25 July 2020, NIICE Commentary 5625
Prabhakaran A
India and Iran recently commemorated 70 years of their bilateral relations in the midst of the tension that has developed between the two countries. On 14 July 2020, The Hindu, reported “Iran drops India from Chabahar rail project, cites funding delay” implying India’s relieving from the Chabahar rail plan. Tehran refuted the claims by stating that the project had just been negotiated, not agreed upon. Iran decided to fund the project by its own National Development Fund. Chabahar port of Iran, which is in news, is pivotal to both India and China as it is strategically located near to Strait of Hormuz. This chokepoint is crucial as it is through the Strait that large volumes of maritime trade and oil passage of both countries take place.
Present and the Past
For India, the relation with Iran is crucial for trade, particularly for oil, and also to pursue strategic interests of increasing its influence in the Indian Ocean region. In 2016, India, Iran and Afghanistan signed a trilateral agreement on the development of Chabahar Port in Iran. The Chabahar port rail and road project, which travels upto Iranian border town Zahedan, will connect to Zaranj, a border town in Afghanistan. This transit route acts as an intermediary for India’s aspiration to establish sustained trade relations with Afghanistan and Central Asia. Therefore, India has pursued its plans to develop the Chabahar port, railway line and road projects that subsequently connect the port with Afghanistan. This project bypasses Pakistan and offers India a strategic land route, which would facilitate land-based trade to Kabul and, eventually beyond, to Central Asia.
India’s Dilemma
India’s stand on supporting the United Nations’ sanctions, and not considering any unilateral action by a country in this direction has always been clear. India did not isolate Iran during the course of the US sanctions that were imposed. India chose to continue trade ties with Iran and even opted for non-dollarbased trade for oil imports. Likewise, India maintained parallel relations with both the US and Iran. India was relieved when these sanctions were lifted as a result of the Joint Comprehensive Plan of Action (JCPOA).
However, the sanction regimes and strategic ties with the USA affected India’s parallel relations with both countries, which latter slightly turned into a dilemma towards Iran. After the civil nuclear deal with the US in 2005, India withdrew from the India-Pakistan-Iran (I-P-I) gas pipeline project in 2009. Undeniably, there are risks and insecurities for the gas pipeline which is passing through Pakistan, due to terrorism and bilateral tensions; but the US pressure is considered to have played a major role in India’s step out from this gas pipeline project. Later, in 2018 the US withdrew from JCPOA and imposes several new sanctions over Iran. During the sanctions imposed in, the US requested countries such as India and China to zero out their oil imports from Iran. Though India initially reduced its oil imports from about 2.5 billion tonnes a month to 1 million tonnes, the pressure from the US made it to completely cut off its oil imports from Iran by 2019.
On the other hand, the US has shown its approval to Indian investments in the Chabahar port. This was a way to promote Afghanistan’s economy, which the US sees as a beneficial site for negotiations with the Taliban. Hence, India’s policy of ‘not respecting any unilateral sanction’ seems to be contradictory to its actions and raising concerns over the ‘strategic autonomy’ of India.
Meanwhile, even after the exemptions, companies and vendors from across the globe are unwilling to invest and supply equipment to Chabahar port due to the risk of the US’s blacklist. For example, in March 2020, the US Treasury Department imposed sanctions on nine companies allegedly providing materials to Iran’s metals sector. Thus, the sanctions regime of the US, not only has hurt India’s trade with Iran but its strategic calculations of connectivity with those landlocked states and contain Chinese footprints in the Indian Ocean region.
Iran’s Shift
The dilemma of India and its closeness towards the US and Israel created a lot of suspicions in the minds of the Iranian leadership. When India signed a civil nuclear deal with the US, Iran warned that the pact would create a crisis in the global community. According to the views of Iranian authorities, India succumbed into the US’s economic sanctions fear, which pushed Tehran to adopt some adverse approach towards the latter.
China has used the opportunity and is cashing on India’s dilemma by following a ‘diplomacy over sanction’. Iran relies on China’s veto power in the UN Security Council to protect itself from the US-led sanctions. Likewise, Iran is more important to China for its footprints in Central Asia. As of September 2019, Iran was part of the Belt and Road Initiative (BRI), and China announced its intent to infuse USD400 billion worth of investments in various sectors of Iran. Since then, Tehran was included as the key factor for China’s geopolitical ambitions in Central Asia and West Asia.
Iran expressed concerns over the violence against Muslims in India during the anti-CAA protests, but not against the continuous repression by China towards Uighur Muslims in Xinjiang province. This indicates the strengthening ties between Iran and China that are tacitly working towards economic and security partnership, countering the US’s efforts to isolate the former.
Feasibility for China
The New York Times on 11 July 2020, published a leaked draft of a comprehensive partnership document between Iran and China. According to this, China would vastly expand its presence in various sectors of Iran and that would deepen the military partnership and weapons development between the two countries. The deal might push Iran towards a possible permanent military access arrangement with China. This will certainly further enhance China’s position in the Indian Ocean region through its positioning in Gwadar, Djibouti along with Chabahar port. It then becomes a serious threat not only for regional countries but also for the western powers.
In the current situation, Iran will pick a reliable partner between India and China. Though Iranian President Hassan Rouhani, during a cabinet meeting on 15 July 2020 said, “Despite the efforts of the United States, Iran has never been and will never be isolated, and its progress on the track of development will not stop”, Iran is looking out for reliable partners.
To avoid any further deterioration in bilateral relations between India and Iran, there is a need for both countries to act mutually. In transit and transport corridor projects, Iran should give priority to its goodwill partner India, by changing those suspicious views. On the other hand, a good relationship with Iran will be a sign of the leadership excellence of India, and maintaining a stable bilateral relation is utmost essential for the latter’s regional partnerships within South Asia and to maintain its influence in the Indian Ocean region. India, also should uphold the principle of strategic autonomy by not siding with any unilateral sanctions or motive-driven actions, as the Chabahar projects are not only economically but also strategically important for India.
