India-Iran port of call

After his successful visits to the UAE and Saudi Arabia, Prime Minister Narendra Modi finally turned his attention to Iran, widely considered to be the decisive power in an increasingly fractious West Asia. There has been a widespread concern that despite the historic nature of Indo-Iranian ties, the relationship has been struggling in the last few years. It needs to revive and revise fast. Modi’s visit to Tehran is the most important signal that New Delhi is ready to put its money where its mouth is. 

Modi quoted Ghalib to underscore the historic nature of ‘dosti’ between India and Iran even as the trilateral agreement to develop the Chabahar port and related infrastructure was signed with India making about $ 500 million available for this project. Indian Ports Global Pvt, a joint venture between the Jawaharlal Nehru Port Trust and the Kandla Port Trust, will sign a contract with Arya Bandar Company of Iran for developing two terminals and five multi-cargo berth in Phase-1 of the Chabahar port project. 

After years of dilly-dallying by the United Progressive Alliance government, the Modi government decided last year to invest $85.21 million in developing the strategically important Chabahar port in Iran, allowing India to circumvent Pakistan and open up a route to landlocked Afghanistan. The port, located 72km west of Pakistan’s Gwadar port, holds immense strategic and economic significance for India. It is already connected to the city of Zaranj in Afghanistan’s south-western province of Nimruz and can serve as India’s entry point to Afghanistan, Central Asia and beyond. New Delhi and Tehran both view Chabahar as critical to developing connectivity with Kabul and as a geopolitical lever vis-à-vis Pakistan. This is a high-priority issue for the Modi government and it has done well to expedite decision-making in this realm.

During Modi’s visit, the two states shared concerns at the spread of forces of instability, radicalism and terror in the region and agreed to enhance interaction between their defence and security institutions on regional and maritime security. Plans are afoot for greater maritime cooperation, and Iran has already joined the Indian Navy’s annual initiative, the Indian Ocean Naval Symposium, which provides a forum for the navies of the Indian Ocean littoral states to engage with each other. The two sides are now working towards greater intelligence sharing on regional and terrorism related matters.

Yet, not surprisingly the focus of Prime Minister’s visit was on enhancing connectivity, and boosting bilateral trade so as to lay strong economic foundations for Indo-Iranian ties. This is critical for Iran as it moves towards engaging the wider world.  A preliminary agreement on developing Farzad B gas field has also been accomplished during the visit by Indian Minister for State for Petroleum and Natural Resources Dharmendra Pradhan to Iran last month. The initial agreement for exploration and development of Farzad B gas field was signed with a consortium of three Indian state companies in 2000. During his recent visit to Iran, Pradhan offered to invest up to $20 billion in oil, petrochemicals and fertiliser projects in joint ventures with Iran if Tehran provides land and gas at concessional rates. He also expressed an interest in setting up an LNG plant and a gas cracker unit at Chabahar. The official lifting of western sanctions against Iran in January 2016 has expanded the scope of Indo-Iranian engagement significantly and India is trying to recalibrate its Iran policy. Iran’s crude oil exports to India are now three times higher compared to last year.

The geopolitics of the Middle East is always a difficult one to traverse, even for great powers, as the US has found to its considerable cost. Today, the Obama administration is desperately trying to reduce its equities in a region that has been in perpetual turmoil, partly due to external interference and partly due to internal contradictions. This has led to an even greater regional turmoil in the process. Enter China in an attempt to gingerly probe its ability to shape a new regional order. Chinese President Xi Jinping’s visit to Iran, Egypt and Saudi Arabia earlier this year was aimed at gaining greater political and economic salience in a region where it has been reluctant to get involved so far. But as the balance of power in the region unravels, new equations are emerging and older paradigms are no longer sufficient to engage the region.

The most significant disruption to Indo-Iranian relationship has come in the form of China, which is now Iran’s largest trading partner. China has invested massively in Iran, with more than 100 Chinese companies on the ground seeking to occupy the space vacated by Western firms that had grown skittish about international pressure on the country. Today, Iran is being courted by all major powers and India will have to work hard to retain its strategic space. A thaw in US-Iran relations, heralded by the new nuclear understanding between the two, has allowed India to push forth with a more purposeful regional engagement with Iran. Modi’s visit should be the beginning of this reorientation.

The author teaches at King’s College, London