India should not lose interest in Chabahar

| | in Oped

After years of policy paralysis in India that led to desperation among Iranians about New Delhi not taking enough interest in developing the strategic Chabahar port, there is a ray of hope from the Modi Government in the context of changing regional geopolitical realities

A visit to a strategic location is often an exciting experience. But sometimes it could induce a sense of utter frustration and helplessness in you. Our maiden trip to the port city of Chabahar in Iran led to such mixed feelings.

Import of Chabahar

Situated in the Gulf of Oman, along the Makran coast, Chabahar has been in news, off and on, in Indian media for its strategic relevance for India, especially since 2003, when then Iranian

Prime Minister Khatami visited out country. India and Iran signed an MoU to develop the port and build supportive infrastructure to promote bilateral trade and provide India access to Afghanistan and Central Asia. Following this, there were reports that an Indian company owned by the Hindujas signed an MoU with Iranian authorities to develop the port infrastructure in 2004.

Chabahar is at a distance of about 480 nautical miles from the Indian port of Kandla in Gujarat and about 840 nautical miles from Mumbai. It connects Afghanistan-Iran border point at Zaranj through Iranian cities of Zahedan, Zabol and Milak. The total distance is about 987 kms. India has already built the 219 km long Zaranj-Delaram stretch inside Afghanistan which connects the route to the Afghan ring road. India can also connect Turkmen city of Asghabat through the Iranian city of Mashhad, another about 900 kms north of Zahedan.

Given the strategic import of the port for India — which finds it difficult to access Afghanistan and Central Asia through Pakistan — one would have expected India pushing for fast-track development of such a crucial project. A decade hence, however, nothing concrete seems to have happened on the ground. It is a classic case of Indian inaction.

Iranian seriousness about Chabahar

During the visit, we noticed that despite the sense of lethargy and lassitude from the Indian side, the Iranians have started developing the port and ancillary infrastructure on their own. The road from Chabahar to Milak is complete. The first phase of the port construction is nearing completion. The two terminals at the port — Shahid Behesti and Shahid Kalantari — with five berths each (six multi-purpose and four container) are operational. The port is handling traffic of more than 2 million metric tonnes and the port authorities hope to increase it up to 82 million by the end of the third phase of the project.

Petrochemical Complex

In a dusty corner of the city, about 20-25 kms away from Chabahar airport, Iranians are fast developing a petrochemical industrial complex close to the port. Their aim is to turn Chabahar into the third major hub for petrochemical industries in Iran (the first two are in Bandar Imam & Assaluyeh). The complex is being built with investment by SATA (Armed Forces’ Social Welfare Investment Organization), and executed by an Iranian company called Mokran Negin Development Co, a subsidiary of Nemat Business Development Company (NEBCO), reportedly founded by Mr Mohammadreza Nematzadeh, the incumbent Industry Minister. The company has laid down roads, drawn up electricity lines and is in the process of building water connections. Eight Iranian companies have already invested there. Various companies from China, Oman and Europe have evinced their interest in the project.

A railway station is being built up to connect the zone with the port. There are efforts to connect Chabahar with Zahedan and Mashhad by rail. A new pipeline is also being considered for transferring South Pars ethane gas to Chabahar. Another pipeline is being laid from Iranshahr (220 km long) to supply Methane gas from Iranshahr to Chabahar. These pipelines will provide the feedstock for the petrochemical plants.

The information provided by the Iranians suggests that the entire industrial zone will contain 16 basic petrochemical complexes, built with an investment of about $10 billion, in three different phases. There will be plants producing urea, ammonia, Methanol, polypropylene, olefin and dimethoxyethane. They will also set up an aromatic complex and a crystal melamine unit. Iranians are looking at a total investment of about $80 billion by the end of the project. We were also told that all economic activities in the Free Zone would be exempt from taxes for 20 years.

Chabahar Free Zone

Chabahar Free Zone (CFZ) has been developed well. The township is fully operational with a shopping mall, hotels and well-paved roads. A close interaction with officials of the CFZ, Port and Maritime Organisation led us to believe that there is a lot of enthusiasm in Iran today than ever before about developing Chabahar as a port-cum-industrial zone. The managing director of CFZ, Hamed Ali Mobaraki, along with his teammates, impressed upon us the need for India to sustain its interest in Chabahar and help Iran build the infrastructure to harness the full potential of the port.

There was a clear sense of desperation about India not taking enough interest despite the clear strategic advantages that would accrue from investing in Chabahar. While they would like India to come in as a partner, it seemed that they were fast losing their patience with Indian indecision and opening their doors to other possible investors.

Chinese interests

During the course of the discussions, our Iranian interlocutors also informed us about the growing Chinese interest in Chabahar in recent months. After developing Gwadar in Pakistan, which has proved a bad investment, the Chinese are perhaps eying the potential of Chabahar as yet another alternate port they can develop as a strategic asset in the region.

We were shown a Chinese dredger operating at the Shahid Behesti terminal with Chinese workers. China has also started a heavy oil refinery opposite the upcoming petrochemical industrial complex. One could see the familiar squat barracks coming up at the construction site. A special market complex — a la ‘China Town’ — selling Chinese goods has already been set up in the city. Chinese interest in Iran is well-known. However, their interest in Chabahar is comparatively new.

In general, there has been a resurgence of Chinese interest, keeping the geopolitical shifts at the global level. In Tehran, in the hotel we were staying, we could see and overhear Chinese businessmen (to be read apart from tourists) engaged in animated discussions with their local contacts about how best to invest in Iran. Chinese pragmatism seems to have overtaken Indian conservatism in Iran.

Local perceptions

Chabahar is situated in the Iranian province of Seistan-Balochistan bordering the Pakistani state of Balochistan. The local people in Chabahar, cutting across sectarian affiliations, either spoke or understood Urdu and were quite warm and friendly towards Indians. Many of them send their children for education to India. There is a big craze for imitation jewellery in the city and many Baloch businessmen are engaged in this trade.

Moreover, unlike the Balochistan province of Pakistan, Seistan-Balochistan was quiet and peaceful and as somebody noted in Iran, Chabahar was ‘much more business-worthy’ than Gwadar. Many local businessmen, both Baloch and non-Baloch, expressed their surprise at Indian reticence and held that if China was braving Chabahar despite ‘zero linguistic and cultural links’, India must not be so hesitant.

Views in Tehran

Back in Tehran, in our interaction at the track II level with think-tanks, academics and students, there were repeated references to Indian callousness about Chabahar, despite its enormous strategic salience for India. There was a pervasive feeling that the primary reason for Indian vacillation was real or artificial fear of the US. It was pointed out to us that Iran would love to work with India on Chabahar, but it cannot hold its interests hostage to Indian fear of the US. There was a mention of the decrease in the level of oil trade and the adverse effect of sanctions on India-Iran bilateral trade. Some analysts even hinted at the proactive role India could have played in mediating the difference between Iran and the US rather than getting bogged down with US sanctions. Overall, there were huge expectations from India laced with an inevitable sense of dismay. Iranians were astonished at the way India was conducting its Iran policy against its own strategic interests. Our tame arguments to the contrary could not cut much ice.

Need for a new ‘Look West’ Policy

We came back with the feeling that Iranians are fast losing their patience with us, but they would still welcome us more than any other country to invest in Chabahar. They are upbeat about the P5+1 talks on nuclear issues and clearly see in it an opportunity for them to bounce back as an economic power in the region. There is already a beeline of foreign companies to Iran trying to assess the ground situation for prospective investment and Iranians are not going to wait endlessly for India to invest in Chabahar.

Moreover, the growing interest of China and European countries in Iran in general and Chabahar in particular could displace India from Iranian strategic calculations. Therefore, it is high time for India to shun its cautious and conservative approach and enhance its participation in developing Chabahar as a strategic hub as an integral part of its — what can be called — a new ‘Look-West’ policy. The Indian foreign office has so far engaged itself in empty policy rhetoric over Chabahar; now it is time for action. 

One can only hope that the new government in New Delhi will adopt proactive diplomacy in this regard. Regional geopolitical realities are changing around us. This warrants recalibration of our foreign policy priorities.

(Dr Ashok Behuria is Coordinator of South Asia Centre and a Fellow at IDSA. The views expressed here are his own)

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