Tuesday, March 9, 2021

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Iran-India Chabahar Port Deal: Iran Kicks-Out India from Chabahar Rail Project citing funding delays

The Iran-India Chabahar port deal has run out of fuel. Iran has reportedly expelled India from the Chabahar rail project according to a report by The Hindu.

According to the report – four years after India and Iran signed a deal to construct a rail line from Chabahar port to Zahedan, Tehran has decided to proceed with the project by itself citing delays from New Delhi.

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The report writes – The Iranian Transport and Urban Development Minister — Mohammad Eslami inaugurated the track-laying process for Chabahar-Zahedan line, which will be extended to Zaranj in Afghanistan. Iranian officials told The Hindu that the complete project would be finished by March 2022 and that Iranian Railways will proceed without India’s support, using nearly $400 million from the Iranian National Development Fund.

The railway project was meant to be part of India’s vow to the trilateral deal between India, Iran and Afghanistan to develop an alternate trade route to Afghanistan and Central Asia bypassing a hostile Pakistan.

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In May 2016, during PM Modi’s visit to Iran to sign the Chabahar pact President Rouhani and Afghan President Ashraf Ghani, IRCON had signed an MoU with the Iranian Rail Ministry. The MoU was to construct the Chabahar-Zahedan railway as “part of transit and transportation corridor in a trilateral agreement between India, Iran and Afghanistan”.

However, according to the Hindu, despite several site visits by IRCON engineers, India never commenced the work, apparently due to apprehensions that these could attract U.S. sanctions.

The U.S. had provided a sanctions waiver for the Chabahar port and the rail line to Zahedan, but it has been difficult to find equipment suppliers and partners due to concerns they could be targeted by the U.S., according to key officials.

 

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Iran wanted India to accelerate the acquisition of heavy equipment and expedite work on a railway link to the Afghan border to boost the economic viability of the Chabahar port, according to experts.  As per earlier reports, – there was a written assurance from the US that will make it easier for banks to provide funds for the procurement of heavy equipment” said an expert.

In late 2018, the US had approved a waiver for Chabahar and the construction of a railway line from the port to the Afghan border from sanctions under the Iran Freedom and Counter-Proliferation Act of 2012. However, banks had been reluctant to provide loans for buying heavy equipment due to US sanctions.

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Iranian President Hassan Rouhani had earlier raised the Chabahar-Zahedan rail link at a meeting with Indian external affairs minister S Jaishankar in Tehran and asked India to expedite work on it to “benefit regional trade relations”.

During that visit, India and Iran had agreed to boost Chabahar’s economic viability, including steps such as providing higher subsidies to merchant shipping using the port.

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