India should move quickly on the North South Transport Corridor
by Ramtanu Maitra on 05 Jun 2015 2 Comments

A number of recent developments in and around Afghanistan have made it evident that India’s investments made during the decade since the 2001 US invasion (and often wrongly described by some analysts as a display of India’s “soft power”) will certainly help Afghanistan. At the same time, these developments have made it clear that those investments will not help India at all in its quest to carve out a long-term, mutually-beneficial role in that country, or in Central Asia, situated north of Afghanistan.


It is also evident that Pakistan has no intent whatsoever to allow New Delhi a corridor through its landmass in the future to help India tie a strong knot with Afghanistan and do business, as well, in Central Asia. Neither India’s soft nor its hard power can do much to make Pakistan change its long-standing, carved-in-granite policy.


Yet whether or not India can secure a firm toehold in Central Asia depends on New Delhi’s clarity in grasping the wide-ranging importance of this policy and summoning the political will to carry it out quickly.


New Delhi has two choices. One option is to organize some media persons to gloat over India’s extraordinary success in wielding its “soft power” in Afghanistan, and thereby remain at the mercy of Pakistan in developing its relations with Central Asia. This is the option the Manmohan Singh-led government embraced. Alternatively, New Delhi could act purposefully to assert its rightful place, but nothing more, in that part of Asia, which is rich in natural resources that the Indian economy needs badly and which provides access by land to important economic centres in Europe, southwest Asia and, of course, Russia.


One can already see that, as things now stand, Indian influence in Afghanistan and Central Asia will be diluted. Pakistan has already begun making efforts to develop closer economic relations with some of its Central Asian neighbours. Prime Minister Nawaz Sharif was recently in Kyrgyzstan and Turkmenistan, in addition to having developed a kind of bonhomie with the newly elected and Washington-directed Afghan president, Ashraf Ghani. Pakistan is developing closer relations with the gas-rich Central Asian nations for its own energy requirements, of course. Meanwhile, Islamabad has developed certain advantages on the ground that enable its relationship with the Central Asian nations to mature quickly.


To begin with, Pakistan’s citizens, like those of the Central Asian nations, are predominantly Muslim. A tertiary factor, it nonetheless helps. Pakistan also has a strong military, and the country’s expected inclusion in the Shanghai Cooperation Organization (SCO) as a full member this year will enable Islamabad to exert its influence on these Central Asian nations on security matters. Since the “stan” nations (Tajikistan, Kyrgyzstan, Uzbekistan, Turkmenistan and Kazakhstan) have been plagued with security threats since their inception, they might very well prefer Pakistan’s assistance to that of Russia in helping them manage those issues. Pakistan’s recently improved relations with Russia may help to further its role in Central Asia. The most crucial advantage that Islamabad has acquired, however, is its close relations with China, that which is fast-becoming the most important economic element in Central Asia’s future. This relationship can be expected to enhance Islamabad’s credibility in Central Asia significantly.


If New Delhi chooses to ignore these ground realities and continue in its business-as-usual mode, Chinese President Xi Jinping’s April 2015 visit to Pakistan to kick-start the China-Pakistan Economic Corridor - which will link Gwadar Port, located at the Makran coast of Balochistan, to Kashgar in Xinjiang - should have sent a clear message to the Modi administration. The message is this: In addition to deriving significant economic benefits from the proposed China-Pakistan Economic Corridor, Beijing will use the corridor to connect transport and energy routes to Afghanistan and Central Asia, allowing these land-locked nations to use Gwadar Port as a maritime hub.


Again, the China-Pakistan Economic Corridor is not a pie-in-the-sky concept. China has already won the right to operate Pakistan’s Gwadar port for 40 years, and the port should be ready for full use this year. China has financed and built the port, and is obviously determined to initiate the corridor project at the earliest.


China’s New Silk Road project, what President Xi has labelled the “one belt, one road,” has already made inroads into Central Asia in the north in a big way and is moving at a rapid pace. Reports indicate the Bank of China is already channelling $62 billion of its immense foreign exchange reserves to policy banks supporting New Silk Road projects - $32 billion to the China Development Bank (CDB) and $30 billion to the Export-Import Bank of China (EXIM).


China Seizes the Opportunity


China has already built a highway from Kashgar to Osh, considered the “southern capital” of Kyrgyzstan and situated where the southern ranges of the Tian Shan give way to the irrigable and fertile lowlands of the Ferghana Valley. China has also built a railway that links Xinjiang province’s capital, Urumqi, to Almaty in southeastern Kazakhstan bordering Kyrgyzstan. Interfax-Kazakhstan reports that Kazakhstan’s President Nursultan Nazarbaev, at a plenary government meeting in Astana on May 5, stated: “We need to build a new railway line across the territory of Kazakhstan from the border with China to the [Caspian] sea port of Aktau. Negotiations [with China] are underway in this regard.”


These link-ups have not only positioned China to make deep inroads into the western “stan” nations in the near future, but have already enabled major Chinese cities in east-central China to deliver cargo via overland routes to, and receive from, Germany in under three weeks - at least 15 days less than it takes by sea.


These developments also ensure that China is ready to move aggressively in the coming days to establish trade routes over land to Central Asia, and then further to Afghanistan and Iran. Under the circumstances, India has been left with two options: New Delhi can sit around, fret and complain about China encircling India, or it can act expeditiously to establish trade routes marking its strong economic presence in Iran, Afghanistan, Central Asia, Russia and Europe with the same vigour as China.


The Importance of the Corridor


The North-South transport corridor consists of two routes. The western route starts at the Iranian port of Bandar Abbas, located in the Strait of Hormuz, and stretches northward to St. Petersburg in northwestern Russia and then on to northern Europe. This route relies on the extensive transport networks of Russia, Iran, Kazakhstan and other countries. Bandar Abbas is the sea-link between the Indian ports located on the Arabian Sea, but still a distance away. This route from the port of Mumbai to St. Petersburg via Bandar Abbas is 7,200 km long. Indian cargo hauled by sea to Bandar Abbas is then carried by railroads to the Caspian Sea and on to ports in Russia’s sector of the Caspian, where it is again loaded on a ship for the short trip across the Caspian. Once the cargo reaches Russia, it is put on railroads or highways heading to Moscow, St. Petersburg and beyond into Europe.


The eastern route is, however, more attractive for India. On that route the sea-to-rail transit point in Iran is much closer to India, and the route goes through Afghanistan. The eastern route starts off at Iran’s Chabahar port, located on the Gulf of Oman. Chabahar port has not yet been fully developed, although a decade has passed since India expressed its willingness to do so. From Chabahar, the route runs northward through Iran’s Sistan-Baluchistan province into Afghanistan, enabling India to secure a key entry point into Afghanistan.


Kabir Taneja, in a May 21 article in The Diplomat, points out that India first showed interest in the Chabahar port project in 2002, and in 2003 India, Iran and Afghanistan signed a memorandum of understanding on the development and construction of transit and transport infrastructure on the Chabahar-Milak-Zaranj-Delaram route. The same year, then-President of Iran Mohammed Khatami visited India when New Delhi committed to further its infrastructure and energy-related investment in Iran, with Chabahar prominently leading the way. Unfortunately, things have not moved much further than the signing of more MoUs.


The development of this route of the North-South Corridor will infuse fresh blood into war-depleted Afghanistan, and it will also help India immensely in the future - a point often ignored by New Delhi. The route will not simply carry goods from the Indian ports to Afghanistan, Central Asia, Russia and beyond. Of great importance to energy-starved India, the route will also provide easy access to help Afghanistan and Central Asia explore their mineral reserves. The route will also help Afghanistan, Central Asia and Iran to bring their products for export to southern Asia, Africa and even southern Europe. If India is indeed keen on acquiring stakes in the vast Central Asian gas fields (before China acquires them) to make India’s “Made in India” campaign a bit more meaningful, New Delhi should not depend on Pakistan’s mercy. New Delhi should map out a plan and execute it expeditiously to bring the Central Asian gas through Chabahar port into India. 


During 10 years of moribund UPA rule, New Delhi did not do what was necessary and, instead, spent $2 billion in Afghanistan on various infrastructural projects, hoping the United States would never leave Afghanistan and would keep Pakistan from undermining India’s interest there. That wishful and vacuous approach is now clearly at a dead end.


Besides the fact that the Americans will be playing only a nominal role in Afghanistan in the future, and China and Pakistan have joined hands to build the China-Pakistan Economic Corridor that will move right into Afghanistan, New Delhi should realize that it will be checkmated unless it takes measures to undo its earlier mistakes and moves quickly with Iran to establish its access to Afghanistan and beyond into Central Asia.


India’s Non-Focused Approach


It should have been a top-level priority for the Modi government to bring this project to fruition quickly and make steady inroads into Afghanistan, without depending on what Washington or any other country says or does. Since Iran is ready to cooperate actively, the first requirement is development of the Chabahar port. The port currently has the capacity to handle 2.5 million tons annually, and Iran would like to increase that to 12.5 million tons. Iran has long designated 140 square kilometres adjacent to Chabahar as a Free Trade Industrial Zone to enhance its potential to become a major trade and transit hub.


The Iranians have been pushing India to take up the project seriously for a long time. They want this area to be developed. Last December, Iranian President Hassan Rouhani visited Chabahar and urged quick implementation of development projects in Chabahar. Speaking to reporters there, Rouhani said he has visited the port city as part of plans for ratifying a development plan for the Makran Coast. Since assuming office in August 2013, President Rouhani has made clear his intent to develop the country’s southern littoral provinces bordering the Persian Gulf and Gulf of Oman. He said he would do all he can to remove the remaining obstacles to completion of the projects in that area.


In January of this year, President Rouhani sent his adviser and Secretary of the High Council of Free Zones, Akbar Torkan, to New Delhi to highlight the need to use the North-South Corridor to develop the Chabahar port. Torkan told Indian Minister of Commerce and Industries Nirmala Sitharaman that India could use Iran’s railways and roads to get access to Afghanistan and Central Asian markets.


Almost four months went by before the Modi administration, goaded by Iran, sent India’s Minister for Road Transport, Highways and Shipping Nitin Gadkari to sign yet another MoU stating that: “Indian and Iranian commercial entities would now be in a position to commence negotiations towards finalization of a commercial contract under which Indian firms will lease two existing berths at the Port and operationalize them as container and multi-purpose cargo terminals.”


Even Afghanistan under President Ghani is agreeable to sign trade agreements with India. In March, Afghan Ambassador to India Shaida Mohammad Abdali, speaking at a session on business opportunities in Afghanistan organized by the Bengal Chamber of Commerce and Industry, said: “Pakistan is currently the route. Once we have the Chabahar port, we expect it to go up at least to $3 billion. India has already announced money for the up-gradation of the Chabahar port. The draft transit agreement has been shared with the parties. Once signed, we will see a trade jump.” India-Afghanistan trade is currently about $ 750 million and is highly dependent on a route that passes through Pakistan.


Iran, economically weakened after years of sanctions by Western nations, has not sat idle either. From Tehran’s perspective, the Chabahar port serves to facilitate its objective of emerging as the main trade and transit hub between Central Asia, South Asia and the Persian Gulf. Chabahar port facilitates this process because it ensures that Iran is not constrained by the Straits of Hormuz.


The aim of being an important transit point is consistent with Iran’s desire to be seen as a significant regional player. In order to achieve these ends, Iran has not only already taken the initiative to develop infrastructure but has also engaged with other countries to enhance its own transit potential (“Accessing Afghanistan and Central Asia: Importance of Chabahar to India,” Aryaman Bhatnagar and Divya John, Observer Research Foundation, October 2013).


In addition to the enthusiasm exhibited by Iran and Afghanistan for the project, the Central Asian nations are also keen to see it implemented. In 2011, when Uzbek President Islam Karimov visited New Delhi, he emphasized the increasing cooperation between regional countries. In 2009, Kazakh President Nursultan Nazarbaev had expressed similar views during his visit to India. Since then, Kazakhstan has invited India to explore its Satpayev oil block.


It is evident that building and strengthening the North-South Corridor, and developing a strong interdependency with Afghanistan and the Central Asian nations, is mutually beneficial and would bring these countries into direct economic contact with India. One of China’s major successes, besides its emergence as a great economic power, is its laying emphasis on better connectivity and deeper trade and commerce with other countries. The North-South Transport Corridor is just such a project.


Why the Delay?


Some may believe that everything that India proposes to do gets delayed. Delaying the execution of projects, however essential they may be for the 1.2 billion person nation, has become India’s hallmark over the decades. Others may assume the delay is due to complex issues concerning Iran, which is not known for being easy to deal with.


As Kabir Taneja says: “At the heart of the issue lies a fundamental clash of political wills, with both India and Iran spending much of their political capital on negotiations, seemingly trying to outdo each other in levels of bureaucratic ineptness. If Delhi was acting aloof over Chabahar for years due to circumstances, which included economic shortfalls at home, a greedy Tehran with problems of chronic corruption was equally indifferent at any attempts by India to find a compromise.”


The delay is by no means attributable to Tehran alone, Taneja makes clear. He notes that New Delhi often scaled back its investment plans. Whatever progress was made over Chabahar and Farzad B in the past was lost within weeks of India refusing to release financial commitments to Tehran for oil purchases during the peak sanctions period, he states.


Besides the economic benefits that Afghanistan and the Central Asian nations will derive from this Corridor once it is completed, it is important for New Delhi to realize that these countries view India as a major power with no hegemonic interest. That by itself allows India to play a significant role in developing and utilizing the Corridor.


But there is more to it: All the nations through which the North-South Corridor passes are weak states living under the shadow of powerful nations, particularly since China made its economic march westward. Under the circumstances, these countries will welcome India’s presence to provide them a greater sense of security, in much the same way as some of the Southeast Asian nations have sought a strong Indian presence in that region.

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