The Strategic Significance of the Chabahar Deal: India enters the new great game with renewed confidence

Issues Details: 
Vol 10 Issue-3 Jul - Aug 2016
Page No.: 
Sub Title: 
Strategic implications of India’s effort in developing Chabahar Port in SE Iran on the Gulf of Oman
Lt Gen Syed Ata Hasnain (Retd)
Saturday, July 23, 2016

In the foreign policy domain it is always ‘win some, lose some’, especially when it comes to establishing relationships for strategic advantage, seeking entry into exclusive clubs or exploiting emerging opportunities at the initial stages they present themselves. In the last two months this belief has played true. With active assistance of the US the avenue for India to enter the Missile Technology Control Regime (MTCR) was created. It failed to gain entry into the exclusive Nuclear Suppliers Group (NSG) at Seoul even as it weathered an anti-India tirade by China. Many feel India was actually the gainer by not securing entry as the 2008 waiver by NSG gives it marked advantage for acquiring nuclear material. Most importantly, with another initiative however, India broke a 26 year old effort by Pakistan to deny it access to the strategically significant region of the Central Asian Republics (CARs). This was through the visit of PM Modi to Tehran to finally ink a deal on the crucial Indian Ocean Chabahar port which lies in the south eastern province of Sistan in Iran. The deal languishing since 2004, caused enough consternation in Pakistan and presumably in China too as both these nations have deep interests in the region of the New Great Game. That is where they are keenly promoting the development of energy and transportation conduits which they wish to exploit.

The region of the New Great Game has been constantly expanding beyond the bounds of the CARs. For the last 37 years one of the most significant potential players has been systematically kept outside its ambit; Iran’s self-imposed isolation and subsequently US sponsored sanctions have disallowed it to exercise its influence and compete towards its legitimate claims. The Jul 2015 Iranian Deal may not have yet transparently empowered Iran to be a part of the international community but has nonetheless removed those constraints which prevented it from competing for is strategic space. The geopolitics of the Middle East impinges very largely on those of South West and Central Asia. Saudi Arabia’s dwindling fortunes, the general abhorrence against Radicalism of the Salafi variety perceived to be linked with Saudi Arabia and to an extent with Qatar, have distinctly given Iran’s quiet diplomacy a fillip. Although still perceived by the US and the West as a nation sponsoring terror there has been a gradual dilution in that perception; this is largely due to the general quiet that is being witnessed on the Iran-Hezbollah-Hamas front where Iran is perceived as the villain. Iran therefore is ready for business but before that must get its geopolitics and the geo-strategy right. Many nations such as Russia, China and those from the West may be rushing in to do business but India’s entry spells a dimension which has always notionally been present, never taken ahead to the true potential.

What importance does Iran hold and what really is the significance of the Chabahar Deal, is important for us to fully comprehend if we wish to continue the momentum of this success in our foreign policy?

Firstly India’s relationship with Iran cannot be at the cost of the existing relationship with Saudi Arabia and the Gulf. All are of matching significance to India and not from the energy and trade angle alone. Undoubtedly, the presence of the huge 7 million Indian diaspora in the Gulf remains one of the strategic issues of mutual benefit. India needs energy from both the Gulf and Iran but the political significance of either cannot be downplayed. In a world where India is being viewed to be increasingly looking to the US and its interests here is an area where India needs to robustly display its strategic independence and remain linked to its interests just as two other big powers, Russia and China, are linked to theirs. The US emergence from an era of its anti-Iran bias is as yet slow and reluctant. India can help it progress the stabilization of this relationship and contribute to the balance of power in the Gulf region. This will allow the US more leverage in the eventual shift of its focus towards Rebalancing to the Asia Pacific region where its future interests lie. A more confident Iran linked to some of those nations with whom the US too has a beneficial relationship will help stabilize the Middle East.

Politically and ideologically, Iran’s importance also lies in the fact that it is the ideological fountainhead for the 25 million strong Indian Shia Muslim community. The linkages are strong between the Awadh Shia culture and Iran and the ideological one between Qom the center of Shia theological discourse and investigation and Indian Shia theologians.

On the economic side, India imports 83 percent of its energy needs in the petroleum and natural gas sectors and its home production is not showing signs of any major growth in the future. Our natural gas requirement is huge and Iran has the second largest reserve of natural gas in the world. It’s the fourth largest holder of proven crude oil reserves with 12 percent of the OPEC potential. India’s requirement of natural gas is going to multiply as its local resources have also not given the promised potential. The maximum use is in power generation (44.28 percent) followed by fertilizer industry (24.68 percent) and then domestic fuel (6.2 percent). Fertilizer industry receives huge subsidies from the Government which keeps increasing with rise in gas prices. India is seeking to construct a fertilizer plant at Chabahar if competitive prices can be negotiated with Iran. It will have a cascading effect on the price of fertilizer and the quantum of subsidy can be reduced drastically.

Nestled to the north of Iran is Turkmenistan the nation sitting on a huge quantum of natural gas reserves. It is estimated that if the TAPI pipeline ever comes up to deliver natural gas from Turkmenistan to India it will meet 25 percent of India’s natural gas reserves. TAPI’s future remains suspect and is contingent upon the security situation in Afghanistan and Pakistan as much as the attitude of Pakistan which has continuously denied India access to Central Asia. Chabahar will offer the feasibility of transportation of fertilizer manufactured from the gas available in the region through investment in plants. The transportation infrastructure which too India is seeking to develop will ensure in due course that India’s fertilizer needs manufactured in Iran can help reduce the huge Rs 80,000 cr subsidies that government of India underwrites each year.

Shifting to Chabahar itself, besides the long awaited cooperation from Pakistan to enable India to reach out to Afghanistan and the CARs through the overland routes which lie within Pakistan the port also bears the potential of connectivity with Russia. In addition it can ultimately connect to the Chinese trade corridor as part of the One Belt One Road (OBOR) concept. OBOR is yet an emerging concept with China itself unclear about the extent to which connectivity offered by it will mutually benefit other nations. India’s relationship with Pakistan is not likely to improve in the near future and the continuing search for influence in Afghanistan will keep Pakistan on tenterhooks despite all the economic benefits that flow to it from allowing India overland access. In such a situation India’s long wait ends with the decision to assist in the development of the Chabahar port and the inner infrastructure linking it to the western quadrilateral road infrastructure of Afghanistan. Chabahar is the door to Central Asia, Russia and in fact to Europe as the rail, energy and road links develop. The joint potential of Bandar Abbas Iran’s largest port lying to the west of Chabahar will ensure the opening of a gateway of access to the landlocked parts of Asia and southern Russia  and supplement the trade potential for Europe.

India’s strategic interests in Afghanistan remain challenged due to the impediments placed in the way of the Afghan traders to trade with India. Under the Bilateral Trade and Transit Agreement between Pakistan and Afghanistan the latter is permitted access to all dry and wet ports but Pakistan has forced it to use only the Karachi port. This strategy has been employed to deny Indian influence in Afghanistan and make trade between India and Afghanistan cost prohibitive. Yet, India’s 2.2 billion US$ investment in Afghanistan’s reconstruction has ensured that it remains a major player. This potential has now been enhanced with the far reaching India – Iran - Afghanistan Tripartite Agreement. It will ensure Afghan goods also have cheaper access to Indian markets to reduce deficit.  “The agreement can change the course of history in this region,” Indian Prime Minister Narendra Modi said during his visit to Tehran. Obviously India’s soft power commitment to Afghanistan on which much of the relationship has been built through the last many years will receipt a boost as will the overall goodwill. This will remain to the chagrin of Pakistan which will see its strategy of denial of access increasingly failing.

It is seldom realized that Afghanistan’s unrealized mineral potential is to the level of approximately two trillion US$. India was accused of being tardy in its approach towards the exploitation of this potential in which China has the lead. Lithium is available in abundance as is copper and other premium minerals. It will save India much in foreign exchange if this can be exploited. Thus far without land access to the landlocked state India’s effort was always limited. With infrastructure likely being developed in the form of roads and rail linking Afghanistan to Chabahar India will have the means to take the economic relationship with Afghanistan to another level. The 500 Km proposed rail link from Chabahar to Zahidan may eventually need an investment in its extension to Zaranj and beyond to Hajigak in Afghanistan.

What should have been a multi billion dollar trade between India and the CARs is limited to just 500 million US$ due to lack of connectivity. China with its borders and outreach   has reached trade quantity of  47 billion US$. Over a period of time India’s potential  will need to be enhanced to its true potential once the economic corridor from Chabahar becomes progressively active.

The geopolitical implications of the Chabahar deal are immense. The linkages with the CARs were built during the time of the Soviet Union. The natural progress of this could not be achieved once the Soviet Union broke up. Now with the economic potential looming ahead with accessibility through Chabahar, the future of enhancing shared interests appears bright. The CARs are particularly keen to prevent the entry of radicalism into their fold and this is something in which they can jointly work with India.

India’s role in the Shanghai Cooperation Organization (SCO) too will receive a shot in the arm. It will progressively increase as the geo-economics improves. Although primarily an economic forum SCO’s geopolitical linkages too are immense as will its other soft power arms such as environment and water related issues, the areas of all future engagement between nations of a region.. India’s role in Afghanistan was often dismissed in international for a as peripheral because of the lack of accessibility and common borders. This argument can now be overturned once India Afghanistan trade takes off. With fading aid potential after the ultimate final withdrawal of the International Security Assistance Force (ISAF) from Afghanistan the latter will have to seek avenues to remain economically afloat. It is ultimately comfortable in dealing with India.

With enhanced energy security and greater accessibility to areas where it has major strategic interests the Chabahar deal is one of the major successes of the recent past in the field of proactive foreign policy. The important thing is to continue studying its potential as avenues and relationships open. In the world of geo-politics he who has the vision and the initiative emerges winner. That is where India will have to continue to be dynamic to seriously realize the full potential of the opportunities which have opened and which will further open with the Chabahar deal.