Chabahar port: Between the dragon and the deep sea

Dramatic shifts in West Asian geo-strategic realities have complicated India's participation in Iran's recently inaugurated Chabahar deep-sea port

With a commitment to build two container berths and three multi-cargo berths at Chabahar port, India has stepped into the quicksand of West Asia oil politics. With an eventually $500 million commitment to develop the port with road and rail links, this is no tentative step. Chabahar offers India a vital route to Afghanistan and land-locked central Asia that bypasses Pakistan. Yet last week, when Iran inaugurated this deep-sea port, India had but a token presence.

Down south, Sri Lanka handed over its Hambantota port to China on a 99-year lease much more dramatically. India could only send its lightweight minister of state for shipping, Pon Radhakrishnan, to attend the Chabahar ceremony while Sri Lanka Prime Minister Ranil Wickremesinghe presided over the handing-over ceremony in parliament at Colombo. 

Yet as changes roil the region, India is for the first time forced to choose partners in the desert and begin to make a guess about the economic future of the competing countries. 

One element of the future is China’s inexorable march to secure its energy supply, which is determining its outreach in the Indian Ocean and West Asia and forcing India to react. Djibouti in Africa, Gwadar in Pakistan and Hambantota in Sri Lanka are all Chinese-run ports coming up close to Indian coasts. Wickremesinghe has emphasised that Chinese navy will not call at Hambantota, but that can be seen as an exhortation rather than a statement of position since Sri Lanka owes China $8 billion. Djibouti is a port for Chinese navy and so is Gwadar. Possibly next on the cards is the proposed deep seaport, Payra, in Bangladesh, though India too plans to bid for it through the same special purpose vehicle that it has set up for Chabahar — Indian Ports Global. An energy blockade from the seas may seem far-fetched at this juncture, but instead of a difficult war that nuclear nations cannot wage, it is a plausible threat to reckon with since it can be waged at far less cost.

Would Chabahar ensure a checkmate in India’s favour? Hardly so. Yet India has already begun to use the two berths it has committed to develop at Shahid Beheshti, one of the Chabahar port system’s two ports, to send the first consignment of grain to Kabul. 

With Afghanistan in tow, India will need to work towards integrated development of connectivity infrastructure, including ports, road and rail networks to open up greater opportunities for access to regional markets and “integration of the three economies”.  In May 2016, Prime Minister Narendra Modi had signed a pact with President Hassan Rouhani of Iran to build a Transit and Transport Corridor among the three countries using Chabahar Port as one of the regional hubs.

These sound great. The problems are, however, plenty and the solutions few — at least none that some nation will not veto. For instance, as India and Iran looked across the waters from Chabahar, the hitherto politically solid Gulf Cooperation Council (GCC), the alliance of six states led by Saudi Arabia (which established it in 1981 at its capital Riyadh), almost dissolved in the same week. Earlier this year, Qatar was accused of breaking ranks  with other GCC members (which included Kuwait, the United Arab Emirates (UAE), Bahrain, and Oman) for having cultivated relations with Iran. The others broke off diplomatic relations with Qatar and enforced a crippling blockade. 

Last week, as Kuwait invited Qatar back to the annual meeting of the six, a miffed UAE and Saudi Arabia walked out to form a new “joint cooperation committee”. India has so far been used to dealing with the GCC as a bloc that is largely Sunni against the Shia-majority countries that are led by Iran. That relatively easy equation has broken down. 

To ramp up investments back home, India has fostered competing relations with these countries in the past couple of years. Last week, UAE operationalised a $75 billion sovereign fund for India, of which $1 billion has been transferred to India’s National Infrastructure and Investment Fund while the volume of oil imports from Saudi Arabia is competing for the number one rank against a resurgent Iran. The kingdom is now the second-largest crude oil supplier to India after Iraq. India sourced 19 per cent of its oil and 29 per cent of LPG imports from Riyadh in 2016-17. Deepening ties with Tehran at this juncture, despite its role as a traditional heavyweight partner for New Delhi, has costs. 

It is a study in contrast how China plays this great game. Beijing has plans to use its fat purse to buy influence like its plans to buy shares in Saudi Arabia’s state-run Aramco, whose IPO is due in the new year. China’s Belt and Road Initiative is also meant to provide opportunities to Chinese firms to invest in mega-infrastructure projects in the region just as they hope to do elsewhere in Asia and Africa. India is instead waking up to the possibility that its huge internal market can provide rich investment avenues for the oil states, as a counter-opportunity to US bonds. But investments in projects like Chabahar would still need India to put its hand into its thin purse. To make the choices harder, New Delhi’s new-found investment partner, Japan, has seemingly decided not to get involved in Chabahar despite initial enthusiasm. Japan has deep economic relations with the US, where the Trump administration is bent on putting Iran back in the nuclear deep freeze. 

In a region with so many competing interests, a wrong call can have consequences. But with a dragon sailing the oceans, India has to make some choices and Chabahar seems the right call to make — especially if it were pursued with gusto.