Will US-Iran tensions impact Chabahar Project

US President Donald Trump has accused Iran of not living up to the spirit of the nuclear deal signed in 2015 hence he intends to ensure that Tehran never obtains a nuclear weapon. Some of the analysts are of the view that US-Iran tensions would adversely impact the Chabahar Project and its fate hangs in balance. The deal was signed between Iran and P5+1 (US, UK, Russia, China and France plus Germany) along with the European Union (EU) on 14 July 2015, named the Joint Comprehensive Plan of Action (JCPOA). The objective of  JCPOA was to significantly limit Iran’s nuclear ability for more than a decade in return for lifting international oil and financial sanctions. The stockpile will be reduced by 98 per cent to 300 kg for fifteen years. The level of enrichment will be maximum 3.67 per cent and will possess only 6104 centrifuges out of about 20000. Under the plan of action it is decided that the facility at Natanz will be limited to installing not more than 5060 least efficient centrifuges for ten years and Fordo, the underground facility will not have enrichment for fifteen years and it will be converted into Nuclear Physics and Technology Centre. The Plan of Action also says that Iran will provide access to all of its declared facilities by International Atomic Energy Agency (IAEA). There will be no reprocessing of spent fuel and the heavy water facility at Arak will be redesigned to Heavy Water Research Reactor.

The US President said that he would not certify that Tehran was complying with the terms of the 2015 nuclear deal. He described the pact as one of the “worst and most one-sided transactions the US has ever entered into”. Albeit, the US did not pull itself out of the pact, the President gave the US Congress 60 days to decide whether to reimpose economic sanctions on Iran that were lifted under the pact.

India and Iran are developing the Chabahar port as a major trade junction for movement of goods among the countries and Afghanistan, bypassing Pakistan altogether.

The Chabahar project first found mention in an India-Iran joint statement issued in 2003 and is aimed to start port operations by the end of 2018.

India is closely monitoring the developments given that the US Congress has been seen as more hawkish on the Iran nuclear deal than the administration in the past.

However, India is confident that it would not impact the Project. In the past also, there have been embargos of over $20 million investment in Iran but this time the European Union, China, Russia and other major countries are opposing the US de-certification. Hence, it should give India cover to continue with Chabahar.

India and Iran signed a pact to develop the Chabahar Port on the Gulf of Oman in May 2016. The two countries also signed a trilateral connectivity pact to open an alternative route for landlocked Afghanistan, to access markets like India.

According to the pact, India is to equip and operate two berths in Chabahar Port Phase-I with capital investment of $85.21 million and annual revenue expenditure of $22.95 million on a 10-year lease. The Iranian side had requested for the provision of a credit of $150 million in accordance with the pact.

Geopolitically, the Project is seen as India’s strategic move to bypass Pakistan and trade goods to and from Afghanistan via road and sea. This was also in lieu of the fact that Pakistan, had shown reluctance to allow overland transit between Afghanistan and India through its territory. The Chabahar Port is also less than 100km from Pakistan’s Chinese-constructed port of Gwadar, part of a project to open up an energy and trade corridor from the Gulf to western China.

Finance minister Arun Jaitley, who was in Washington last week for meetings with the International Monetary Fund and the World Bank, separately underlined the strategic nature of the port, stating that Chabahar would not only “service Iran, but is also going to service Afghanistan.”

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