Iran Transit – Analysis

By C. Raja Mohan

Senior officials from India, Iran and Afghanistan meeting on the margins of the NAM summit in Tehran on Sunday have agreed to promote an ambitious trilateral economic partnership.

A joint working group (JWG) of the three countries will soon meet to find ways to expand trilateral trade, transit and investment cooperation starting with the Chabahar port on Iran’s southeastern coast.

This is an important step forward, but there is a long way to go before Iran’s Chabahar becomes India’s gateway to Afghanistan and Central Asia.

For India, going to Afghanistan through Iran is like holding your nose by wrapping your arm around the head. India’s natural access to Afghanistan is through the Khyber and Bolan passes. Today, both of those are in Pakistan.

Islamabad lets Afghan goods traverse Pakistani territory into India, but it does not give New Delhi overland transit facilities in the other direction.

Pakistan’s civilian leaders and businessmen see the logic of offering India the full transit rights and benefiting from it. But for the Pakistan army, allowing India to deepen its commercial presence in Afghanistan is a big political taboo.

That leaves Delhi with no option but to explore the more circuitous route to Afghanistan through Iran.

US Concerns

India’s search to deepen regional economic cooperation with Iran will indeed raise some political hackles in Washington. But Delhi can’t simply abandon its engagement with Iran, which will always be an important part of India’s neighbourhood and a critical factor in shaping the future of Afghanistan.

To be sure, the Obama administration appreciates India’s need for physical access to Afghanistan. Over the last few years, Washington has indeed urged Pakistan to offer transit facilities to India.

Washington hoped that the trade and transit treaty signed by Pakistan and Afghanistan in June 2011 would be extended to include India.

Promoting the development of trade and transport corridors among Afghanistan, Pakistan and India has been central to the US strategy of building a “New Silk Road” connecting the subcontinent with Central Asia. But Rawalpindi is yet to be persuaded.

Chabahar dreams

The idea of developing Chabahar as a regional commercial hub was first discussed when Iran’s President Mohammed Khatami came to Delhi as the chief guest for the Republic Day celebrations in January 2003.

It has taken nearly a decade to begin serious talks on the project. Sunday’s trilateral agreement to establish a JWG underlines the procedural framework for the negotiations.

The high politics of Chabahar and the fine print on the terms of engagement remain to be sorted out before Delhi commits big money for the project.

Investing in the port becomes attractive to India only if Tehran lays out a reasonable framework for moving goods in and out of Afghanistan through Chabahar. It was no surprise then that the three key words in Sunday’s joint statement are, “transit”, “trade” and “investment”.

That a trade and transit agreement would benefit Delhi, Tehran and Kabul is not in doubt. Landlocked Afghanistan will be able to reduce its current complete dependence on Pakistan’s territory for access to the Arabian Sea.

Delhi will gain an indirect but reliable physical access to Afghanistan. This in turn will allow Indian companies to participate in the development of Afghanistan’s mineral resources.

India, for example, has won the rights to develop the iron ore deposits at Hajigak in Afghanistan. If there is a sustainable transit deal with Iran, India’s plans to invest $11 billion in the project, which will include the building of a steel plant and other associated infrastructure, will become more viable.

Iran can turn Chabahar into a logistical hub, make money on goods moving through its territory, and accelerate the economic development of its eastern provinces.

But converging interests do not always translate into effective cooperation between countries. Nor is it easy to convert lines on the map into projects on the ground.

India is approaching Chabahar from the perspective of accessing Afghanistan. While Afghanistan is very important for Iran, Tehran’s priority is to draw India onto its side in its growing conflicts with the United States and Arab neighbours.

Delhi wants to stay neutral in those wars, but wants a stronger partnership with Tehran in Afghanistan. The mismatch between Indian and Iranian priorities might yet delay if not derail the Chabahar project.

(The writer is a Distinguished Fellow at Observer Research Foundation, Delhi)

Courtesy: The Indian Express August 29, 2012