India-Iran ties | Old concerns in new packaging

Aditi Bhaduri

Lately there has been much heartburn in India over the leaked report of an Iran-China deal for the next 25 years to the tune of a whopping $400 billion Chinese investments in Iran in return for assured oil supplies at a discount of 20 percent.

Added to that are new reports of India losing out on the Farzad B gas fields which ONGC Videsh had helped discover and the speculation of India being dropped from the Chabahar Zahedan railway project in which India has invested considerable energy. The Ministry of External Affairs has clarified that the Chabahar Port is functioning while there has been no commitment on the Chabahar-Zahedan railway project.

The surprise is that all this is causing surprise. None of the above is really new, or unexpected.

The development of Chabahar Port by India was mooted in 2003, but failed to make any progress because of the US sanctions imposed on Iran.

While India withdrew, China remained engaged in Iran. One of the first countries Iranian Petroleum Minister Bijan Namdar Zangeneh visited seeking investments days after the Joint Comprehensive Plan of Action (JCPOA) nuclear deal was announced was China.

Therefore, China is not a recent entrant to Iran. In 2014, India once again renewed interest in Chabahar as the JCPOA was being negotiated. In May 2016, when Prime Minister Narendra Modi visited Tehran, a trilateral agreement was signed between India, Iran, and Afghanistan, on the establishment of a transit and transport corridor among the three countries using the Chabahar Port as the regional hub for sea transportation, facilitating India's trade with Afghanistan and Central Asia bypassing Pakistan.

Fast forward to 2020.

The Iran-China deal was leaked to The New York Times by the Iranian side. The Chinese have not furnished any details, and neither has the deal been inked till the time of writing. $400 billon sounds nice, but it one thing to promise and another to deliver. It’s not clear if the $100 billion China promised India in 2014 has materialised. Similarly, in 2016, on his Teheran visit Chinese President Xi Jinping promised to take bilateral trade levels to $600 billion which again remains very much to be seen.

Therefore, the deal is more symbolic than substantial and maybe a signalling to the US as presidential elections draw nearer and a change of guard in the White House may result in the US returning to the JCPOA.

Next, the Chabahar Port project was particularly important for facilitating Afghan trade, which is why it had been exempted from US sanctions. However, the US-Taliban peace accord signed in February forced India to step back from Afghanistan and there is no clarity how things will proceed once the US completes its troops’ withdrawal from there.

The Afghans have made no secret their willingness to join China's Belt and Road Initiative (BRI), or to Chinese investments in general. In fact on July 19, Afghanistan’s first transit goods to China via Chabahar Port was shipped.

Moreover, the Iranians have in the past talked about linking China-developed Gwadar Port (in Pakistan) with the India-developed Chabahar Port (in Iran),  as a leverage over India. In a 2019 meeting between Iranian Foreign Minister Javad Zarif with his Pakistani counterpart Shah Mahmood Qureshi in Islamabad, Zarif did just that, after India stopped purchasing Iranian oil because of US sanctions on Iran.

Iran, in 2017, announced that it had roped in Russia’s Gazprom to develop the Farzad B gas fields. Now it will be going on its own.

However, in the midst of all this doom and gloom in India, two things are worth noting. First, the Iranians have refuted dropping India from the railway project, saying that sanctions have nothing to do with Chabahar.

Second, a Russian news agency report highlighted the potential of the multimodal International North South Transport Corridor, quoting the Chabahar Free Trade Zone Organisation's director general Abdul Rahim Kordi. The corridor is to run from Mumbai to St Petersburg via Iran, holding out immense potential. Such reports are not coincidental and highlights the other major stakeholder in the region's connectivity plans — Russia.

What this means is that in spite of the posturing Iran will not let go entirely of India, putting all its eggs in the Chinese basket.

Therefore, there is nothing new in all these speculations and India, now as before, will know it has to contend with the dragon's role in the region, which may be a more reduced one after COVID-19. As always, India's best partner in anything Eurasian remains Russia.

Aditi Bhaduri is a journalist and political analyst. Views are personal.