India, Iran to sign Chabahar agreement after elections
The move comes after more than two decades of negotiations stymied by geopolitical factors
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India and Iran have finalized a longterm contract for the development of Chabahar port after more than two decades of painfully slow negotiations, periodically disrupted by geopolitical tensions, according to three persons aware of the matter.
A high-level delegation led by the Indian minister for shipping will be visiting the oil-rich Gulf nations after India’s general election. The visit, to take place in the second half of 2024, will see the signing of the contract that could pave the way for full exploitation of this strategic port located in southeastern Iran that was developed with Indian aid.
The Embassy of Iran in New Delhi confirmed the development.
“This contract is in the final stages. We are waiting for the Indian delegation to go to Iran,” a spokesperson for the Iran Embassy said in response to a query from Mint.
“This is a very good and beneficial agreement for both sides,” the spokesperson, Mahdi Esfandiari, added, while declining to provide the specifics of the contract.
Queries mailed to the ministries of external affairs and shipping went unanswered at press time.
The Chabahar cooperation dates back to 2003, when India agreed to help Iran develop the port as well as accompanying infrastructure links during Iranian President Muhammad Khatami’s visit to India. New Delhi’s interest in Chabahar comes from the port’s value as a strategic gateway for Indian goods to reach markets in Afghanistan and Central Asia.
However, matters progressed slowly thereafter. In 2013, India committed to providing $100 million for the development of Chabahar and in 2016, India, Iran, and Afghanistan signed an agreement for the development of an international trade corridor, which included Chabahar as a central transit point.
India also agreed to invest $85 million in the development of Chabahar’s Shahid Beheshti terminal. However, the reimposition of western sanctions on Iran for its nuclear programme hampered India’s ability to move speedily. Thus far, India has only been able to supply six mobile harbour cranes valued at $25 million to develop the port.
India and Iran are now set to sign a long-term contract, which may be valid for 10 years, after the general elections to speed up the development of the port. Thus far, the two sides have signed shorter, one-year contracts.
Negotiations on the long-term contract were also held up over disagreements on arbitration clauses. Mint had earlier reported that the two sides have reached an accommodation which will allow arbitration under rules framed by the UN Commission on International Trade Law (UNCITRAL). According to persons aware of the matter, bilateral disputes have been satisfactorily resolved now, and the contract will be signed soon after the elections.
The deal is also significant as it comes at a time of renewed geopolitical disruption in West Asia. In recent weeks, Iran and Israel have clashed militarily after Tehran accused Tel Aviv of launching an air strike against an Iranian diplomatic mission in Syria earlier in April.
Iran launched a barrage of missile and drone attacks on Israel in retaliation.
India has expressed concern as tensions rise in the region. It has also maintained a diplomatic dialogue with Iran on issues of concern, such as attacks on India-linked ships by Yemen’s Houthi rebels, who are believed to have links to Iran.
Apart from its strategic importance, Chabahar Port also has the potential to be a revenue generating facility. In the first half of last fiscal year 2023-24, container cargo handling at the Shahid Beheshti terminal was to the tune of 25.788 TEU (twenty foot equivalent unit) while bulk cargo handling was to the tune of 1.5 million tonnes.
shashank.mattoo@livemint.com