Daily Times

Sir: Iran’s Indian-back port of Chabahar, inaugurated months before the United States re-imposed sanctions on the Islamic republic, is where Asia and the Middle East’s multiple political conflicts and commercial rivalries collide.

Chabahar was destined to become a player in geopolitical and economic manoeuvring between Asian states. The sanctions have, however, significantly enhanced its importance as Iran struggles to offset the likely punishing impact of US efforts to force the Islamic republic to alter its foreign and defence policy and/or achieve a change of regime.

Iran sees the port together with the Indian-backed Chabahar Free Trade Zone, that hopes to host a steel mill and a petrochemical complex, as the motor of development of the Iranian section of the Makran coast. Iran’s province of Sistan and Balochistan shares the coast line with the Pakistani province of Balochistan, home to the Chinese-backed rival port of Gwadar.

Saudi Arabia sees the Pakistani region as a launching pad of a potential effort by the kingdom and/or the United States to destabilize the Islamic republic by stirring unrest among its ethnic minorities, including the Baloch. Saudi Arabia has put the building blocks in place for possible covert action but has to date given no indication that it intends to act on proposals to support irredentist action.

Chabahar will enable Iran to increase market share in India for its oil exports at the expense of Saudi Arabia, raise foreign investment in the Islamic republic, and allow Iran to project power in the Gulf and the Indian Ocean.

Saudi Arabia, months before the US re-imposition of sanctions, already sought to thwart development of Chabahar by stopping South Korea’s POSCO Engineering & Construction from moving ahead with a $1.6 billion agreement with Iranian steelmaker Pars Kohan Diar Parsian Steel (PKP) to build a steel mill in Chabahar. Saudi Arabia’s Public Investment Fund has a 38 percent stake in POSCO.

Beyond the port’s economic importance for Iran, it will also likely allow the Islamic republic to increase its influence in Afghanistan at a time that the United States and Saudi Arabia are stepping up economic cooperation with Kabul in a bid to isolate both Iran and the Taliban. For its part, Afghanistan sees the port as a way to reduce its transport dependence on Pakistan with which it has strained relations.

India hopes that its US$500 million investment in the port will offer it a gateway to Afghanistan and land-locked Central Asia that constitutes an alternative to infrastructure related to China’s Belt and Road initiative, including the $50 billion plus China Pakistan Economic Corridor (CPEC), and an anti-dote to Chinese investment in Indian Ocean ports.

If geopolitics did not already amount to a full plate, Chabahar is likely, together with a host of ports in Saudi Arabia, Abu Dhabi, Oman and Qatar, to challenge the longstanding dominance in the Indian Ocean of Dubai’s Jebel Ali port.

Commercial competition between ports has been reinforced by the Saudi-Iranian battle for regional hegemony as well as the Gulf spat between Qatar and a Saudi-United Arab Emirates-led alliance that a year ago imposed an economic and diplomatic boycott on the Gulf state and the war in Yemen.

JAMES M DORSEY

Singapore

Published in Daily Times, June 28^th 2018.