Did US forget sanction waiver it gave India on Chabahar Port?

It appears that the US has forgotten the exemption order it had issued for India in 2018, waiving any risk of sanctions for working on the Chabahar port. Earlier this week it warned of “potential risk of sanctions” after New Delhi and Iran signed a “long-term” contract for the development of Shahid Beheshti Port Terminal in Chabahar city.

India, on Monday (May 13), inked a “long term” contract for the operation of Shahid Beheshti Port and obtaining 10-year access to use the port, situated on Iran’s southeastern border with Pakistan. A deep water port, Chabahar provides easy and secure access to large cargo ships.

Reacting on the India-Iran Chabahar Port deal, State Department Deputy Spokesperson Vedant Patel said, “US sanctions on Iran remain in place and we will continue to enforce them… anyone considering business deals with Iran needs to be aware of the potential risk that they are opening themselves up to and the potential risk of sanctions."

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When asked whether there was any specific exemption for the latest agreement between India and Iran on Chabahar, Patel responded using a single word: “No."

Also Read: It's a first: India takes over management of overseas port with Chabahar deal

On the US’ reaction, India’s External Affairs Minister S Jaishankar said a “narrow view” should not be taken of the India-Iran Chabahar port agreement and added the project will benefit the entire region.

Jaishankar emphasised that India had a long association with Chabahar port, but till now was not able to sign a long-term agreement with Iran for its operations at the facility.

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Also Read: 'Anyone doing business with Iran open to potential sanctions': US warns after India & Iran sign Chabahar port deal

The minister also said: “If you look at even the US’s own attitude to Chabahar in the past, the US has been appreciative of the fact that Chabahar has a larger relevance. We will work at it."  

When US exempted India from sanctions 

The administration led by the former US president Donald Trump, in November 2018, imposed the toughest-ever sanctions on Iran. Just hours after doing so, it exempted India from certain sanctions for the development of the strategically-located port, along with the construction of a railway line connecting it with Afghanistan.

The Trump administration’s decision to exempt India was seen as a recognition by Washington of New Delhi’s role in the development of the Chabahar Port, which was considered to be of strategic importance for Afghanistan’s development.

Also Read: US grants sanctions waiver to India on Chabahar: Port is at the centre of Washington's South Asia strategy

A report by The Economic Times quoted sources saying that India Ports Global Ltd has been working on Chabahar Port, providing cranes and handling cargo since 2018 in the backdrop of sanction waivers.

But why did India delay signing the deal

The report further mentioned sources saying that India has been cautious on the account that it does not want to get involved with any sanctioned entity from Iran as part of the Chabahar project. They also stated that one of the reasons why the 10-year pact between New Delhi and Tehran took time was because India did not want to violate any legalities.

The deal inked between India and Iran on May 13 is expected to give a major boost to regional connectivity and New Delhi’s linkages with Afghanistan, Central Asia and Eurasia.  

But why is Chabahar Port so crucial for India?

For both India and Iran, the Chabahar Port holds strategic importance and can potentially help Tehran ward off the effect of Western sanctions and offer New Delhi an alternative route that bypasses Pakistan.

For long, India has been pushing for the Chabahar Port project to boost regional trade, especially for its proximity to Afghanistan.

Chabahar Port serves as a counterbalance to Pakistan’s Gwadar Port and China’s Belt and Road Initiative (BRI).

There are plans to integrate Chabahar with the International North-South Transport Corridor (INSTC) which will help facilitate India’s access to Afghanistan and Central Asia without any dependency on Pakistan.