Source: Global Times

[Global Times reporter Ni Hao, Yuan Jirong] Just as the United States and India announced the resumption of trade negotiations that had been stalled, India suffered another blow. According to the latest decision by the United States on the Iran Chabahar Port operated by India, individuals and companies in India working or engaging in related activities at the port may face sanctions starting from September 29. According to reports, this port is India's first overseas port project. The Indian Economic Times stated: "This decision may hinder India's connectivity projects in Eurasia."

Key exemptions revoked

The U.S. government recently announced the revocation of sanctions exemptions for the Iran Chabahar Port. According to a report by The Indian Express, the U.S. State Department's deputy spokesperson stated in a statement on September 16 that in accordance with President Trump's "maximum pressure" policy aimed at isolating Iran, the sanctions exemption issued in 2018 under the Iran Freedom and Counter-Proliferation Act (IFCA) has been revoked. This decision will take effect on September 29.

The Chabahar Port is located along the Oman Gulf coast in the southeast of Iran, serving as a key maritime route for India to reach landlocked Afghanistan and Central Asia. In 2018, to support aid and economic development for Afghanistan's reconstruction, the United States granted sanctions exemptions to Indian entities under the IFCA, allowing them to invest in and operate the port without facing U.S. sanctions.

According to Indian media, this exemption previously allowed Indian companies to operate the port without U.S. restrictions, enabling New Delhi to directly access Afghanistan and resource-rich Central Asia without going through Pakistan. Once the exemption is revoked, all entities operating the Chabahar Port or engaging in related activities may face the risk of sanctions as stipulated by the act.

The Indian Ministry of Foreign Affairs acknowledged this development on the 26th, with spokesperson Randhir Jaiswal stating, "We have seen the U.S. news statement regarding the revocation of sanctions exemptions for the Chabahar Port. We are currently assessing the impact on India."

"India's long-term blueprint for connectivity via this port may be severely damaged"

For India, unlike other Iranian ports, the Chabahar Port provides a direct sea route bypassing Pakistani territory.

Additionally, strategically, the Chabahar Port is central to India's regional connectivity goals. The Indian government hopes to use this port to open new markets for exports from India's inland regions, facilitating trade with Russia and Europe. The First Post reported that the U.S. decision limits India's ability to develop Chabahar as a hub connecting Central Asia and Europe. In the 2023 "India-Middle East-Europe Economic Corridor," New Delhi plans to connect India's western ports with the UAE by sea, then cross Saudi Arabia, Jordan, and reach Haifa Port in Israel via rail, finally linking up with Europe through shipping. This plan could shorten transport time by about 40% compared to the Suez Canal route.

India aims to expand the market of the Chabahar Port to build trade routes with Afghanistan and Central Asia. Reports indicate that without integrating the Chabahar Port, the reach of the "India-Middle East-Europe Economic Corridor" might be more limited to the Gulf region, making it difficult to develop into a trade corridor spanning Eurasia.

Since 2016, India has invested heavily in this project, and the port's throughput has steadily increased. Indian government officials and experts had hoped that the full operation of the port would significantly boost trade, taxes, and New Delhi's strategic influence.

Furthermore, in May 2024, India and Iran signed a 10-year agreement to develop and operate the Chabahar Port. According to the agreement, India Global Ports Limited committed to investing approximately $120 million for operations and promised an additional $250 million in credit to support surrounding infrastructure development.

However, The Indian Express pointed out that this move by the United States is a "strategic blow" to India: years of efforts may be in vain. After losing the exemption, the expansion plans for the Chabahar Port will also be significantly slowed down. India's several hundred million dollar investments are at risk, and its long-term connectivity blueprint relying on this port may also suffer severe damage.

Qian Feng, a researcher at the Tsinghua University National Strategy Institute, told the Global Times reporter that enterprises or individuals involved in the operation of the Chabahar Port may face secondary sanctions from the U.S., which could lead to the stagnation of India's $370 million investment in port upgrades. This not only weakens India's plans to establish regional trade links through the port but also undermines India's ability to compete with Pakistan's Gwadar Port in the land power competition, and shakes New Delhi's strategic plan to expand its influence in Central Asia through infrastructure connectivity.

Businesses worry about potential disruptions in the supply chain

According to a report by The Mint, due to U.S. sanctions, Indian companies may face delays in cargo transportation due to compliance reviews and banking restrictions. Ongoing projects may slow down, and the transportation of basic goods, construction materials, and other supplies to Afghanistan and Central Asia may be affected. Although the Indian government states that it is fully assessing the impact, businesses remain concerned about possible supply chain disruptions. Cargo insurance costs may rise, and foreign investors may be reluctant to participate in projects related to the Chabahar Port.

In addition to the Chabahar Port, there are multiple challenges in U.S.-India relations. Trade tensions continue to escalate - the U.S. has imposed a 50% tariff on Indian export goods, citing India's continued imports of Russian oil, leading to a decline in Indian exports and economic pressures on industries such as chemicals, metals, pharmaceuticals, and agriculture. According to a report by the South China Morning Post on the 27th, citing sources, senior trade negotiators from India and the U.S. failed to resolve their tariff disputes during meetings held between sessions of the United Nations General Assembly last week.

The Indian Express stated that for India, the current challenge lies in maintaining the operation of the Chabahar Port while avoiding direct conflict with Washington. However, with the implementation of the latest sanctions, the fate of India's most ambitious overseas port project remains uncertain.

Original: https://www.toutiao.com/article/7555274084192371234/

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