Published On: Tue, Oct 30th, 2018

#Iranian #Port Project Poses a Dilemma for #U.S. – #Chabahar facility is the type of project #Washington aims to curb, but doing so would hinder efforts to bolster #India and #Afghanistan

A port being developed in the southern Iranian city of Chabahar underscores some of the dilemmas U.S. policy makers face in implementing sanctions against Tehran.

Strategically located on the Gulf of Oman and named for an Iranian revolutionary war hero, the Shahid Beheshti Port is exactly the sort of Iranian economic development the Trump administration wants to stop with sanctions that kick in on Nov. 5.

Those measures aim to punish Iran for what the U.S. sees as unacceptable behavior in Syria, Lebanon, Yemen and elsewhere. They follow the Trump administration’s decision this year to withdraw from an international deal struck with Iran in 2015 to prevent Iran from developing nuclear weapons.

Strategic Location

U.S. sanctions on Iran could undermine the development of a port in Chabahar that is expected to boost trade in the region.

Once completed, the port—a small part of which started initial operations in December—could help Iran by strengthening economic ties with South and Central Asia, providing an export point for its oil beyond the Persian Gulf and functioning as a strategic military asset.

But it could also be a critical economic lifeline for Afghanistan, where the U.S. has tried for 16 years to strengthen and stabilize the government so thousands of U.S. troops can come home.

The port also could be a big boon to India, an increasingly close partner of the U.S. in Asia. India wants Chabahar port activities exempted from sanctions. Indian companies are mostly equipping and operating the facility. If the port is completed, they are expected to be among the biggest users of the port in order to participate in the reconstruction of Afghanistan—something the Trump administration has asked India to get more involved in—and establish a stronger economic presence in Central Asia.

“There’s such a strong case to be made in terms of India’s ability to create lines of communications and transport up to Afghanistan,” said Richard Rossow, a South Asia expert at the Center for Strategic and International Studies in Washington. “But you just never know if it’s going to pique interest in the White House one day and suddenly things change.”

Sanctions law allows the president to grant exemptions for projects intended to help reconstruct Afghanistan, one way the port development could continue. The Trump administration hasn’t decided whether to grant exemptions, but has said the intent of sanctions isn’t to punish Afghanistan or India.

High-level Iranian, Indian and Afghan officials also have been shuttling among their respective capitals in recent months to find ways to carry on the work even if no exemptions are granted. That may include making payments through a mechanism European countries are trying to devise to continue doing business with Iran despite U.S. sanctions.

The Chabahar port has long been seen as a potential way around Pakistan, a sworn enemy of India that believes holding sway over Afghanistan is critical to its own security.

Pakistan has squelched trade between India and Afghanistan across its territory. It wants Afghanistan to eventually transport goods through a competing Pakistani port on the Gulf of Oman that is being developed with China.

That has greatly complicated access Afghan merchants and farmers have to India’s huge and growing market, while hampering Indian efforts to make inroads into Afghanistan and beyond that into Central Asia. Meanwhile, Pakistan has had a tense relationship with the current Afghan government, while being accused by the Afghan, U.S. and Indian governments of supporting the Taliban, who are fighting an insurgency against it. Pakistan denies providing support.

The Chabahar port offers landlocked Afghanistan an alternative route to and from the sea, one India and Iran have been eager to develop. Indeed, roads have been constructed from the port north through Iran to the Afghan border and into Afghanistan to connect with roads built there in recent years with international assistance.

As part of an agreement with Iran in May 2016, India’s government has agreed to pay $85 million for buying equipments and operating the port through a consortium of Indian companies led by India Ports Global. Separately, New Delhi will also make available another $150 million in soft loans to develop the port. While Iran is developing the port solely, India has the responsibility to buy all the equipment required for the port. It would also operate the two terminals for 10 years.

“We have shared our concerns with the U.S.,” one Indian official who has been involved in the issue said. “If India is to play a better role in economic empowerment of Afghanistan, Chabahar will be an important element.”

For Western countries concerned about countering growing Russian and Chinese involvement in Central Asia, Chabahar also opens a gateway for India to extend its economic and political influence through Afghanistan and beyond.

“India has no other way of getting into Central Asia,” said Christine Fair, a South Asia expert at Georgetown University.

Iran, India and Afghanistan signed an agreement in May 2016 to facilitate and simplify the shipment of goods to and from Afghanistan through the port. India has sent seven shipments containing 110,000 metric tons of wheat, 2,000 tons of edible seeds such as lentils, as well as spare parts for large vehicles needed for reconstruction and mining work in Afghanistan.

The trade could eventually flow in the other direction to open international markets to Afghan fruit and vegetable farmers and one day be a primary route through which Afghanistan’s vast mineral reserves might be shipped to global buyers. That could help Afghanistan wean itself from growing opium—its most lucrative cash crop—as well as gain greater independence from Pakistan.

“If you stop Chabahar, you make Afghanistan permanently dependent on Pakistan,” said Barnett Rubin, a New York University expert on South Asia who has advised Western governments on policy in Afghanistan and the surrounding region.

—Aresu Eqbali
contributed to this article.

Write to Bill Spindle at bill.spindle@wsj.com and Rajesh Roy at rajesh.roy@wsj.com

Read more: Iranian Port Project Poses a Dilemma for U.S. – WSJ

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