Chabahar Port and India-Iran Relations

RISING SUN

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Kazakhstan envoy Yerlan Alimbayev bats for Chabahar port, says process underway for use via Caspian Sea​

New Delhi: Kazakhstan has backed the use of Chabahar port, with its envoy saying by June of this year, a link will be established that will connect the country via the Caspian sea. Speaking exclusively to our Principal Diplomatic Correspondent Sidhant Sibal, Kazakh envoy Yerlan Alimbayev said, "Kazakhstan will not only join, but we are also actually in a process. We initiated this process and we were expected the Chabahar connection will be done"
Kazakhstan is the world's largest landlocked country, bordering the Aral and Caspian seas, both of which are inland seas with no access to oceans. The comments by the envoy come even as India is keen that the port expands India's connection not only to Afghanistan but to the wider Central Asian region. Last month India, Uzbekistan, and Iran had a trilateral talk on the use of the port. The trilateral talk has been expanded with India set to Invite Afghanistan as well.

The Kazakh envoy also spoke on the upcoming Parliamentary elections in his country. In October of 2021, Kazakh President Kassym-Jomart Tokayev signed a decree setting the date for the elections to the Majilis of the Parliament of Kazakhstan to be held on 10th January.

Sidhant Sibal: Elections are going to happen in your country. If you can give some details?
Yerlan Alimbayev: We will have the Parliamentary elections on 10th January 2021 to the lower chamber of the Parliament of Kazakhstan --Majlis. Given in the situation, we are having the elections after new political reforms conducted by the first President then taken by our President. So far, we have 5 parties participating in the elections. And we are expecting the results the next day on the 11th. Some papers/voting will be brought from abroad. So final results by 12th.

Sidhant Sibal: Will Indian observers also be present?
Yerlan Alimbayev: Our election commission sent an invitation to the election commission of India but due to the pandemic and absence of direct flight they could not make it. They sent, the election commission of India sent a letter explaining this. Within the framework of the Shanghai cooperation organization, we have some Indian observers.

Sidhant Sibal: How have the ties been between the 2 countries? We know a number of high-level visits are being planned...including of the Kazakh President?
Yerlan Alimbayev: We have some highest- and high-level visits postponed from 2020. The visit of Lok Sabha speaker to Kazakhstan, visit of high-level Parliament delegation from Kazakhstan to India. We expect this to happen this year. We have this year, some high-level meetings between the ministries. We have the 14th intergovernmental commission meeting--by the minister of trade of Kazakhstan and from India, minister of petroleum and gas. We have several joint working groups headed by ministers. For example, in trade and economy, transport, and logistics. We have a special working group on pharmacy, on military-technical cooperation. All these events were postponed in 2020, so we will have them this year.

Sidhant Sibal: How keen is Kazakhstan on the Chabahar port project?
Yerlan Alimbayev: Kazakhstan will not only join, we are actually in a process. We initiated this process and we were expected the Chabahar connection will be done and hopefully, as set by the transport ministry of Iran, it will be done, finish by June of this year. A small part of the connection will be done by Zahedan--Babar Abbas which will be done to the Caspian seaport of Iran. From that place, Kazakhstan will be part of the North-South International transport corridor. So we already part of NSITC. India, during the virtual summit with Uzbekistan, invited to join that. Chabahar is part of it. Kazakhstan is the east part of NSITC. As a country, being the biggest trade partner of India in Central Asia, we are in a position to support any kind of communication links to make our trade and people-to-people contact much easier and wider.

Sidhant Sibal: So, will it be right to say, we will join the project by year-end?
Yerlan Alimbayev: Yes, we are already part of Chabahar. It's a process. My minister of foreign affairs mentioned last year that, even before in 2019 that Chabahar port is the most appropriate connecting point if logistic companies, trade partners from India, and other countries hesitate to use Bander Abbas due to restrictions, Chabahar is the best option. We are continuously talking about the use of Chabahar since 2015 and Kazakhstan announced and proposed a consortium for use of the port. In 2017 we had a joint meeting between Uzbekistan, Turkmenistan, India, and Kazakhstan for use of the Chabahar port. Finally, it is coming to a realization and we will have it with India Uzbekistan having a working group with Iran. Kazakhstan is much eager to be part of it.

Sidhant Sibal: Amid the COVID crisis, how have both the countries continued talks. Also any talks on the COVID vaccine?
Yerlan Alimbayev: Despite the pandemic, we had several bilateral events. Our foreign ministers met in Moscow, they had also virtual meet within the framework of the India Central Asia Dialogue. We have several cultural events online, we have joined several meetings. We have lost 2000 people due to covid. We are developing our own vaccines. 3 vaccines are on the way, 2 of them under trial. We are working with our partner Russia, and Pfizer. With India, we are ready and open to discuss but it is up to India. As you know yesterday, it was announced India will not allow the export of vaccines till April. We are open and we can discuss with the Indian government.
 

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India delivers 1st batch of heavy cranes to bolster operations at Chabahar port​

India has delivered a consignment of heavy equipment, including cranes, for further development of Iran’s Chabahar port, signalling New Delhi’s commitment to the strategic connectivity project that can provide access to markets in Central Asia.

The consignment included two mobile harbour cranes of 140 tonnes, which were acquired from the Italian firm Italgru S.r.l. under a deal for a total of six cranes, people familiar with developments said on condition of anonymity.

“The first shipment of strategic loading and unloading equipment worth $8.5 million has arrived in Chabahar port to mark the activation of the contract between the Ports and Maritime Organization (PMO) and the Indian side,” said Behrouz Aghaei, director-general of the ports and maritime department of Iran’s Sistan-Baluchestan province.

Aghaei told Tehran Times that the heavy equipment will be installed at Shahid Beheshti terminal at Chabahar port, which is operated by India.

Hindustan Times had first reported last month that the cranes were set to be delivered in January, months after India cancelled a $30-million contract with Shanghai Zhenhua Heavy Industries for heavy cranes because of delays by the Chinese company in supplying the equipment ordered in 2017.

In May 2016, India Ports Global and Iran’s Aria Banader Iranian Port and Marine Services Company signed a deal to equip and operate the Shahid Behesti terminal, with a capital investment of $85.21 million and annual revenue expenditure of $22.95 million, on a 10-year lease.

Despite the Chabahar port being granted a waiver from US sanctions on Iran, India has faced problems in acquiring heavy equipment from foreign countries, mainly because of the reluctance of foreign banks to open letters of credit (LoCs) for a project within Iran.

A special process was adopted to acquire the cranes from Italy that sidestepped the sanctions issue, the people cited above said. The cranes were shipped to India before being transported to Chabahar, they added.

Aghaei said the Indian side will operate Shahid Beheshti terminal under a build-operate-transfer (BOT) contract and this was the first time such a deal is being implemented in an Iranian port with 100 per cent foreign investment.

Grain suckers, gate cranes and gantry cranes were installed at Shahid Beheshti terminal last year, but the lack of heavy cranes has hampered the loading and unloading of cargo from ships.

“India is the only foreign country that is currently participating in a major development project in Iran despite the US sanctions,” Tehran Times noted. The project is the “anchor for the expansion of economic relations” between the two sides, it added.

The Iranian side has requested the Indian government for railway equipment, including locomotives, signalling gear and equipment for railway stations, to bolster operations on the Chabahar-Zahedan and Khaf-Herat railway lines to give a further boost to Chabahar port. Iran has suggested this equipment can be provided by India under a $150 line of credit proposed some years ago.

India, Iran and Uzbekistan held their first trilateral meeting focused on Chabahar port in December 14 and this body is expected to meet every three months to push the joint use of the trade and transit facility on the Gulf of Oman. Afghanistan will be invited to the next meeting of this body.
 
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RISING SUN

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Chahbahar-Zahedan rail link: Iran's insistence on roping in a specific entity put deal off track
India’s problem with Iran on the Chahbahar-Zahedan rail link is latter’s insistence on ensuring the civil works contract goes to Khatam al-Anbiya constructions, an entity belonging to Iran’s proscribed Islamic Revolutionary Guard Corps (IRGC). These entities are under secondary sanctions by the US, which means companies who deal with them could also come under scrutiny, face restrictions and may even have their assets frozen.

Now, India does have a waiver from the US to go ahead with the development of the port as well as the railway line. But in doing so, India cannot involve sanctioned entities in the project. So, India asked Iran in December 2019 that must nominate another entity, one which is not proscribed. Iran, according to the South Block, gave no replacement.

It’s important note that Khatam al-Anbiya is not just any IRGC entity but one of its key construction arms, which has been involved building activity at nuclear sites. And IRCON, which had done the feasibility and identified the alignment, could not be exposed to this risk.

From an Indian standpoint, a railway line – regardless of who builds it – must come up because it will help move larger quantities of freight from the Afghan border. There already is a road connecting the port to Zahedan, which is how 8200 containers have moved through this port since December 2018. In the past year alone, 52 vessels were handled at the port. These are not big numbers but better than what Indian authorities had anticipated.

The real roadblock for Iran is American sanctions. Much as the proposed China-Iran deal is being touted, the fact remains that no Chinese entity has yet openly flouted the US sanctions regime. Now, many Chinese entities have worked below the radar to supply dual use items for the nuclear programmes in Iran, North Korea and Pakistan but have never done so overtly.

For all the talk about expansion plans to include China in Chahbahaar, the fact remains that on ground there exist only two terminals – Shahid Kalantari operated by Iran and Shahid Behesti run by India. The Chahbahar Special Economic Zone in which China was to invest in large amounts has still not moved ahead.

Another instance was India’s struggle for getting big crane operators to set up equipment at Chahbahar. Most foreign entities were unwilling despite the fact that India had an American waiver.

Then, Iranian authorities told India that they could obtain this equipment from Chinese companies. New Delhi was open to proposition as long as the equipment reached the port. But it’s been months now and no Chinese equipment is on the horizon.

The issue also is of Iran shifting goalposts. Between 2016, when Iran had reached a nuclear deal with the US and 2018, when the Trump Administration withdrew, Iran vacillated, trying to strike a better bargain but in the end, was unable to close deals.

In Farzad-B, for instance, India was to develop, transport and market the gas. But suddenly, Iran wanted to market it on its own, then said India would only be allowed to export post-extraction. New Delhi, incidentally, accommodated many of these concerns but then Iran wanted India to set up a LNG terminal and that further delayed matters.

At one point, India alerted Iran that Saudi Arabia, which shares the field, was drawing out all the gas while it procrastinated. Then came the new sanctions in 2018 and Iran wanted to revert to the older arrangement which by now became difficult for India.

Even the port could have been delayed had India not moved in for a short-term lease contract(SLC). This was done after Iran stalled talks by linking the activation clause to the condition that India first extend $150 m credit facility. The issue still remains unresolved but the port is functioning under a SLC for 18 months which goes on until October 2020. For this, India also agreed to the nomination of Arya Banader, a local entity, to carry out the civil works.

But the same was not possible with the Khatab al-Anbiya. That China will undertake any such risk, exposing its own entities to US sanctions is one worth watching, because trends show otherwise.
 

jetray

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when US imposes sanction they will give it to India when they start having talks with US every thing will revert back.