To apply “maximum pressure” on Iran to “end its nuclear threat, curtail its ballistic missile program and stop its support for terrorist groups,” U.S. President Donald Trump signed a Memorandum in early February to “modify or rescind sanctions waivers, particularly those that provide Iran any degree of economic or financial relief, including those related to Iran’s Chabahar port project.”
In November 2018, Trump 1.0 had provided a narrow waiver on the sanctions imposed earlier on the strategic Iranian port, as it was seen to facilitate reconstruction and economic development of Afghanistan. That sanctions waiver is now in danger of being rescinded.
That the Trump administration is determined to press ahead on this matter is evident from the fact that a joint statement issued on February 13 after a meeting between Indian Prime Minister Narendra Modi and Trump in Washington had no reference to the Chabahar port or the sanctions. However, the statement did refer to the ambitious India-Middle East-Europe-Economic Corridor (IMEC).
Additionally, in their joint press conference, Trump, with Modi by his side, described the IMEC as one of the “greatest trade routes in all of history.” It has triggered questions whether India would now prioritize IMEC over Chabahar.
For India, it’s not an either-or choice. It would gladly be part of both. It would welcome both projects taking off. Except that India is not in a position to influence outcomes in either case.
It was in 2003 that the then Iranian President Mohammad Khatami mooted the idea of the joint development of a deep-sea port at Chabahar. The project was slow to get off the ground mainly because India looked to forge a civil nuclear partnership with the U.S., and India was keen to avoid drawing Washington’s ire over cooperation with Iran. Also, with sanctions being imposed on Iran, New Delhi was reluctant to risk investing large amounts on the port project. It was only in 2015 that India and Iran — with whom India shares a millennia-long history of civilizational and cultural links — signed a pact on “Partnership of India in the Development Plan of Chabahar Port.” The broader idea behind Chabahar was for India to connect to Afghanistan and onward to Central Asia via Chabahar port. The Iranian port was important for India given the fact that Pakistan has denied India overland access to Afghanistan.
In 2016, India, Iran and Afghanistan signed a Trilateral Agreement to establish the International Transport and Transit Corridor. This period broadly coincided with Iran and the international community negotiating and reaching the Joint Comprehensive Plan of Action, also known as the Iran Nuclear Deal.
In 2018, the India Ports Global took over the operations of Chabahar Port. Though President Trump announced in May 2018 that the U.S. was walking out of the JCPOA, India won a reprieve — the sanctions waiver for India would remain as Chabahar’s development was seen as a way of stabilizing Afghanistan economically. This, even as Trump kept up the pressure on India to stop buying oil from Iran. Despite the reprieve, Indian companies feared sanctions and were uncomfortable with partnering government efforts to develop Chabahar.
In May last year, India Ports Global Limited signed a 10-year contract with Iran’s Ports and Maritime Organization for equipping and operating the Shahid Beheshti Terminal of Chabahar Port. The pact was sealed only months before Trump staged a comeback.
As it stands, India has already supplied port equipment worth about $24 million to develop the Chabahar Port, and procurement of other equipment for Chabahar Port “is underway,” according to a government document.
Unlike the Chabahar port project, which is more than two decades in the making, the IMEC project is new. The IMEC partnership agreement was announced at a special event on the sidelines of the New Delhi G-20 Summit in September 2023.
IMEC aims to economically integrate India with the Middle East and Europe. It provides for a connectivity corridor that envisages a sea route between India and the UAE, a rail route across the Middle East (through Saudi Arabia and Jordan) to Israel. From Israel’s Haifa port, goods are expected to be shipped to Europe via Greece (or Italy or France). The movement of goods is expected to be complemented by a network of hydrogen pipelines and undersea optical data cables.
In addition to speeding up trade between India and Europe, IMEC will reduce dependence of shippers on the Red Sea route. And it has the U.S. President’s support as evident during the Modi-Trump joint press conference.
Trump’s support for IMEC is not surprising.
He was the driver of the Abraham Accords that culminated in the establishment of diplomatic ties and normalization of relations between Israel and its Arab neighbors starting in 2020. In fact, the India-Israel-UAE-U.S. (I2U2) grouping established in 2022, was an offshoot of the new realities in the Middle East following the normalization of ties between Israel and its Arab neighbors.
While Hamas’ attack on Israel on October 7, 2023, and the subsequent Israeli waging of war on Gaza slowed the process of getting IMEC off the ground, the fate of IMEC has improved somewhat with the ceasefire coming into force last month and holding despite turbulence. This is a positive development for the future of IMEC.
However, the vision for post-war Gaza and the future of the Palestinians are among several questions on which hinge the normalization of ties between Saudi Arabia and Israel – two key members of the IMEC and influential countries in the region.
With Trump set to use maximum pressure on Iran and sanctions on Chabahar likely to return, India can be expected to go slow on Chabahar. India will, of course, seek to engage in dialogue with the Trump administration on Iran and Chabahar in a bid to get the sanctions waiver extended. Given Chabahar’s immense importance for India — India’s Central Asia ambitions cannot be realized without trade via this port — abandoning Chabahar isn’t an option India would like to pursue. New Delhi should keep it on the agenda for talks with the U.S.