the same pace as that of Phase-I.


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Observer Research Foundation

Observer Research Foundation

ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

One thought on “Chabahar: A Game Changer In Eurasia? – Analysis

  • August 14, 2018 at 7:18 pm
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    “Gwadar is located in Balochistan province of Pakistan which is highly unstable and violence-prone. ” And where is Chabahar located? Answer: Same Balochistan but on the Iranian side of the border, where not only are the Baloch violence prone but also have sectarian tensions with Shia Iran which is not the case in Pakistan. Also, Indians will have to deal with Taliban as Zabol/Ghazni is now Taliban country. So at least two different raging insurgencies have a veto on this Chabahar daydreaming!

    One wishes the Indian commentators would at least try to understand the lands they wish to influence ………

    Reply

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