Gadkari on Iran port-placate trip

Prime Minister Narendra Modi has picked transport minister Nitin Gadkari to represent India at the inauguration of Iranian President Hassan Rouhani's second term tomorrow, trying to signal commitment to a critical port deal they had inked last year amid fresh irritants.

By Our Special Correspondent
  • Published 5.08.17
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Nitin Gadkari

New Delhi. Aug. 4: Prime Minister Narendra Modi has picked transport minister Nitin Gadkari to represent India at the inauguration of Iranian President Hassan Rouhani's second term tomorrow, trying to signal commitment to a critical port deal they had inked last year amid fresh irritants.

Gadkari was influential in the final stages of negotiations over multiple berths at the strategically located Chabahar Port on the Gulf of Oman that India has promised to build and operate for the next decade, and Iranian officials are known to respect him.

But the shipping and road transport minister's visit also coincides with a dip in ties following delays in the timeline India was to follow for the development of the port, and tensions over a gas field that New Delhi wants but Tehran is bargaining hard over.

The tensions between the US and Iran after Donald Trump's election as American President, and the threat of fresh sanctions against Tehran from Washington, are also clouding the India-Iran relationship, officials said.

India is unsure about how fast to invest in the port and in a special economic zone next to it when fresh US sanctions could effectively end up locking those investments up.

Today, Gadkari attempted to suggest that the bilateral relationship with Iran was on track.

"The Chabahar Port will start functioning within 12-18 months," Gadkari said. "This will open the door for business and trade with Iran and Afghanistan."

For India, the Chabahar Port is strategically critical as a gateway into Iran and land-locked Afghanistan that bypasses the land route through Pakistan, with which New Delhi continues to have tense relations. Pakistan has repeatedly barred land trade between India and Afghanistan.

During Modi's visit to Tehran last year, India, Iran and Afghanistan had also signed a trilateral transit agreement that would allow the movement of goods till Chabahar by ship, and then to Zahedan on the Iran-Afghanistan border by rail. Trucks can then ferry the goods into Afghanistan.

The port is also important for India as it outflanks the Chinese-built Gwadar Port in Pakistan's Balochistan that New Delhi views as a potential threat in the event of a military confrontation.

That strategic value made Modi commit to an "early implementation" of the bilateral agreement with Iran for the development of the port, during the Prime Minister's visit to Tehran - recognition also of India's poor track record in delivering on international projects.

To convince Iran that it was serious about implementing the project, India agreed to strict timelines that are included in the commercial contract signed during Modi's visit.

Under the commercial contract, India was to deliver a $150 million soft loan in four months and to develop two terminals and five berths in 18 months.

Cargo was to be shipped out from the start of the third year of the contract - the volume starting at 30,000 containers of 20 feet length, and going up to 275,000 such containers by 2026, according to the contract. The two countries will share the customs revenue and Iran will retain the infrastructure after the contract concludes.

But almost 15 months after the contract was signed, India is yet to disburse the soft loan - though it has budgeted for the loan this financial year. The development of the berths is also still to begin.

Modi had also said during his Tehran visit that India would consider investments worth $500 million in the special economic zone around Chabahar - investments that are yet to flow into Iran.

But India and Iran have since been locked in increasingly tense negotiations over New Delhi's access to the Farzad B gas fields that Tehran had earlier offered.

Amid faltering negotiations, India had in May cut its oil imports from Iran as a pressure tool. Iran hit back this week, with its Majlis Energy Commission - the parliamentary panel on energy - saying in a statement that the country was under no obligation to let India explore the fields.

The threat of fresh sanctions against Iran by the Trump administration is also clouding relations. India had dramatically slashed its oil imports from Iran during earlier US sanctions that included clauses punishing other nations that traded with Iran. That had changed, with the nuclear agreement Iran arrived at with the West in October 2015.

India then rushed to re-enter Iran, with Gadkari at the forefront of those wooing efforts. Now, his task is to convince Iran that India remains committed to the Chabahar pact despite the delays, officials said.