Chabahar Port: A Nexus for Trade, Peace, Prosperity and Geopolitical Realignment

India and Iran have signed a 10-year agreement granting India Ports Global Limited (IPGL) authority to develop and manage the Chabahar Port in Iran. This partnership aims to facilitate the transit of Indian goods to Afghanistan and Central Asia, bypassing Pakistan. Since 2016, IPGL has invested $85 million in Chabahar, challenging Chinese-funded Pakistani ports to boost regional trade. Although delays in the Chabahar-Zahedan railway project have hindered progress, the new agreement raises the expected investment to $370 million. This initiative benefits from a US sanctions waiver obtained in 2018.

Located in southeastern Iran, Chabahar holds immense strategic importance for India, Iran, and Afghanistan, serving as a critical nexus for their economic and geopolitical objectives. Despite challenges posed by US sanctions on Iran, the port remains a focal point for fostering regional connectivity, economic growth, and stability.

India’s Strategic and Economic Interests

For India, Chabahar is a linchpin of its “Connect Central Asia” policy, providing a direct gateway to Afghanistan and Central Asia that bypasses Pakistan’s blockade. This access enhances trade and economic ties with Afghanistan and the broader region, allowing India to counter China’s influence, particularly through the China-Pakistan Economic Corridor (CPEC) and Gwadar Port.

As a counterweight to China’s Belt and Road Initiative (BRI), Chabahar also aligns with India’s broader geopolitical goals, supported tacitly by Quad partners (U.S., Japan, and Australia), who share concerns about China’s expanding footprint in the Indian Ocean and Central Asia.

Chabahar plays a key role in India’s energy security strategy. By providing direct access to Iranian oil and Central Asian energy resources, it diversifies India’s imports, reducing dependency on traditional, geopolitically vulnerable routes like the Strait of Hormuz.

China’s Response and Its Implications

China’s reaction to Chabahar’s development is significant. While Gwadar Port remains China’s strategic foothold in the region, Chabahar offers an alternative route that could challenge its influence. By deepening trade links through IMEC, Chabahar may contribute to reducing China’s grip on regional connectivity.

Iran’s Economic Development and Strategic Leverage

For Iran, Chabahar represents an economic lifeline, particularly for its underdeveloped southeastern region. The port is not only a key hub for attracting investment and boosting trade but also a vital link in the International North-South Transport Corridor (INSTC). This corridor connects India with Russia and Europe through Iran, bolstering Tehran’s role in global trade.

Chabahar also provides Iran with strategic leverage against US sanctions. By enabling trade with regional partners and reducing reliance on vulnerable routes, Iran sustains its economic activities despite external pressures. Furthermore, the port’s development spurs job creation, infrastructure growth, and potential tourism in southeastern Iran, catalyzing broader economic benefits.

However, the region’s security challenges cannot be overlooked. Southeastern Iran and the Baluchistan region are prone to militant activity, piracy, and political instability, which could hinder Chabahar’s operational reliability. Addressing these risks requires additional investments in securing the port and its trade corridors.

Afghanistan’s Lifeline

For landlocked Afghanistan, Chabahar is a vital alternative to Pakistan’s ports, reducing transit costs and providing much-needed access to international markets. The port’s connectivity could catalyze economic development, enabling Afghanistan to export goods like minerals, textiles, and agricultural products while importing essentials more efficiently.

Enhanced trade connectivity through Chabahar also fosters regional stability. By integrating Afghanistan economically with Iran and India, the port promotes interdependence, a crucial factor for long-term peace and development in the region.

Navigating US Sanctions

US sanctions on Iran remain a significant challenge, yet Chabahar’s unique role has allowed India to secure waivers. The port’s strategic importance in promoting regional stability, facilitating trade, and countering rival influences has earned it exceptional treatment under US policy. Moreover, since 2022, Chabahar has been instrumental in delivering humanitarian aid, such as grain and medicines, to Afghanistan, reflecting its practical significance.

However, future US-Iran relations could alter the port’s trajectory. A potential revival of the Joint Comprehensive Plan of Action (JCPOA) or a hardening of sanctions could either accelerate or stall Chabahar’s development. India’s ability to navigate this complex geopolitical landscape will be critical to the port’s success.

A Beacon of Regional Integration

Chabahar is more than just a port—it is a symbol of regional integration, cooperation, and resilience. It embodies the shared economic aspirations and geopolitical strategies of India, Iran, and Afghanistan, counterbalancing China and Pakistan’s strategic influence.

In this context, India’s active participation in the India-Middle East-Europe Economic Corridor (IMEC) offers another layer of synergy. Announced at the 2023 G20 Summit, IMEC envisions an interconnected trade route linking South Asia, the Middle East, and Europe via rail and sea. Chabahar can serve as a critical node in this framework, enhancing India’s connectivity with West Asia and Europe.

Remarkably, IMEC and similar infrastructure projects hold the potential to foster cooperation between historically adversarial nations. The corridor envisions linking diverse players such as India, the UAE, Saudi Arabia, and Europe—but its success could eventually extend its reach to unlikely participants like Iran and Israel. Both nations, despite their deep political divides, share economic incentives to benefit from enhanced trade networks. Infrastructure initiatives like Chabahar and IMEC provide a platform for pragmatic, parallel engagement, where economic interdependence could incrementally soften adversarial postures.

Broader Impacts on Regional Stability

The interconnected infrastructure developments surrounding Chabahar—including IMEC and the INSTC—offer a broader pathway for peace and stability. By integrating diverse regional stakeholders, the port contributes to a more resilient economic framework that could mitigate tensions and encourage cooperation in areas beyond trade. Infrastructure projects far outlive countless regime switches over centuries.

Conclusion

The Port of Chabahar is a testament to the interplay between economic ambitions and geopolitical strategies in South and Central Asia. It reflects the determination of India, Iran, and Afghanistan to foster connectivity and economic growth despite external pressures. When linked with larger initiatives like IMEC and INSTC, Chabahar assumes an even more significant role—not only in shaping the region’s prosperity and stability but also in creating opportunities for cooperation among even the most unlikely of partners, like Israel and Iran.