A little-noticed deal this month between India and Iran to develop an obscure port in the Gulf of Oman is offering a glimpse into just how dramatically last summer’s Iranian nuclear accord stands to upend South Asia’s geopolitical dynamics — as New Delhi pushes to expand its influence in nearby Afghanistan, outflank rival Pakistan and challenge Chinese dominance in the region.
Indian Prime Minister Narendra Modi, Iranian President Hassan Rouhani and Afghan President Ashraf Ghani were all smiles at an unusual gathering last week in Tehran, where Mr. Modi pledged billions to develop Iran’s southeastern Chabahar port and help establish a free trade zone stretching toward the Iran-Afghan border during the coming years.
News of the deal prompted a wary reaction from some in Washington, amid concern that sanctions relief under the Obama administration-backed nuclear accord with Iran last year has paved the way for a key U.S. ally to align itself with Washington’s main adversary in the region.
But most South Asia experts say New Delhi remains firmly committed to its growing security cooperation with the U.S., and that its dealings with Iran are being motivated mainly by a desire to open a vast new trade link between a key Indian industry hub and the landlocked nations of Central Asia — without including rival Pakistan.
Iran’s Chabahar port, located on the northern side of the Gulf of Oman, sits less than 600 miles from western India’s export powerhouse of Gujarat state, where Mr. Modi served as chief minister for more than a decade prior to his election as prime minister in 2014.
It’s a long-stalled deal that has economic, diplomatic and security implications for states across the region and beyond.
“This is about ensuring transit access for Indian goods in general to Afghanistan through Iran, but potentially also to Central Asia,” said Tanvi Madan, who heads the India Project at the Brookings Institution in Washington.
“The Indians have tried for many years to get such transit access through Pakistan, but they’ve come to the conclusion that it’s just not going to happen and that they need to move forward another way.
“India also sees this deal as potentially contributing to the future stability of Afghanistan,” Ms. Madan said, adding that New Delhi is anxious to ensure that “Afghanistan has options other than going through Pakistan to get access to the sea.”
The big question, she said, is whether ground will actually be broken on the Chabahar project anytime soon.
New Delhi first made promises about the port back in 2003. But the plan got stalled for years by bureaucratic bungling on both sides and was then derailed by international tensions over Iran’s nuclear program — specifically when the Obama administration and its allies ramped up sanctions on Tehran in 2012.
Mr. Modi pledged $500 million to develop the port’s facilities and make it a major transshipment point for goods during last week’s meeting in Tehran. He also said India will spend some $16 billion during the coming years to build up the Chabahar Free Trade Zone with roads and railroads running inland to the north.
Mr. Rouhani said the projects could be a “great symbol” of Iran-India cooperation, with Iranian energy resources and Indian mines potentially paving the way for expanded trade in aluminum, steel and petrochemicals between the two nations.
Such plans fit within Tehran’s push to reintegrate into the global economic system following the lifting of international sanctions in exchange for Iran’s curtailing of its nuclear program under last summer’s accord with the U.S. and other world powers.
For New Delhi, the deepened engagement could mean easier access to oil and gas to feed India’s immense and growing energy needs.
Iran had been the nation’s second-largest crude supplier prior to the imposition of sanctions in 2012. Mr. Modi’s two-day trip to Tehran came with the announcement that India has begun paying back $6 billion in debt to Iran from past oil purchases — reportedly delivering some $750 million in such payments last week.
Friction with China and Pakistan?
The India-Iran-Afghanistan nexus comes as Pakistan has grown increasingly close to China, which has poured money and resources into its own port-development project in the Pakistan coastal city of Gwadar — just 45 miles down the coast from Chabajar.
Despite the threat of attacks by Islamist militants in Pakistan, the Chinese have forged ahead with a $46 billion China-Pakistan Economic Corridor project, the thrust of which revolves around developing Gwadar.
Construction at Gwadar is already well underway, with Beijing framing the project as essential to connecting its industries in western China to markets across the Middle East through Pakistan.
The Indians are keenly aware of Chinese plans and, according to Ms. Madan, a key part of New Delhi’s interest in backing a competing project through Iran stems from a desire to “make sure China is not the only option Middle Eastern countries have for trading in the future.”
Many believe the Pakistanis, who have been locked in a nuclear arms race with India for decades and have long resisted Indian involvement in Afghanistan, will view any India-Iran alliance with alarm.
“For India to build up a relationship with one of Pakistan’s other neighbors, you can’t look at that as anything but a threat,” said Richard M. Rossow, a senior fellow on U.S.-India policy studies at the Center for Strategic International Studies in Washington.
And from the Indian side, the idea of “geopolitically surrounding Pakistan makes a lot of sense,” Mr. Rossow said. “They’re putting a bet down that building ties with Iran will give them a friend on the other side of Pakistan that they can potentially leverage at some point.”
Pakistan’s embassy in Washington declined to even acknowledge the Chabahar Port announcement last week. When pressed, an embassy official said only that the Pakistani government views the China Pakistan Economic Corridor “as an important step toward growth and shared prosperity.”
But the prospect of friction with Pakistan seemed to be on Mr. Rouhani’s mind while he met with Mr. Modi and Mr. Abadi in Tehran for their celebratory summit. The Iranian president went out of his way to assure Pakistan that the project is not against Islamabad.
“Today’s deal will not be against any country, and activities of [Iran, India and Afghanistan] will serve the entire region and its peace and stability,” he said.
U.S. watching ‘closely’
To date, the Obama administration’s approach to India has centered largely around an effort to enlist New Delhi in Washington’s push for a coalition of nations to counter China’s growing influence in East Asia.
The most notable example came in January 2015, when President Obama visited New Delhi and signed the “U.S.-India Joint Strategic Vision for the Asia-Pacific.” Defense Secretary Ashton Carter last June inked a 10-year defense framework pact with his Indian counterpart.
“India is playing ball with the U.S. on security issues more than they ever have,” said Mr. Rossow, who suggested that India’s willing alignment with the Obama posture toward China may have created some “wiggle room” for New Delhi to expand its ties with Iran without objection from Washington.
“We look at India’s security role and we look east, we don’t look west,” he said.
But India’s moves have not gone unnoticed on Capitol Hill. Several U.S. lawmakers have raised questions about the extent to which the Chabahar Port deal might violate remaining U.S. sanctions on Iran, and expressed concern toward the prospect of deepening military ties between New Delhi and Tehran.
During a Senate Committee on Foreign Relations hearing last week, Sen. Benjamin L. Cardin, Maryland Democrat, cautioned that Iran continues to sponsor terrorism in the region. Sen. David Perdue, Georgia Republican, asked whether Washington should be paying closer attention as nuclear-armed India grows closer to the “aspiring nuclear power” of Iran.
The Obama administration’s top official for South Asia told lawmakers that there has so far been no evidence of military-to-military or counterterrorism cooperation between India and Iran, but that U.S. officials have been carefully monitoring the situation.
“We watch very closely,” said Assistant Secretary of State for South and Central Asian Affairs Nisha Desai Biswal. “We have very candid conversations about what our concerns and red lines are.”
With Chabahar, “we have been very clear with the Indians on what we believe are the continuing restrictions on activities with respect to Iran,” Ms. Biswal said. “They’ve been very responsive and receptive to our briefings.”
As for potential sanctions violations, a State Department official speaking on background noted that the 2012 Iran Freedom and Counter-Proliferation Act, which had specifically authorized against sanctions on anyone trying to invest in Iranian ports, was lifted under last summer’s nuclear accord.
While U.S. sanctions remain in place against anyone engaging in transactions with Iran’s Islamic Revolutionary Guards Corps (IRGC), the official said that “there’s never been any specific evidence that Chabahar Port is controlled by the IRGC.”