Breaking Geo-Economic Containment: India’s Need of the Hour - II
by Ramtanu Maitra on 17 May 2022 0 Comment

Chabahar Port and Its Importance


Chabahar port is situated in the province of Sistan and Baluchistan in the south-eastern part of Iran. It is strategically located at the Strait of Hormuz in the Arabian Sea, providing easy access to Oman Sea, the Persian Gulf and the Indian Ocean. The port opens a direct linkage to South Asia, Central Asia, the Middle East and Afghanistan via rail, road, sea and air transportation and possesses all the necessary ingredients to become a major centre of trade for these regions.


Chabahar consists, in fact, of two ports, Shahid-Beheshti and Shahid-Kalantary, that share 10 berths between them that are expected to handle a capacity of 10-12 million tons of cargo per year when fully developed. (Marketing Strategies of Chabahar Port to Access Central Asia and Afghanistan Markets through Rail, Road, Sea, and Air Transportation Facilities: Mohammad Saeid Arbabi, Hossein Vazifehdoust, Karim Hamdi and Vahid Reza Mirabi: International Journal of Economics & Management Sciences: 2018).


The port is fully operational, but the adjoining area that Iran wants to be built up as an industrial zone has not been developed as of this writing. The port was first used by India in March 2012 to send humanitarian aid in the form of 100,000 metric tons of wheat to Afghanistan. India received 20 containers of dry fruits from Afghanistan as its first shipment in September 2013. In October 2017, India’s first commercial shipment of wheat to Afghanistan was sent through the Chabahar Port. India formally took over operations at Chabahar Port on Dec 24, 2018, when representatives from India, Iran and Afghanistan met in Tehran to formally hand over control to state-owned India Ports Global Limited. In early 2021 India sent a consignment of two mobile harbour cranes to Chabahar to enable seamless cargo handling services, according to India’s Ministry of Shipping.


India has already invested US $100 million in the project and promises to invest another US $500 million. In 2009 India completed 200 km road linking Chabahar to Zaranj-Delaram in Afghanistan near the border of Iran. With Indian financial assistance, Iran is developing the remaining part of that road, which will connect Malik, Zaran and Delaram with other important Afghan cities, namely Kabul, Kandahar and Herat. The importance of this route is that it reduces the distance between India and Central Asia by 1,500 km, thereby promoting regional trade and goods movement. In addition, both countries have discussed a multibillion-dollar Chabahar-Zahedan-Mashhad railway network to connect different areas of the Eurasian region. (Geopolitics of ports: Factoring Iran in India’s counterbalancing strategy for “Sino-Pak Axis”: Sandeep Singh and Bawa Singh: Journal of Eurasian Studies 2019 Vol 10(2))


India is by no means the only beneficiary of the development of Chabahar port; it is of great importance for Iran and the region, as well. Iran is a very important trading partner of India and is keen to see India active in the region. Speaking at a “Chabahar Day” virtual event organized as part of the three-day “Maritime India” summit in March 2021, Iran’s then–Minister of Roads and Urban Development Mohammed Eslami predicted that a fully functioning Chabahar port will change the “geo-economy” of the region. Eslami called for assistance from India in developing the project, both through the provision of cranes and other equipment at the port, as well as rail tracks, signal and switching equipment for the Chabahar-Zahedan railway project. In an earlier letter, Iran had asked India to activate the $150 million credit line for the project New Delhi offered during then–Iranian President Hassan Rouhani’s visit in 2018. (India pushes for Chabahar in India-Iran-Russia INSTC corridor: The Hindu: Suhasini Haidar: Mar 4, 2021)


For India, Chabahar is the nearest Iranian port. From there, it is only 650 nautical miles to the Indian port of Kandla in Gujarat, a distance that takes only two days and thus enables speedy movement of goods. Chabahar port will allow India to get energy supplies from Iran, the Middle East and Central Asia and expand Indian trade and commerce in these regions. Iran is also developing the Chabahar Free Trade Zone to develop Chabahar into a trade hub and has granted its land and other facilities to India, Afghanistan, China, and the Commonwealth of Independent States.


India-Iran trade has enormous potential. As of now, India supplies more than one-third of Iran’s demand for sugar and rice. Iran imported some 700,000 tons of basmati rice from India during the first quarter of 2020. Other agricultural exports to Iran include barley, sesamum seeds, cane sugar and oil cake. In Fiscal Year 2019, India’s export basket to Iran was valued at US$3.5 billion, and in the first 10 months of FY2020, this value stood at US$2.8 billion. Major Indian imports from Iran include crude oil, inorganic/organic chemicals, fertilizers, plastic and articles, glass and glassware, natural or cultured pearls, precious or semiprecious stones, and leather. Agricultural imports from Iran consist of almonds, pistachios, dates and saffron. In FY2019, imports from Iran amounted to US$13.5 billion.


New Delhi realizes that the Chabahar port development is a crucial steppingstone for enhancing its westward trade and having a presence in an area of great economic potential. However, progress has been bogged down since 2018 because of continuing U.S. sanctions on Iran. Although Washington has given New Delhi a waiver to proceed, Indian companies are hesitant to invest in the face of the U.S. sanctions.


As significantly as the connection to Afghanistan, Chabahar Port provides India access to the International North South Transport Corridor (INSTC), a second great project connecting Iran to the Central Asian countries by railroad. Addressing the March 2021 “Maritime India” event, India’s External Affairs Minister S. Jaishankar proposed that the land route via Kabul and Tashkent form the INSTC’s “Eastern corridor.” He said: “Establishing an eastern corridor through Afghanistan would maximize [INSTC’S] potential. India has also proposed the inclusion of Chabahar in the INSTC route. I am hopeful that during the INSTC Coordination Council meeting, member states would agree to the expansion of the INSTC route to include the Chabahar Port and agree on expanding the membership of this project.”


Road to Russia and Beyond


The International North-South Transport Corridor is India’s import-export route to Russia, Europe, and Central Asia that bypasses Pakistan and strengthens its cooperation with Russia and other members of the project. INSTC offers an efficient alternative to the traditional “Suez” maritime route from St. Petersburg in Russia to the Gulf region and India that runs through the Baltic and North Seas and the English Channel, past France and down to and around the Iberian Peninsula, along the Mediterranean and through the Suez Canal, and then to Bandar Abbas in Iran or to Mumbai. (Rebuilding Interconnections: Russia, India, And The International North-South Transport Corridor: Mher D. Sahakyan: Asia Global Online: September 17, 2020) Presently, INSTC connects India with Nordic Europe, Central Asia and Russia; and it has the potential to expand up to the Baltic and Arctic regions, which are slowly being drawn into the Northern Sea Passage route as that becomes economically viable.


INSTC originated with an intergovernmental agreement between Russia, Iran and India in 2002. Subsequently, a total of 13 countries (including Pakistan) has since ratified the agreement. India and Russia remain the prime movers behind the undertaking. The main spur is the 7,200-kilometre corridor between Mumbai and St. Petersburg, based on ferry links between the ports along the Russian coast of the Caspian (Astrakhan, Olya and Makhachkala) and the Iranian ones (Bandar-Anzali, Nowshehr and Bandar-Amirabad). As of now, Indian goods are delivered to the Iranian port of Bandar Abbas on the Persian Gulf and shipped across the Caspian for onward rail or road transport to Russia and Europe.


The Indian Federation of Freight Forwarders Associations estimates that, compared to the Suez route, INSTC involves 30 percent cost and 40 per cent transit time reductions. Dry runs conducted between 2014 and 2017 showed possible savings in the order of $2,500 per 15 tonnes of cargo, while transit time could be slashed to 25-30 days compared to 40-60 days via Suez. Shipments would take an average of 23 days, at costs ranging between $2,300 and $3,500 for a dry container and between $4,600 and $6,800 for a reefer container. For example, it would only take 19 days (as opposed to 32-37) to cover the route between Mumbai and Moscow, cutting the distance by more than half, from around 16,112 km (8,700 nautical miles) to about 7075 km. Likewise, it would take only 21 days for shipments between India and Finland, down from about 45 days. (The International North-South Transport Corridor — Part 5: Ikram Sehgal and Dr Bettina Robotika: Daily Times: October 29, 2021)


INSTC has four main routes


The Caspian route connects Russian and Iranian ports on the Caspian Sea. Only about 12-16 percent of Russia-Iran container traffic uses these links.


The western route connects Russian and Iranian railways through the territory of Azerbaijan, which is emerging as a key hub for INSTC. The link from the Azerbaijan border into Iran, the section from Astara to Rasht (167 km), for which Tehran and Baku have agreed to invest US$500 million each, has not been completed. The Rasht-Kazvin section (175 km) inside Iran was opened on March 6, 2019. The western route is operational, but not as a coherent rail link. Russia and Iran are using it for trading wood and wood products, grain, construction materials, fruits, containers and other goods. Azerbaijan and Turkey, meanwhile, have strengthened their positions in the INSTC network; Turkish ports on the Mediterranean and Black seas are now connected to Azerbaijani ports on the Caspian Sea through the Baku-Tbilisi-Kars rail line, which they launched with Georgia in October 2017.


The eastern route links the railway systems of Russia, Iran, Turkmenistan, Kazakhstan and Uzbekistan, and is fully operational and considered to be the most successful part of INSTC. Iran’s gateways to Central Asia are at Sarakhs (Serakhs in Turkmenistan) and Incheboron (Ak-Yayla in Turkmenistan). The eastern route includes the new Kazakhstan-Turkmenistan-Iran railway link, which was inaugurated in December 2014 in Ak-Yayla.


The Armenian North-South Road Corridor is an ongoing 556-km project to connect ports on the Persian Gulf with Georgian ports on the Black Sea. In all this, Armenia is somewhat left out because of its political and military problems with Turkey to its immediate south and with Azerbaijan to its north—a legacy of Christian/Muslim religious fault lines. However, Armenia has an ally in Georgia, and a proposed spur from the Baku-Tbilisi-Kars (BTK) route is expected to head down to Yerevan.


India’s prime objectives in helping to develop INSTC are an expansion of trade relations with Russia and Europe and development of close economic and bilateral relations with smaller countries situated east and west of the corridor. India must be a participant in the development of energy resources of the sparsely populated Central Asia, and cooperation with the Gulf states is a necessity for New Delhi. In addition to their vast oil and gas resources, the Gulf states are the workplaces of an estimated 8.5 million Indians.


China’s Contain-India Ploy


To the east, India’s plan to move forward by land to institute broader and stronger economic and security ties with the Southeast Asian nations has met with resistance from China as part of its policy to prevent India from becoming a regional power and turning New Delhi into an adversary in Asia. This policy also explains why Beijing resorted recently to unprovoked violence to grab bits and pieces of territories along a nondemarcated border in the Himalayas.


In 2014 India adopted an Act East Policy to promote economic cooperation, cultural ties, and strategic relationship with countries in the Asia-Pacific region through continuous engagement at bilateral, regional and multilateral levels. The policy called for establishing enhanced land-based connectivity between India’s northeastern states, Myanmar and the Southeast Asian nations who are also part of the ASEAN economic grouping. Since then, New Delhi has overlooked many minor border infractions by Chinese troops. Most recently, Prime Minister Modi’s intent has been to ignore those incidents in the interest of building a mutually beneficial economic and security partnership with China.


What was not evident to New Delhi, however, was that Beijing had other designs, and that revelation came as a rude shock to India in 2017. The 73-day military stand-off between China and India in Bhutan’s Doklam Plateau made it plain to Indian authorities that one arm of China’s hegemonic policy in Asia is to encircle and undermine India’s growth potential through physical containment. The Doklam crisis began when Chinese People’s Liberation Army (PLA) engineers began constructing a road near the Indian border on a piece of territory disputed between China and Bhutan.


India, perceiving this as an unacceptable change to the status quo with potentially serious strategic security ramifications, crossed a settled and undisputed international border with its troops to block the PLA contingent from proceeding. (The Political Geography of the India-China Crisis at Doklam: Ankit Panda: The Diplomat: July 13, 2017). The agreement to end the tense face-off came in early September 2017, right before the ninth summit of Brazil, Russia, India, China, and South Africa (BRICS) organization. Following the Indian intervention and the end of the stand-off, China’s President Xi Jinping told India it was a one-off event that would not affect the “all-important” China-India relations.


India soon realized that those statements were an effort by Beijing to lull India to sleep while carrying on with its agenda. Based on satellite images, India came to know in 2019 that the Chinese had resumed construction and troop-movement activities once more in the Doklam Plateau region in western Bhutan. However serious the 2017 stand-off was, it paled in comparison to what Beijing decided to do next in eastern Ladakh. In the spring of 2020, when Indian and Chinese commanders in eastern Ladakh were engaged in routine post-winter discussions on “disengagement and de-escalation,” PLA troops unleashed what India termed a “premeditated and planned” attack that led to the death of 20 Indian soldiers. China’s troops used barbed wire fencing bats and nail-studded sticks to attack the Indian troops. China did not explain why its civilized army behaved in such barbaric manner.


This attack underlined China’s devious plan to grab hold of some militarily strategic locations in eastern Ladakh. However, the Chinese found out soon that the Indian troops mobilized there were battle-hardened mountain divisions with high-altitude training. Overcoming the shock of the sudden attack, Indian troops retaliated and secured control over crucial mountaintops dominating the Mount Kailash range. Surprised by this adverse outcome and realizing that grabbing Indian territory by force is now an impossible task, China began to negotiate to end this crisis.


Nonetheless, with these actions Beijing has made it clear to New Delhi that as its adversary China will oppose and, if it so chooses, resort to violence to undermine India’s efforts to develop land ties with other Asian countries. It is evident to India now that China, like Pakistan to its west, will block India’s eastward access.


(To be concluded…)

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