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Chabahar and the Chinese Challenge

After Pakistan-China collaboration, India too is improving its access to world by building Chabahar port

Shankar Kumar
Publish Date: May 27 2016 4:04PM | Updated Date: May 27 2016 4:49PM

Chabahar and the Chinese Challenge

Since Pakistan and China have joined hands to build a deep water port at Gwadar in Balochistan, India too is moving to improve its access to the world by building Chabahar port in Iran under the Act East policy, writes Shankar Kumar

A great strategic game of the 21st century would be played in the Arabian Sea. This was the message that China gave to the world when it got control over Gwadar port in 2013 in the Arabian Sea at the tip of Pakistan’s Balochistan province. The deep water Gwadar port has a major strategic importance for China as it will provide Beijing with a well-developed base just 350 miles from the Strait of Hormuz, the narrow sea lane through which about 20 percent of the world’s oil pass. However, India is not far behind in giving China run for its money. It is developing equally strong deep water port in Chabahar, lying along Iran’s Southern coast and only 72 nautical miles away from Pakistan’s Gwadar port. Once functional, Chabahar port would make India’s reach to Afghanistan, Central Asia, Russia and other parts of Europe easy and it would also provide India much needed platform to monitor Pakistan and Chinese activities in the Indian Ocean Region (IOR) and the Gulf.
In February this year, India agreed to provide Iran through Line of Credit (LoC) as much as $150 million for the development of Chabahar port. Of this sum, $85.21 million would be used in the first phase for the modernisation of two berths of Chabahar which would be operational in 18 months. Being developed under India’s ‘Act East’ policy, the project would, however, make its first mark on the canvas of Indian strategy when it would be connected with Afghanistan’s 215 km long Zaranj-Delaram highway that New Delhi built in 2009. To this effect, India, Iran and Afghanistan have recently concluded negotiations on the text of the trilateral transport and transit pact which will serve as the legal framework to operate trade corridors with Chabahar as its main hub. 
Along with this, India is keen to give push to the Ashgabat Agreement which envisages an international transport and transit corridor between the Persian Gulf and Central Asia. Iran, Oman, Turkmenistan, Uzbekistan and Kazakhstan are members of this arrangement. In the third week of March, the Cabinet meeting chaired by Prime Minister Narendra Modi gave its approval for joining the arrangement which would ultimately help India, Iran and Russia in realizing their much ambitious International North South Transport Corridor (INSTC).
In the third week of this month when Modi undertakes his maiden visit to Iran, he will not only supervise signing of MoU between New Delhi and Tehran for the development of Chabahar port, but will also oversee signing of agreement between the two countries on building Chabahar-Zaheden-Mashhad line which would be linked with grand international transport corridor envisioned by India, Iran and Russia in 2000.
Notably, India has agreed to supply $400 million worth of steel rails, rolling stock, signalling and other works for development of Chabahar-Zahedan-Mashhad rail line. And this decision was taken days after India, away from media glare, called a meeting of stakeholders of the proposed INSTC in New Delhi last year. In this meeting, representatives from Russia, Iran, Central Asian countries and Europe approved draft transit and custom agreements related to the proposed corridor. Almost four months after this meet, Ministry of Commerce also organised INSTC stake holders’ conclave in Mumbai in which all outstanding issues related to logistics, banking, insurance cover, harmonisation of documentation and procedures for cargo movement from India to Central Asia to Russia were discussed in nitty-gritty.
Interestingly, prospect of development of such a corridor and its connectivity with Chabahar port further brightened after Iran and P5 (US, Russia, Britain, France and China) countries and Germany signed nuclear deal last year. Indian authorities are now confident that these high profile projects after their implementation will serve an answer to China’s One Belt One Road (OBOR) initiative which envisages road, rail and water connectivity from China to South Asia to Middle East, Central Asia, Africa and Eurasia. Indeed, with this in tow, India would find it easy in securing its interest in the Middle-East, Central Asia and beyond. Even experts like C Uday Bhaskar feel that the transport corridor project which will cover a stretch of 7,200 km from India to the Eurasian region, would prove to be a “game changer” for New Delhi as it would  “substantially increase” India’s economic and strategic weight in the world. Then as per a study by the Federation of Freight Forwarders’ Associations in India (FFFAI), an apex body of 27 member associations of custom brokers, the corridor would be 30 percent cheaper and 40 percent shorter than current route. Currently Indian goods reach Moscow in 40 days after crisscrossing entire western part of Europe and the Suez Canal.  
Nonetheless, what would add economic value to such connectivity programme is planned Free Trade Agreement between India and the five-nation Eurasian Economic Union. India and EEU comprising Russia Kazakhstan, Belarus, Kyrgyzstan and Armenia have set up a joint study group for the feasibility of a Free Trade Agreement between two sides. Once established this would boost trade and economy among its stakeholders. International observers say that in the light of evolving geopolitical developments in Central Asia and surrounding regions, it has become essential for India to invest more political and economic capital for better access to INSTC via Iran. In this context, India’s plan to invest millions of dollars for development of deep sea port and special economic zone and other projects in Chabahar assumes significance.
For the success of ‘Act East’ policy, India knows that it cannot wish away the importance of the Iranian port which would boost India’s trade with Middle-East, Central Asia and its surrounding regions once it becomes operative. Cost of crude oil shipments from the region to India would reduce manifold. Besides, it will reduce dependence of Afghanistan on Pakistan for sourcing its goods from the world, thus, causing great blow to Islamabad’s strategic hold over the land locked nation. Chabahar port will help India in maintaining a close eye on China which is trying to enhance its presence in Indian Ocean by having bases in Pakistan and Djibouti. In Sri Lanka too, China has developed deep sea port in Hambantota. But because of Indian pressure, the present government in the island country has disallowed Beijing for using it for its strategic purposes. Amid this, it is not yet clear whether Chabahar port will help India in realizing its dream of blue-water navy or not.
Though such ambition needs to be backed by rapid modernisation of Indian Navy, but question is: will Tehran allow New Delhi to station its high-tech ships and armaments in Chabahar? However, there is a possibility that Iran will not undermine the 2003 New Delhi Declaration which set forth the vision for ‘strategic partnership’ between India and Iran. Following the signing of the declaration, navies of the two countries are regularly holding exercises in Indian Ocean. Just last month, they held drills in Iran’s southern waters and exchanged experience in relief and rescue operation. Nonetheless, India’s great game in Indian Ocean and around Middle-East and Central Asia regions would unfold once Chabahar is developed into a hub of economic activity. In this respect, the forthcoming visit of the Prime Minister to Iran would be keenly watched by the students of diplomacy and foreign affairs.