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The strategic significance of the Port of Chabahar amidst US sanctions

By Vince Hooper - posted Tuesday, 28 May 2024

India and Iran have signed a 10-year deal allowing India Ports Global Limited (IPGL) to develop and manage Chabahar Port, Iran facilitating the transit of Indian goods to Afghanistan and Central Asia. Sarbananda Sonowal, India's Minister of Ports and Shipping, attended the ceremony. Since 2016, IPGL has invested $85 million in Chabahar, aiming to rival Chinese-funded Pakistani ports and boost regional trade. Delays in the Chabahar-Zahedan railway have hindered progress, but the new agreement raises the expected investment to $370 million, benefiting from a US sanctions waiver obtained in 2018. [].

The Port of Chabahar, situated in southeastern Iran, holds immense strategic importance for India, Iran, and Afghanistan, acting as a linchpin in their economic and geopolitical aspirations. Despite the challenges posed by US sanctions on Iran, the development of this port continues to be a focal point for these nations, underscoring their commitment to fostering regional connectivity and economic growth.

India's strategic and economic interests

For India, Chabahar is a gateway to Afghanistan and Central Asia, bypassing the geopolitical blockade posed by Pakistan. This direct route not only enhances India's trade and economic ties with Afghanistan but also with the broader Central Asian region. The significance of this cannot be overstated, as it allows India to counter China's growing influence in the region, particularly through the China-Pakistan Economic Corridor (CPEC) and the development of the Gwadar Port in Pakistan.


Furthermore, Chabahar serves as a crucial conduit for India's energy security. With direct access to Iranian oil and potentially to Central Asian energy resources, the port helps diversify India's energy imports, reducing dependence on traditional routes that are more susceptible to geopolitical tensions.

Iran's economic development and strategic leverage

For Iran, Chabahar is a beacon of economic potential, particularly for the underdeveloped southeastern region. The port's development aims to boost trade and attract investment, which is vital for Iran's economic resilience in the face of sanctions. Additionally, Chabahar is a pivotal link in the International North-South Transport Corridor (INSTC), enhancing Iran's role in global trade networks by connecting India with Russia and Europe through Iranian territory.

The port also offers Iran a strategic tool to mitigate the impacts of sanctions. By facilitating trade with regional partners and reducing reliance on routes vulnerable to sanctions enforcement, Chabahar enables Iran to sustain its economic activities and pursue development goals despite external pressures.

Afghanistan's lifeline

For landlocked Afghanistan, Chabahar offers an alternative trade route that circumvents Pakistan's ports. This is a significant development, as it reduces transit costs and opens up new economic opportunities. Improved access to international markets via Chabahar can spur Afghanistan's economic development, facilitating exports and imports that are crucial for the country's growth.

Moreover, enhanced trade connectivity through Chabahar can contribute to regional stability by fostering economic interdependence and cooperation among Afghanistan, Iran, and India. This interconnectedness is vital for the overall stability and development of the region.

A beacon of regional integration

Chabahar is more than just a port; it is a symbol of regional integration and cooperation. It embodies the collective economic ambitions and geopolitical strategies of India, Iran, and Afghanistan, acting as a counterbalance to the strategic influences of China and Pakistan. Despite the formidable challenge of US sanctions, the commitment to developing Chabahar illustrates the participating countries' dedication to achieving economic resilience and self-sufficiency through alternative trade routes and partnerships.


Navigating US sanctions

While US sanctions on Iran pose significant challenges, India has managed to negotiate waivers and special arrangements to continue the development of Chabahar. The port's strategic importance in promoting regional stability and development, coupled with its potential to counterbalance other strategic influences, underscores its critical role. The determination of India, Iran, and Afghanistan to push forward with Chabahar's development amidst these sanctions highlights their resolve to pursue their economic and geopolitical goals. The US is a major donor of humanitarian aid to Afghanistan since 2022 and the Port of Chabahar provides an easier route for grain shipments and vital medicines.

In conclusion, the Port of Chabahar stands as a testament to the interplay between economic aspirations and geopolitical strategies in South Asia and Central Asia. It demonstrates the involved countries' determination to foster connectivity and economic growth despite external pressures, making it a pivotal project in the region's future landscape and potential peacefulness.


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About the Author

Dr Vince Hooper is an associate professor at the Prince Mohammad bin Fahd University, Saudi Arabia.

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