US sanctions on Iran challenges India, opens the door to China
New Delhi is weighing the consequences of the end of US exemptions on the Iranian port of Chabahar, in which it has invested hundreds of millions of dollars as a strategic hub to Central Asia and a counterweight to China's presence in Gwadar. New sanctions risk stalling the project and further complicating relations with Washington, already beset by tariffs and new visa restrictions. In the long run, analysts warn, China could be the real beneficiary of the crisis.
New Delhi (AsiaNews) – India is considering how to respond to the implementation of US sanctions on Iran this week, which will affect the port of Chabahar, in which it has invested heavily, at a time of increasingly difficult relations with the United States.
The decision to target Iran not only threatens India's ambitions but could also end up benefiting China in the long run.
Randhir Jaiswal, a spokesperson for India's Ministry of External Affairs, said that the government is "presently examining the implications that this revocation for India," referring to an exemption that had been in place since 2018 for India-related projects.
Announced on 16 September, the revocation became effective on 29 September.
The latest sanctions could block investments, significantly delay the port's construction, and force the companies involved, including state-owned India Ports Global (IPGL), to pull out within a limited timeframe to avoid potential secondary sanctions, such as a freeze on assets in the United States and a ban on transactions.
The Port of Chabahar is of significant strategic importance for New Delhi. India assumed management of the port in December 2018 and has committed to modernising its facilities, positioning it as a crucial hub in the International North-South Transport Corridor (INSTC).
Chabahar's importance lies in its ability to provide direct access to Afghanistan and energy-rich Central Asia, thus bypassing Pakistan, one of India’s historic rivals.
Analysts also see the project as a strategic countermove to the Port of Gwadar in Pakistan’s Balochistan province, the hub of China's Belt and Road Initiative, located just 200 kilometres to the east.
Despite changes in the geopolitical landscape (particularly the Taliban's capture of Kabul in 2021), India has reaffirmed its commitment to the port infrastructure.
In May 2024, India and Iran signed a ten-year contract worth US$ 370 million for the operation and development of the port.
This agreement would see India invest approximately US$ 120 million in equipment and offer Iran a 0 million loan for related infrastructure.
The decision to revoke the sanctions waiver is consistent with the Trump administration's renewed “maximum pressure” campaign against Iran.
The move comes at a time of growing tensions in US-India relations. The first waiver in 2018 was granted with the aim of supporting Afghanistan's reconstruction and economic stability.
Some analysts suggest that Washington is now using every opportunity to apply pressure on New Delhi.
Recent US punitive actions have included the imposition of 50 per cent tariffs on Indian imports and a new fee for H1-B visas (which many Indian professionals benefit from) of US$ 100,000.
Some experts believe that revoking the exemption on the Chabahar sanctions is part of Trump’s ongoing trade negotiations strategy, with the US administration seeking to extract as much as possible from India, which is now in a difficult position.
New Delhi could adopt a wait-and-see approach, hoping the US government will understand the importance of maintaining a solid relationship against China.
During Trump’s first term, India complied with US sanctions and stopped purchasing Iranian crude (today Trump is asking India to do the same with Russian crude), making China the sole buyer of Tehran's oil, at a discount.
Alternatively, India could choose to lift the sanctions as part of a broader effort to align itself with non-Western powers, such as Russia and China, who want to reduce their dependence on the US economy and distance themselves from US-led financial networks.
For now, India's trade with Central Asia is limited (just over US$ 2 billion a year), so the impact of the reintroduction of sanctions on Iran will not be immediate. But in the long run, it seems inevitable that China will (once again) benefit from the situation.
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24/05/2016 13:39
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