Why a strategic port in Iran was exempted from sanctions

Why a strategic port in Iran was exempted from sanctions

For the US, it makes more sense to allow India to continue developing Chabahar port than for China to ‘hijack’ yet another strategically important port

An entry by the Chinese would be deeply disquieting for its regional rivals especially as its investors already have a foothold in Chabahar. Concerns arising due to India losing its grip on the project and a handing over of the port’s development to China, which was last proposed by Iranian Foreign Minister Javad Zarif in a visit to Islamabad in March this year, has led to a proposal by even Japan – a friend and foe to India and China respectively – to express its interest in developing the sea outlet.

Bumblingly slow progress by India

China has been showing a willingness to participate in the port venture since late 2015. The reason responsible for China’s potential actual entry is mainly India’s bumbling and the maddeningly slow progress shown by the country in more than a decade of dominating the work on the port, achieving little beyond trite publicity – the much-touted shipment of a few tons of wheat from India to Afghanistan through the port after the inauguration of its first phase in late 2017.

India’s private sector, fearing a return of US sanctions, which now seems to have been prescient, has usually shown reluctance to pick up the slack by making serious investments on the port.

For Iran, the port’s development could bring strategic leverage apart from its economic dividends by giving it a role in the competition between China and its rivals in South and Central Asia. The path to strategic aspirations of at least one big player – India – would, in that case, pass through its soil.

The port also offers Iran an alternative coastal infrastructure, as it currently relies mainly on the shipping hubs in the Persian Gulf which, as happened during the Iran-Iraq war, can put it in risk of getting cut off from the sea in the event of a military invasion by an adversary.

If operationalized, the port can also help the impoverished Sistan Balochistan’s economy in southeast Iran – now facing increasing droughts and an insurgency by Sunni Baluch groups waging a hit-and-run militancy near Iran’s borders with Pakistan.

Iran needs to contain the wound in that region before it becomes an incurable social and economic headache. A thriving port that generates employment for its youth and diverts their grievances from turning into militant opposition, can relax Iran’s security anxieties to a large extent.

Given the port’s importance for Iran and after waiting 15 years for its development, the country may turn to China to save it from India’s complacency. The kind of verve the Chinese have exhibited in building the China Pakistan Economic Corridor (CPEC), the southern section of China’s Belt and Road initiative connecting southwestern China with Pakistan’s Gwadar port, has been conspicuously absent in India’s case in Chabahar. A hefty sum of nearly $50 billion has been put aside by the Chinese for CPEC.

India’s plan for Chabahar, on the other hand, has committed to spend up to a paltry $500 million, which pales in comparison. In case China replaces India as the main stakeholder in developing the port, especially if the latter falls in line with the recent US sanctions or fails to show bigger results, it will put two vital trading posts 80 kilometers apart in Chinese hands in a strategically important region.

Proximity to Strait of Hormuz

In case the point is missed, this will grant China a big stake in the Indian Ocean and the Arabian Sea, leaving it uncontested barely 640 kilometers from the Strait of Hormuz, through which the largest portion of global crude transits daily. Among legitimate reasons for nightmarish unease for US strategists, this should count as one.

Back in late 1970s, one major trigger for US president Jimmy Carter’s strong-worded reaction against the Soviet invasion of Afghanistan – a marginal country accepted as within Soviet sphere of influence by US strategists up until then, according to Thomas Hammond’s book ‘Red Flag Over Afghanistan’, was that it brought the Red Army dangerously close to the Strait of Hormuz. One next move – occupying Iran if necessary, as the Soviets had long sown the seeds for such an eventuality among its sympathizers in Iran’s Tudeh Party – would’ve put them in control of a vital chokepoint. Adding to the already vast hydrocarbon reserves the country itself possessed, this would’ve effectively guaranteed the USSR a commanding position for much of the global supply of energy.

It was not a matter of choice then, to design an immediate campaign to stop the Soviets in Afghanistan, putting Pakistan on the frontline. Iran by then had Islamic revolutionaries (to the dismay of the Soviets) tightening their grip on power under Ayatollah Khomeini, who liked the Soviets as much as they liked its Western adversary, the US. They nonetheless gave a hand in the Western-led campaign against the Soviets in Afghanistan by fostering the Jihadi militancy – through funding and supporting the Shi’a elements. In that historical event, the US’s efforts to contain the Soviets did pay off and kept at bay an adversary from coming too close to its energy interests in the Gulf. It surely wouldn’t consider an exception for the Chinese today especially as doing so involves much less complication.

Chinese takeover not in Iran’s interests either

A larger Chinese presence in Chabahar may not be in the long-term benefit of Iran neither. For the Iranian government, on top of depending on China for one-third of Iran’s energy sales and the bulk of its international trade, a larger Chinese sway over Iran’s only oceanic port might make the latter too reliant on the rising global power. Iran’s hefty rhetoric regarding its self-reliance would, at least, ring hollow in the event that they collapse into becoming a Chinese economic and, perhaps, military outpost in West Asia.

Still, the clerical establishment in Iran doesn’t seem to have the luxury of choice given rising economic hardships and popular resentment because of that. If China offers help in a moment of social and economic distress, so be it. As a bonus, doing so would also help unnerve US policymakers who have shown all willingness to subject the regime to a slow death under Trump’s impulsive dictates.

China taking the lead might also dissuade Pakistan from actively or passively supporting Baluch insurgents in Iran’s Sistan-Baluchistan which, in the event, would endanger Chinese interests and raise their ire. And Pakistan knows all to well that it needs to stay on the good side of the Chinese for myriad economic and security reasons.

It made a lot more sense to slice a concession for a much weaker Iran, letting India continue its business of developing the Chabahar port despite the possible gains for Iran’s loathed regime than see US’s main global contender, China, speed up its inexorable westward move as part of a trend dubbed “easternisation” by hijacking development of the strategically important port.

The port’s exemption from sanctions could also please India’s Modi as a tokenistic reward for his country’s undying close relations with the US. Although not entirely settled and still possible if India misses the opportunity entirely, the sanctions exemption at least temporarily keeps the Chinese away from Chabahar.

– Kambaiz Rafi is a PhD candidate in political economy at University College London (UCL). He currently works as an adviser to the Minister at Afghanistan’s Ministry of Economy.