The renewed impetus for development of the Shahid Behesti Port in Chabahar, comes at an opportune time for India. The changes in the geo-political context due to the Russia-Ukraine war, India’s growing presence in Central Asia and a breakthrough in negotiations over the Chabahar port (as suggested by recent reports[i]) brighten the prospect for this strategically important infrastructure project. With resolution of long-pending issues such as international arbitration framework on the cards, the complete operationalisation of phase 1 of the port in the near future has become a concrete possibility. Considering India’s commitment to the project and its use of Chabahar to expand its international outreach, Chabahar can become a fulcrum for India’s economic diplomacy and strategic engagement in this region.
India has already invested USD 85 million as part of phase 1 of the project’s development and supplied 6 Mobile Harbour Cranes (two with 140 tonnes & four 100 tonnes capacity) as well as other equipment worth USD 25 Million. Since December 2018, when India Ports Global Limited (IPGL) took over operations, the port has handled 215 vessels and 4 million tonnes of bulk and general cargo. The capacity of the port will reach 8.5 million tonnes at the end of the first phase. Strategically, Chabahar offers India a shorter trade route to the West and Central Asia via Iran and also facilitates access to Afghanistan bypassing Pakistan. Integration with the International North South Corridor makes it a more attractive alternative than China’s Belt and Road Initiative to Central Asian nations. Fortuitously for India, recent developments have led to growing support for the project and closer ties with other actors in the neighbourhood.
AFGHANISTAN & TALIBAN SUPPORT FOR CHABAHAR
Political developments, economic contraction and natural disasters have created a serious economic crisis in Afghanistan. According to the World Bank preliminary estimates, the Afghan economy contracted by 20.7% in 2021 as “sudden cessation of aid led to dramatic drop in public spending and aggregate demand, shrinking household incomes and reducing consumption.”[ii] In these circumstances, the Taliban regime has voiced support for the Chabahar project in a statement released this month, saying that it welcomes the integration of the port in the International North-South Transport Corridor and is “ready to provide all necessary protection and facilities in this regard.”[iii] India’s use of the port to provide aid to Afghanistan in the past means that the benefits are evident to the Taliban government. The port was used to send humanitarian consignments to Afghanistan, including a shipment of 75,000 MTs of wheat in 2020. Further, Afghanistan may also see the Chabahar-INSTC link as an opening to restart Indian investment, especially in Afghan infrastructure.
RUSSIA & THE INTERNATIONAL NORTH SOUTH TRANSPORT CORRIDOR
Following the Russia-Ukraine war, India’s decision to stay out of the sanction regime imposed on Russian exports was motivated by national self-interest and pursuit of energy security. As a result, Russia, offering cheaper oil, became India’s largest oil supplier in recent months. As G7 nations and Australia have imposed a price cap on Russian seaborne crude oil in addition to other sanctions, it is likely that Russia will continue to diversify its oil export destinations. The International North South Transport Corridor (INSTC) becomes more important for both Russia and India’s strategic interests in this context. The INSTC is a 7200 km multi modal transport project that includes rail, road, and sea routes. Established in 2000 by India, Iran, and Russia, it offers India a shorter trade route to Europe than the Suez Canal. It links India to the Caspian Sea via the Persian Gulf and has been ratified by 13 countries already. Integrating Chabahar with INSTC promises to cut down transit cost and time significantly for India, which has already proposed integration of the port within the INSTC framework. It links India to Europe, Central Asia as well as Russia and promises to bolster trade ties. The potential for connectivity from Mumbai to Moscow through this project will be of equal significance for Moscow, as it looks to diversify its trade and energy ties.
INDIA’S GROWING PRESENCE IN CENTRAL ASIA
Chabahar and INSTC also play a pivotal role in India’s growing presence in Central Asia[iv]. This includes infrastructure projects, such as the Dushanbe-Chortut Highway Project in Tajikistan, being constructed by the Border Roads Organisation (BRO) and Lines of Credit to various nations. The Indian Government supported USD 448 million line of credit in Uzbekistan has been set up for social infrastructure and other development projects. India also offered USD 40 million to Uzbekistan for Defence procurement. Lines of credit have also been offered to Kyrgyzstan, Turkmenistan and Kazakhstan. The first meeting of India-Central Asia National Security Advisors/Secretaries of the Security Councils, held in December, 2022 added a security dimension to the relationship. Membership of the Shanghai Cooperation Organisation and Ministerial level visits have reinforced India’s commitment to ties with Central Asia. The Chabahar port allows India to pursue closer trade ties with Central Asia through a route bypassing Pakistan. Further, the INSTC adds another aspect to ties with Central Asian nations through the greater connectivity it offers. The INSTC also has the potential to become an alternative to China’s Belt and Road Initiative in the region. Investments under the latter have strings attached which are determined by China’s strategic and security interests. Central Asian nations may find it more palatable to engage with INSTC which links them with the European Union and India. For India, Chabahar port was already a key strategic investment but interests of several nations in the immediate neighbourhood have now aligned with the Indian push for the project in the backdrop of the Russia-Ukraine war and hardening of international blocs in response. With India’s G20 presidency this year, it has taken on the additional role of putting forward a developing country and emerging economy perspective on international fora. The G20 platform itself gives India a unique opportunity to foster dialogue between the global community on the one hand and nations facing sanction such as Iran and Russia on the other. In this global context, the possibilities offered by Chabahar, INSTC and closer ties with India have combined to motivate Central Asian nations, Russia, Afghanistan, and Iran itself to look favourably on the port. For India, this means that completion of phase 1 of the Chabahar project is in sight and can become a launchpad for a wider role in the region