Chabahar Trilateral Agreement: Securing The Strategic Linkages

Rahul Bhonsle 

Jun 2, 2016 

Chabahar Trilateral Agreement: Securing The Strategic Linkages

India, Iran, Afghanistan trilateral Chabahar Agreement officially known as the Trilateral Agreement on Transport and Transit Corridors is possibly the most tangible strategic foreign policy achievement of the Modi government in the past two years. India has been eyeing to develop Chabahar port and rail links to Afghanistan since 2003 in consultation with Iran. Both countries have constructed part links of connectivity planned between Chabahar to Afghanistan such as the Delaram – Zaranj road completed by the Indian Border Roads Organisation in Afghanistan in 2009. Through connectivity and linking up with the International North South Transport Corridor proved elusive mainly due to sanctions on Iran. India was hesitant in investing in the project given possible risks including lack of an efficient mechanism for transfer of funds to Iran for the past few years.

However, the Joint Comprehensive Plan of Action (JCPOA) popularly known as the Iran – EU 3 + 3 (France, UK, Germany and United States, Russia, China) nuclear deal which was agreed upon in July 2015 and came into effect in October the same year lifted restrictions on investments in Iran. This opened prospects for accelerating talks for finalising the Trilateral Agreement on Chabahar. Trilateral negotiations are always very challenging, however to the credit to diplomats of the three countries, who possibly burnt the midnight lamp the agreement has fructified including sewing up detailed arrangements for financing the project.

Much ground work has been done by the Indian Ministry of External Affairs on this project over the years. However, credit for the last mile must go to the present dispensation. How much the China-Pakistan Economic Corridor (CPEC) with investments of $ 45 billion and Gwadar a port set off some 70 plus km from Chabahar accelerated the pace of engagement will be clear in the days ahead. This would have surely added impetus to New Delhi.

Now to the nitty gritty of the Agreement per se.

India, Afghanistan and Iran signed the Trilateral Agreement on Transport and Transit Corridors (Chabahar Agreement) during the visit of Prime Minister Narendra Modi and Afghan President Ashraf Ghani to Iran on 23 May 2016. The Agreement envisions trilateral cooperation for providing alternative access to seas to Afghanistan, among other things for Afghanistan’s trade with India. The Agreement will significantly enhance utilization of Chabahar Port, contribute to economic growth of Afghanistan, and facilitate better regional connectivity, including between India and connections to Afghanistan and Central Asia. The Agreement will be a strategic bulwark for a greater flow of people and goods among the three countries India, Iran and Afghanistan and allows Indian goods to reach Afghanistan through Iran. It links ports in the western coast of India to the Chabahar port and covers the road and rail links between Chabahar and the Afghan border.

The commitment of India and Iran towards the development of the port and rail links was underscored by some agreements signed by the two countries separately during the visit of Prime Minister Modi to Iran. Concerning Chabahar, these include –

(a) The bilateral contract on Chabahar Port for port development and operations between IPGPL [India Ports Global Private Limited] and Arya Banader of Iran This contract envisages development and operation for ten years of two terminals and five berths with cargo handling [multipurpose and general] capacities. 

(b) MoU between EXIM Bank and Iran’s Ports and Maritime Organization [PMO] on current specific terms for the Chabahar Port project This MoU is intended for the purpose of credit of USD 150 million for Chabahar port.

(c) Confirmation Statement between EXIM Bank and Central Bank of Iran. This confirms the availability of credit up to INR 3000 crore for the import of steel rails and implementation of Chabahar port.

(d) MoU between IRCON and Construction, Development of Transport and Infrastructure Company (CDTIC) of Iran. MoU will enable IRCON to provide requisite services for the construction of Chabahar-Zahedan railway line which forms part of transit and transportation corridor in the trilateral agreement between India, Iran and Afghanistan. Services to be provided by IRCON include all superstructure work and financing the project (around USD 1.6 billion). Indian Minister of Road Transport and Highways Mr. Nitin Gadkari held the prospect of Indian companies investing over ₹1 lakh crore (US$15 billion) in the Chabahar Special Economic Zone in the future.

So far the narrative follows a familiar plot of working out a complex deal which is in itself a herculean task. The strategic implications of the same have been best underlined by Prime Minister Mr. Narendra Modi in his Remarks at Chabahar Connectivity event on May 23, 2016. Mr. Modi said,

“The Agreement on the establishment of a Trilateral Transport and Transit Corridor signed just a while ago can alter the course of history of this region. It is a new foundation of convergence between our three nations. The corridor would spur unhindered flow of commerce throughout the region. Inflow of capital and technology could lead to new industrial infrastructure in Chahbahar. This would include gas based fertilizer plants, petrochemicals, pharmaceuticals and IT. The key arteries of the corridor would pass through the Chahbahar port of Iran. It's very location, on the mouth of Gulf of Oman, is of great strategic significance. Afghanistan will get an assured, effective, and a more friendly route to trade with the rest of the world. The arc of economic benefit from this agreement would extend beyond our three nations. Its reach could extend to the depths of the Central Asian countries. When linked with the International North South Transport Corridor, it would touch South Asia at one end and Europe at another. And, studies show that as compared to the traditional sea routes, it could bring down the cost and time of the cargo trade to Europe by about 50%. Over time, we could even look to connect it with the strong sea and land based routes that India has developed with the Indian Ocean Region and South East Asia”.

The Indian Prime Minister also underlined the cooperative framework on which the Agreement was structured and said, “Today, the watch-words of international ties are trust not suspicion; cooperation not dominance; inclusivity not exclusion. This is also the guiding philosophy and driving spirit of the Chahbahar Agreement. This will be a corridor of peace and prosperity for our peoples. Motives of economic growth and empowerment would drive it. It will build our security without making others vulnerable.”

While expecting peace in a realist World one needs to prepare for competition if not conflict in achieving one’s strategic objectives. Thus underlining risks and challenges in the implementation of the Chabahar Agreement are necessary.

Firstly at the geopolitical level while there is a commitment of all parties forming the EU 3 + 3 and the United Nations Security Council to the JCPOA, which has led to the removal of sanctions on Iran, the future course of American policy towards Tehran remains uncertain especially with the Presidential elections a few months away. The Iran deal is seen in the United States as very much an initiative by the Obama administration, and some would even say a personal fetish of the President as well as the Secretary of State Mr. John Kerry. There has been a delay in opening up banking networks with Iran while other American sanctions such as on missile control and support to terrorism continue. These are not likely to go away shortly given the structure of Iran – United States relations.

However United Nations sanctions on Iran are off and re-imposing these is unlikely given the commitment of all countries to the JCPOA especially the non-US component of EU 3 +3. France and the UK have been strongly backing opening banking and commercial transactions with Iran while China and Russia are looking beyond towards lucrative military technical cooperation. Thus, the UNSC imposing sanctions on Iran is unlikely at present, particularly as the International Atomic Energy Agency has in the last two-quarters certified that Iran is sticking to its part of the deal of rolling back and containing nuclear proliferation. India may have also discussed this issue with the United States and is also likely to come up with President Barack Obama during the 6 June meeting in the White House. However, the administration will change in January 2017

At the regional level, outreach to Iran impacts India’s relations with Saudi Arabia. This is important given the present status of relations between Iran and Saudi Arabia which is to state plainly are broke, to the extent that the all important Hajj agreement for pilgrimage by Iranians to the holy site of Mecca has not been inked and is unlikely in the coming days. While the issue of which one is more important India’s relations with Iran or Saudi Arabia can be debated separately, there is likely to be and hopefully an insurance policy taken during the visit of Prime Minister Narendra Modi to Saudi Arabia on 2-3 April.

Then response to China and Pakistan to the Trilateral Agreement needs detailed consideration for it seriously impacts the overall regional dynamics and aims and objectives of the countries in the region. China has a mercantile perspective of expanding trade and economic relations and gaining access to the warm water ports of the Persian Gulf. China may have less resistance to Chabahar looking at the port and infrastructure as another opportunity for investment in the oil-rich Gulf region and an outlet for trading though it can act as a spoiler raising the stakes for investment for India.

Pakistan on the other hand with the paranoia of the security establishment sees this as a move that could destabilise the country or at best impact its interests in the region. Within days of the agreement, there has been an intense debate in the Strategic Vision Institute (SVI) in Islamabad. In a seminar on 'National Security, Deterrence and Regional Stability in South Asia' on 30 May as reported by the Dawn,former defence secretary Lt Gen (retired) Asif Yasin Malik said: "The alliance between India, Afghanistan and Iran is a security threat to Pakistan" and added that he feared that Pakistan is going into isolation." “In view of the regional and global environment, I see Pakistan falling into an abyss of isolation primarily because of its own mistakes and partly due to the hostile policies of other states," he said. Lt Gen (retired) Nadeem Lodhi another former defence secretary said the existence of such a "formidable bloc" in the neighbourhood had "ominous and far-reaching implications" for Pakistan. "We need to break out of this encircling move with help from friends, diplomatic manoeuvres and by forging a strong deterrence," he said. The consensus was to rebuild relations with Iran.

“Isolation, Encirclement, Bloc,” are classical realist terms used to express the sense of insecurity by a state which sees itself at a disadvantage in the strategic equations in the neighbourhood.

The view of academia appears to be somewhat different. Ghulam Mujadid registrar at Air University of Pakistan Air Force at the same event stated that "ascendancy of military in political, internal and foreign policy decision making," should be reviewed. "Pakistan needs to correct this strategic myopia. A survivalist mindset about national security dominates the political discourse and continues to be the central pillar in Pakistan's strategic calculations," he said.

Pakistan’s Foreign Office also views the Chabahar port more positively at least as per statements made by Adviser on Foreign Affairs Sartaj Aziz. Aziz did not see Iran’s Chabahar port as a rival. However given the structure of the strategic establishment in the country views of the military are likely to prevail which are reflected by the statements made by the two former defence secretaries at the SVI.

What strategy Pakistan now adopts to protect its interests remains to be seen? Will Pakistan improve relations with Afghanistan and India which have been one of the main reasons for this outflanking move by the two countries denied direct access through the land route, or will it attempt its failed strategy of using terror in the vulnerable Sistan-Balochistan province remains to be seen? India could also reach out to Pakistan once there is an opportunity for reasonable dialogue which unfortunately does not seem any time close. Pakistan would most certainly reach out to Iran.

The security situation in the Sistan-Balochistan province on the border with Pakistan and Afghanistan should be another concern. The province has a majority of Baluchis mainly Sunni Muslims in a Shia majority state. There are endemic underdevelopment and poverty with 50 percent unemployment. A range of cross-border criminal activities drugs and smuggling is another challenge. Sunni separatists groups such as Jundullah and Jaish al-Adl with their base in the Pakistani province of Balochistan operate here. Some unconfirmed reports state that former Navy commander Jadhav was abducted from Chabahar by Pakistani agencies and taken to Balochistan where he was declared an Indian spy. Thus, the security situation here is tenuous and should be factored in even though Iran maintains a very robust internal security profile.

One obvious conclusion is greater India-Iran security cooperation and guarantees from Tehran of security of the personnel and assets in Chabahar. Iranian media reported that warships of the Indian Navy berthed in the Iranian port of Bandar Abbas on 24 May. "Two frigate-type Ganga F22 and Trikand F51 warships of the Indian Navy berthed in Bandar Abbas port, and they will stay here there for four days," Iranian Rear Admiral Hossein Azad was quoted by the Fars News. Iranian Navy Commander Rear Admiral Habibollah Sayyari stated that India and Iran Navies will be holding a joint drill on 27 May. "The one-day drill will be held in the Eastern part of Hormuz Strait," Sayyari was quoted by the Fars News. 

While INS Ganga and Tarkash are on a tour of ports of West Asia, there was no report in the Indian media including by the Ministry of Defence though port calls to other countries were well publicised. Clearly the Indian side wants to play safe on the declaration of military to military engagement with Iran. A structured framework of security cooperation between Iran and India will be necessary.

To sum up the Chabahar Trilateral Agreement holds much promise for the region and achieving India’s vision of establishing a North-South transport corridor with Eurasia. This would be the harbinger of economic cooperation, peace, and prosperity in the region, under gridding the same mitigation of challenges also needs concurrent consideration.