What This $500 Mn Deal With Iran Means For India And Its Hostile Neighbours

Posted by AmritaHangloo in GlobeScope, Politics
November 2, 2017

The International Transport and Transit Corridor Agreement, which is a trilateral agreement between India, Iran and Afghanistan, focuses on opening and developing new road networks and rail routes between the three countries. It also aims to develop the Chabahar Port to strengthen trade among themselves and open the gateways to Central Asia and Europe. Negotiations between the three nations were initially floated more than a decade back in 2003.

Under this, India and Iran signed various agreements to boost industries and infrastructure. Afghanistan will be connected with Iran by road and rail, and Iran with India by a sea route.

India and Iran have a lot of historical and civilisational ties which are centuries old. Even the ancient languages of Sanskrit and Avestan share similarities. But with India’s independence in 1947, the relationship between the two has seen its fair share of ups and downs – be it the time when India voted against Iran in the International Atomic Energy Agency (IAEA)’s resolution against atomic energy expansion, or the time when India (the third-largest importer) became one of the major importers of crude oil from Iran, not bowing to international pressure.

This trilateral agreement will make India more flexible as it won’t be depending on just one country for its imports. Iran is well aware of the growing demand in India and wants to be benefit from it. India’s investment in the Chabahar Port could help Iran to end its economic isolation. With the sanctions on Iran eased, investments from Europe and China are also bound to increase.

This was much-needed step for a more power-balanced Asia. While China is investing heavily in approximately $62 billion China Pakistan Economic Corridor (which includes developing the Gwadar Port in Pakistan, and massive rail and road connectivity), India’s investment is nowhere close, but it is a very good start nonetheless.

When the Chabahar Port gets operational, it will be connected to Milak (which is close to the Afghanistan border) and will continue into Afghanistan through Zaranj-Delaram highway. This will link it to the International North-South Transport Corridor (INSTC) which will link India in the south and Russia in the north through Central Asia. India can therefore tap into the Euroasian region, which wasn’t exactly feasible before.

The development of the Chabahar Port will open up Central Asia and the Persian Gulf for India, which will make the transportation of goods quicker, easier and more cost-effective. It will also allow the land-locked Afghanistan to have better access to trade, thereby reducing its dependency on Pakistan. Trade between India and Afghanistan will also get a big boost. So, the economic side of the trilateral deal seems to be a win-win situation for all three nations involved.

With India surrounded by hostile neighbors, the Chabahar Port Agreement with Iran is a welcome move. But India also needs to keep looking for more strategic partnerships. It will also have to keep the timeline for the projects in the Chabahar Agreement in mind if it wants to be taken seriously by the global economies.

The International North-South Transport Corridor (Source: Nikkei Asian Review)

However, this trilateral agreement should not be projected as bypassing Pakistan or as a power play with China. As Iran has already said, the Chabahar Port is open to investments from China and Pakistan.

All these countries could benefit from faster trade routes. Pakistan’s Gwadar Port and the Chabahar port are sister ports with less than 100 kilometres separating them. Both the ports can develop simultaneously, thereby providing healthy competition. This can promote stability in Pakistan and Afghanistan by encouraging trade and commerce.

India has tried to strengthen the sovereignty of Afghanistan and to keep peace in the region. Iran has a certain proximity with Pakistan as well. China and India have unresolved territorial disputes, and Kashmir has been the bone of contention between India and Pakistan. So, although the India-Iran-Afghanistan treaty has a successful economic side and might help to build a more united Asia, its political success still seems to be a long-lost dream.

On October 29, 2017, the first consignment of wheat was shipped from the Kandla Port in India to Afghanistan via the Chabahar Port. The pendulum of trade has just been set in motion.


Featured image source: Wikimedia commons, Majid/Getty Images