India is not getting respite on its foreign front after the stand-off with China led to serious border-related tensions. Now New Delhi has to get proactive to salvage its historical ties with Tehran. India is no longer associated with two significant Iranian projects in which it had got an opportunity to play a major role, which would have helped it strengthen its position in Afghanistan and beyond vis-a-vis Pakistan. The agreement India had signed with Iran to develop a section of Iran’s Chabahar port on the Makran coast was not a small gain. It was India’s answer to Pakistan which had denied New Delhi access to the land route passing through Pakistan to reach Afghanistan and the Central Asian Republics.
India acted swiftly after signing an agreement in 2003 to develop a part of the strategically significant port and complete its construction in the shortest possible time. The first phase of the port project, including the part built by India with its financial and technical resources, was inaugurated by Iranian President Hassan Rouhani in December 2017 and India took over the operations of a part of Shahid Beheshti Port, Chabahar, on December 24, 2018. The physical takeover of the port’s terminal area, cargo handling equipment and office building was completed by December 29, 2018.
This was for the first time that India had got an opportunity to operate a seaport outside its territorial limits. The port opened a new strategic route connecting India to Iran, Afghanistan, the Central Asian Republics and Russia, bypassing Pakistan. Since then India has been using it to transport its supplies of grains or other things to Afghanistan with little difficulty as Chabahar is just 1000 km from Kandla port in Gujarat and well connected with India’s western coast through sea lanes.
In its enthusiasm, India completed in 2008 a $150 million 220-km Zaranj-Delaram road project connecting the Herat highway in Afghanistan with a view to taking its aid material to areas in Afghanistan. Zaranj in Afghanistan is 200 km from Zahedan in Iran whereas Zahedan is 628 km from Chabahar. Unfortunately, India has been kept out of the picture so far as the Chabahar-Zahedan railway project is concerned though its public sector company, IRCON International Ltd, had already done ground work and preliminary calculations that it would cost $1.6 billion.
The Chabahar-Zahedan rail track project was part of the agreement for the port project. Some changes in the contract by the Iranians and delays on the part of India owing to various factors came in the way of New Delhi taking up the project for its completion. However, the real roadblock was the US sanctions against Iran which discouraged India from going ahead. In any case, India had signed a trilateral trade and transit agreement with Iran and Afghanistan when Prime Minister Narendra Modi was in Tehran in 2016. The MoUs that were finalised had it that India would be given a 10-year lease to develop and operate two terminals and five berths at Chabahar port, access to the Chabahar free trade zone and a contract to build the Chabahar-Zahedan rail track.
However, reports say that Iran has gone ahead with the rail project with a view to completing a part of it before the scheduled elections next year so that it is easier for President Hassan Rouhani to face the public on the occasion.
Not being involved in the construction of the rail track project is a major upsetting development for India, but New Delhi has its own problems. While India had been granted by the US a waiver from its anti-Iran sanctions with regard to the port project, there was no clarity about the Chabahar-Zahedan rail project. India could not afford to ignore the US sanctions, particularly at this stage when it needed US support to handle China following the recent border standoff in Ladakh and the related tensions.
While India was hoping to be invited by Iran to join the rail track project at some stage, it has been sidelined in the case of another significant project – Farzad-B gas field development plan. Iran has gone ahead with the gas field development project on its own though with a message to India that it can be involved in it at a “later stage”. However, no one can say with certainty when this “later stage” will come.
According to the External Affairs Ministry, “In January 2020, we were informed that in the immediate future, Iran would develop the field on its own and would like to involve India appropriately at a later stage. This matter remains under discussion.”
India has been negotiating with Iran for oil and gas rights associated with Farzad-B since its discovery in 2008 and India’s ONGC has been involved in it at the discovery stage. But the Trump administration’s decision to withdraw from the 2015 nuclear deal with Iran, reimposing the sanctions against Tehran, made the situation difficult for India to continue with its plan concerning the gas field. India found itself in difficult straits when it had to choose between the US and Iran and it opted to do nothing which could jeopardise its relations with the US. The development led to India deciding not to import as much as 90 per cent of its petroleum supplies from Iran. It was an uncomfortable decision but there was no better alternative to protect India’s economic and geopolitical interests.
However, Iran has taken the decision to begin the development of Farzad-B gas field without India being a part of it when it is negotiating to sign a 25-year strategic accord involving economic and security partnership with China. The context cannot be ignored. Indications about such an accord were available when Chinese President Xi Jinping visited Iran in January 2016. This will result in the infusion of $400 billion into the Iranian economy through oil imports and development of transport and manufacturing infrastructure by China.
Iran had earlier entered into an agreement with China to associate itself with the Chinese Belt and Road Initiative, also known as “debt trap diplomacy”.
Iran at the moment may be feeling that it does not have to bother about India’s investments if China is more than willing to come to Tehran with ambitious investment projects. Apparently, there can be no better opportunity than that available now to enter into arrangements with China for infusion of huge funds into various areas to provide the much-needed boost to the Iranian economy because China is engaged in a tiff with the US on various issues like the turmoil in Hong Kong and hiding of the Covid-19 pandemic-related facts besides the border-related tensions with India.
But the Iranians need to keep in mind that China is an undependable, secretive ally, which ultimately aims to subjugate a friendly country through its “debt-trap diplomacy”. India, however, must give a fresh look to its Iran policy so than New Delhi does not lose a time-tested friend in Iran in its zeal to keep the US in good humour to use it to effectively handle China. New Delhi should not allow its national interests to suffer in the process of keeping the US on its side at a time when Washington DC is too willing to strengthen its ties with India.