NEW DELHI // India’s newly signed agreement to develop the Iranian port of Chabahar is being hailed by the media and analysts as a triumph of strategic diplomacy in which New Delhi has outplayed regional rival China.
For months Beijing had expressed keen interest in adding the Iranian contract to its already expansive list of foreign infrastructure projects.
China has already helped develop – to varying degrees – the ports of Chittagong in Bangladesh, Colombo and Hambantota in Sri Lanka, and Gwadar in Pakistan. In January, a Chinese consortium also won a contract for the deepwater port of Kyaukpyu in Myanmar.
But on Monday India’s prime minister Narendra Modi staved off the Chinese challenge during a two-day visit to Iran. By committing US$500 million (Dh1.8 billion) to the Chabahar project, Mr Modi helped secure a line of access for India to Afghanistan and Central Asia – a region traditionally dominated by Pakistan and, more recently, China.
In the first phase of the port’s construction, India will invest and assist in the building of two shipping terminals and five berths.
By moving past the stages of long-running negotiations into a firm contract, India and Iran have given their bilateral ties a significant boost, Kabir Taneja, a Munich-based geopolitical analyst, told The National. "It shows more resolve from both parties. Now we have to see how the implementation goes."
According to an editorial in the Indian Express newspaper on Wednesday, the Chabahar deal "may mark [Mr Modi's] most durable strategic legacy".
“[It] marks a new level in India’s overseas ambitions, establishing a genuinely strategic presence not just in one of the world’s great energy markets but potentially giving Indian business access to some of the fastest-growing economies of the future,” it added.
On the same day, The Hindu newspaper said, also in an editorial, that the Chabahar project "has the potential to alter the geopolitical map of South and Central Asia".
India’s interest in Chabahar began in the late 1990s when another Bharatiya Janata Party (BJP) government was in power. New Delhi and Tehran signed a memorandum of understanding to cooperate on the project in 2003, but once the West levied economic sanctions upon Iran, India was unable to proceed with its initiative.
The United States and Europe lifted most sanctions in January, after Iran agreed to regulate its nuclear programme. But some trade restrictions are still in place, as the United States reminded India on Tuesday.
“We have been very clear with the Indians [about] continuing restrictions on activities with respect to Iran,” said Nisha Biswal, the US assistant secretary of state for south and central Asia. “We have to examine the details of the Chabahar announcement to see where it falls in that place.”
Ms Biswal recognised that “Iran represents for India a gateway into Afghanistan and central Asia. It needs access that it doesn’t have”.
India’s land access to the region has traditionally been cut off by its rival Pakistan, which does not permit the passage of Indian goods through its territory.
In addition to this complication, in November 2014 China announced a $40bn fund to develop land and sea routes across much of south and south-east Asia, central Asia, north-east Africa, and central Europe.
These so-called “Land and Maritime Silk Roads” – named after the ancient trade route stretching from Europe into the heart of China – are designed to pass through Kyrgyzstan, Uzbekistan, Turkmenistan and Iran, bringing central Asia comprehensively into China’s sphere of economic influence.
As a part of this strategy, China has been diligently courting Iran on Chabahar, using its economic influence to bolster its case. While bilateral trade between India and Iran is worth only $9bn, China-Iran trade stands at $52bn.
Chinese delegations have visited Iran frequently to press the issue. In October, an Iranian official told one such delegation that his country would be “glad to work with China to make our relations solid and strong”.
Another Chinese team visited Chabahar last month to explore the possibility of building a township alongside developing the port, Hamed Ali Mobaraki, the managing director of the Chabahar Free Trade Zone, told Iran’s Islamic Republic News Agency.
Ever since his election, Mr Modi has been trying to counterbalance China’s dominance in Central Asia. Last August, he made a whirlwind trip through Uzbekistan, Tajikistan, Turkmenistan, Kyrgyzstan and Kazakhstan – a tour that Mr Taneja, the Munich-based analyst, called “a needed correction to Indian foreign policy”.
“I think the 2013 case of China winning the Kashgan oilfield [contract] from under India’s nose in Kazakhstan was a cold reminder of how far Beijing has managed to build inroads in central Asian governments,” Mr Taneja said.
“This shows how big China’s assertiveness in Central Asia has become, something which is today next to impossible for India to realistically counter.”
In the long-term, Chabahar could provide India with a significant advantage in the region, but for now it still has to contend with China’s head start, Mr Taneja added.
“India still has a lot of diplomacy left to play before it can build up Chabahar from both economic and strategic points of view to what it hopes to become.”
ssubramanian@thenational.ae