US flags potential curbs following India’s Chabahar port deal with Iran

The United States issued a warning of potential sanctions against India after New Delhi signed a long-term agreement for the development of a terminal at Chabahar port in Iran.

“US sanctions on Iran remain in place and we’ll continue to enforce them,” US state department principal deputy spokesperson Vedant Patel said at a media briefing after the signing of the agreement.

The contract was signed between India Port Global Ltd (IPGL) and the Ports and Maritime Organization (PMO) of Iran. India’s shipping minister Sarbananda Sonowal and Iran’s roads and urban development minister Mehrdad Bazrpash were present at the signing on Monday.

The agreement will enable the operation of Shahid-Beheshti in the Chabahar Port Development Project for 10 years.

In response to a reporter’s question on the agreement, Patel said, “Any entity, anyone considering business deals with Iran, they need to be aware of the potential risk that they are opening themselves up to and the potential risk of sanctions.” 

When pressed whether an exemption will be made for India, Patel said, “No.”

‘India will work at it’: Jaishankar

Responding to the US warning for potential sanctions, external affairs minister S. Jaishankar said India “will work at it.”

“I did see some remarks were made, but I think it’s a question of communicating, convincing and getting people to understand that this is actually for everybody’s benefit. I don’t think people should take a narrow view of it, and they have not done so in the past. If you look at the US’s own attitude to Chabahar, the US has been appreciative… We will work at it,” Jaishankar said at an event organized by the Calcutta Citizens’ Initiative in Kolkata.

Jaishankar asserted that the project will benefit the entire region.

“We have a long association with the Chabahar port but we could never sign a long-tern agreement. The reason being there were various problems on the Iranian end, it’s a JV (joint venture), partners changed, conditions changed. Finally, we were able to sort this out and get the long-term agreement done. A long-term agreement is necessary, because without it, you cannot really improve the port operations, which we believe will benefit the entire region,” he was quoted as saying by The Indian Express. 

Iranian envoy responds

Iranian ambassador to India Iraj Elahi said the “importance of India prevents any side from imposing sanctions on India regarding the cooperation between India and Iran on Chabahar.”

“Besides this, the Chabahar project is not just for the benefit of Iran or India. Chabahar will facilitate the transit of goods from Southeast Asia to Europe, Russia and Central Asia. If the US imposes any sanctions on this project, it means that the US is going to harm the trade of many countries, not just India or Iran,” he told the Hindustan Times. 

The Chabahar port

Chabahar, a deep-water port in Iran’s Sistan-Baluchestan province, is being developed by India and Iran to boost connectivity and trade ties. Located on the energy-rich Iran’s southern coast, the Chabahar port is the closest Iranian port to India. 

Through Chabahar, India aims to bypass the ports of Karachi and Gwadar in Pakistan to transport goods to Iran, Afghanistan, and central Asian countries.

The discussions on the development of the port date back to 2003 during then Iranian President Muhammad Khatami’s visit to India. In 2013, India committed to investing $100 million towards the development of Chabahar port.

IPGL was formed to develop and run the port. India’s first overseas port project, the development of Chabahar port was touted as a prestigious project of national importance. 

While US sanctions on Iran slowed the port’s development, it was revived in the past two years. 

Sonowal had visited Chabahar in August 2022 to review the progress in the development of the port.

“With the signature of this contract, we have laid the foundations of India’s long-term involvement at Chabahar,” Sonowal said after signing of the agreement. 

Calling the development of the Chabahar port an “India-Iran flagship project,” a government statement said the contract will further strengthen ties between the two nations and highlights the importance of Chabahar as a gateway for trade with Afghanistan and broader Central Asian countries.