Chabahar and US Sanctions: Unlikely, Reasons Why?

While India and Iran celebrated the signing of a long term agreement on Chabahar Port operation, will US sanctions take the bite out of the development, here is a look.

India’s Union Minister of Ports, Shipping and Waterways and AYUSH, Shri Sarbananda Sonowal visited Chabahar, Iran on 13 May 2024 to witness the signing ceremony of Long-term Main Contract for the development of Shahid Beheshti Port Terminal, Chabahar. The contract was signed between India Port Global Limited (IPGL) and Ports and Maritime Organization (PMO) of Iran. The contract which was under discussion for almost 10 years now underlines importance of Chabahar as a gateway for trade with Afghanistan and broader Central Asian countries and could be a precursor to activation of the International North-South Transport Corridor (INSTC).

After reports of India and Iran having signed Long-term Main Contract for the development of Shahid Beheshti Port Terminal, Chabahar were floated in the media, US State Department Principal Deputy Spokesperson, Vedant Patel warned of the possibility of sanctions. "We are aware of these reports that Iran and India have signed a deal concerning the Chabahar Port, I would let the government of India speak to its own foreign policy goals, vis-a-vis the Chabahar Port as well as its own bilateral relationship with Iran," Vedant Patel said in the press briefing. 

He added: "I would just say...US sanctions on Iran remain in place and we will continue to enforce them." "Any entity, anyone considering business deals with Iran, they need to be aware of the potential risk they are opening themselves up to, potential risk of sanctions," Patel said.

Indian leadership would have weighed the pros and cons while going in for the long term agreement spread over 10 years given the fact that there is unlikely to be any possibility of removal of US sanctions on Iran in the future, in the light of the current geopolitical developments.

Iran having aligned with Russia and China will continue to remain a long term enemy state for the United States,

However India would be backing on the likely payoffs of connectivity with Central Asia, Afghanistan and the International North South Transport Corridor in its calculus apart from the potential benefits that the US may see in these developments.

India would also be leveraging the current strategic partnership and understanding with the US being a front line state for Washington in limiting Chinese expansion in the Indian Ocean region in specific and the Indo Pacific in general as well as in the Middle East.

China has signed a 25 year strategic cooperation agreement with Iran and could also have gained access to Chabahar after having virtual control of Gwadar on the edge of the Makran Coast in Pakistan.

Surely the United States would be better off, without Chinese gaining control of the two main gateways to the waters in the Persian Gulf and the Arabian Sea.