The balance of power is shifting from the United States to Asia, particularly after Russia’s invasion of Ukraine. This has led to significant changes in international transportation and trade, with many new projects being launched involving ports and land corridors. Iran and India are working to bolster trade and connectivity projects in this context. Despite facing Western pressure, sanctions, and security concerns, they are both committed to linking Chabahar Port to the International North-South Transport Corridor (INSTC). India has already invested around $500 million in the port project, which could make Chabahar a significant hub for trade in the region.
However, there are also some potential challenges to this project. These include competition between the two South Asian giants, the water war between Iran and Afghanistan, and the US factor in the case of Iran.
The International North-South Transportation Corridor (INSTC)
The International North-South Transportation Corridor (INSTC) is a 7,200-kilometer multi-modal transportation corridor launched in 2000 in St. Petersburg, Russia. A substitute transport system links India to Central Asia and Eurasia. The primary goal of this project was to promote transport cooperation among Moscow, New Delhi, and Tehran.
The INSTC is a multifaceted integration project that aims to bridge different regions and pursue the intra-regional development of energy-rich countries. Its significance has grown immensely, particularly after the Ukraine war. Moscow intends to use the INSTC as a potentially vital economic escape route into the larger Asian region to circumvent Western sanctions prohibiting Russian goods from entering Europe.
This transit project provides a route for moving freight between three states through ships, rail, and road networks. The three main routes are the East-West Corridor, the South Asian Corridor, and the INSTC. The INSTC is one of the most significant geo-economic initiatives of these transport corridors near Chabahar Port.
Linking Chabahar to INSTC
The Chabahar port in southern Iran is critical to aligning India’s interests with the Islamic Republic’s, as it benefits New Delhi in accessing Russian, Central Asian, and European markets. The International North-South Transport Corridor (INSTC) has received India’s explicit consent for its inclusion in the Chabahar port.
According to an official release in January 2023, the Shipping and Ports Ministry, in collaboration with India Ports Global Ltd., organized a workshop on connecting Iran’s Chabahar Port to the INSTC.
The workshop stressed that successfully completing the corridor would reduce the time it takes for export-import (EXIM) shipments and link New Delhi to Moscow, the European Union, and Central Asia.
Together with the Islamic Republic, New Delhi is working on the first stage of the Shahid Beheshti terminal at the Chabahar port, for which India has provided a $150 million credit facility.
What’s in for New Delhi?
The INSTC route connects India’s western ports of Mumbai and Gujarat to Iran’s Chabahar port, bypassing Pakistan. This project is one of several international initiatives in which India is involved, and it is part of India’s global effort to counter the Belt and Road Initiative (BRI), which began in South Asia.
In this case, the INSTC can be considered a geopolitical and geoeconomic tool for India. It allows India to diversify its export destinations through shorter routes while also avoiding regional problems. Additionally, it helps India attract new markets and gain access to energy resources in the region.
In this case, the INSTC can be considered a geopolitical and geoeconomic tool for India. It allows India to diversify its export destinations through shorter routes, while also avoiding regional problems. Additionally, it helps India attract new markets and gain access to energy resources in the region.
According to an ORF report, India sought other options for connecting with Central Asia, which is rich in hydrocarbons and has strategic significance. Therefore, the INSTC is critical to India’s energy security policy, as the country is the world’s second-largest energy importer after China.
Benefits for Iran
Iran’s efforts to implement the Chabahar port transit project are part of its long-term goal of becoming a regional transit hub. Chabahar Port will benefit Iran economically and directly, making it a more significant player in global transportation and logistics services.
The International North-South Transport Corridor (INSTC) occupies a strategically unique position in the framework of Tehran’s Look East policy. The corridor enhances Tehran’s transit position and has significant geo-economic and geopolitical implications for the Islamic Republic. Chabahar Port is expected to be a flagship facility to help Iran become an important player in international transport and logistics services.
Iran’s other ports, such as Bandar Abbas, are extremely busy, handling 85% of Iran’s international trade. Due to the heavy workload, ships are constantly facing delays. Developing Chabahar Port will alleviate this problem as it is a deep-water port that can accommodate ships weighing more than 100,000 tons.
Obstacles
Several obstacles could hamper cooperation between Tehran and New Delhi. Because of President Trump’s maximum pressure strategy, Washington’s comprehensive sanctions on Tehran have hampered Iran’s ambitions to become a key energy supplier to India.
Due to the risk of economic consequences, New Delhi will probably stick to its policy of avoiding sanctions violations. Furthermore, even if EU leaders agree to lift sanctions, Iran’s access to dollar-dominated markets will remain a significant barrier to overcome. Moreover, these sanctions are not just under the control of EU leaders. They must also be approved by the US. The INSTC would require Washington’s assistance to accomplish its goal, which seems unlikely.
Second, India and China, the two major Asian powers, are competing with each other in the face of drastic shifts in geo-economic trends. The new North-South Corridor competes with China’s Belt and Road Initiative. Tehran’s increasing reliance on Beijing could hurt Indo-Iranian competition and potentially halt connectivity projects.
India has expressed concerns about the agreement due to the 25-year trade agreement between Tehran and Beijing. China’s influence over Pakistan’s Gwadar Port, and thus the Indian Ocean, narrows India’s options.
Iran is dissatisfied with India’s performance in fulfilling its obligations in developing the Chabahar Port and the Chabahar-Zahedan railway route. If India fails to complete the 624-kilometer Chabahar-Zahedan railway route, Tehran will likely seek more investment from China. New Delhi sees the Sino-Iranian agreement as a step towards India’s withdrawal from Chabahar Port.
Finally, the current water war over the Helmand River between the Islamic Republic and Kabul has worsened the security situation in the region. Recent border clashes have raised the political temperature in the region. These disputes could hinder cooperation between the two countries.
In conclusion, the Chabahar Port is essential for Iran’s economic security and India’s access to Iranian oil. Both countries have converging interests in developing Chabahar Port and forging better connectivity to Central Asia. However, the project’s fate is vulnerable to the region’s current geopolitical climate, including the failure of the JCPOA negotiations, Iran’s non-compliance with the IAEA, slow progress and lack of funding, and the possibility of a border clash between Tehran and Kabul. As a result, linking Chabahar Port to INSTC could become a fading dream for Tehran and New Delhi.
*The author is a student at the School of Politics and International Relations QAU, Islamabad, Pakistan.
**The views expressed in this article are those of the author and do not necessarily reflect the opinions of The Diplomatic Insight. The organization neither endorses nor assumes any responsibility for the content of this article.
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