Notwithstanding the potential and the role that Iran sees the Chabahar port will play in somewhat helping her escape the US sanctions, the port’s business potential continues to remain under-utilised and under-productive, causing Iran to worry about its future, leading it to seek out other countries that might invest in the port to meet its true potential. In last few months or so, Iran’s top diplomatic officials, including its foreign minister, have suggested that they would be very interested in having Pakistan and China invest in the port. While India has invested about US$500 million to develop this strategically important port, this investment is neither sufficient to truly develop the port to its full potential nor does it meet Iran’s own policy objectives, which, to say the least, include domination of the trade route between Central Asia and the Indian Ocean and/or the North-South Corridor. Surely, for Chabahar to become pivotal for the Corridor, it must develop its potential first, but the progress that it has shown so far falls short of expectations. For instance, according to the official data, the ships that have docked in the past year have only loaded and unloaded 2.1 million tonnes of cargo as against the port’s annual capacity of 8.5 million. Besides it, it has been reported that only 20 ships have docked at the new section of the port and that most of its three kilometres of waterfront remains unutilised because of the lack of enough shipments coming this way.

Business activity continues to under-perform despite the fact the US has already announced a waiver for this port. Arguably, the actual reason for why the US gave this particular a waiver isn’t Indian lobbying in the U.S., but the fear in the US that Iran might end up handing this port over to China if India loses control due to US sanctions. But the fact that the port, despite the waiver, is under-performing is making Iran uneasy at a time when its leadership hasn’t even minced any words about the negative impact that the US sanctions are leaving on the Iranian economy; hence, Iran’s interest in having other countries invest in the port, especially China, which has been successful in performing relatively much better in other ports, including the Gwadar port of Pakistan. As the data recently released by Pakistan’s ministry of maritime affairs shows, the port of Gwadar has generated Rs.358.151 million ever since the inception of the project in 2016, and it’s yet not fully operational. Similarly, ever since China’s takeover of Sri Lanka’s Hambantota port, the volume of trade and shipment, which was previously extremely poor, has doubled and the new Chinese handler of the port, China Merchants Group, which earned US$93 million in 2017 only, is determined to invest in the port and make it a success story. “China Merchants doesn’t go and dump money if it’s not commercially viable”, said CMG executive Tissa Wickramasinghe, reassuring that they will make the port work. With China’s relative success in ports and the fact that China is already investing in at least 42 ports around the world as part of its Belt & Road Initiative, China does become an attractive country for Iran to look towards to compensate the under-performing port of Chabahar. The shift in Iranian thinking, which is largely a result of US sanctions, makes sense for Iran under the current circumstances as it does want to ensure that Chabahar is an economic success. But this shift in thinking, for New Delhi, could be a strategic loss, for New Delhi essentially opposes China’s expansion in the Indian Ocean and seems to believe that the Gwadar port could one day be used as a military base – along with other China-backed ports from Myanmar to Bangladesh to Sri Lanka – to encircle India.

For Iran, a Chinese investment in the port also makes sense because China already has overland train connections linking China to Iran and huge investment within Iran, making it a country with much deeper connections with Iran than India’s “historical ties”, which can always crumble under the pressure of US sanctions. While China hasn’t yet officially expressed its desire to invest in Iran, there is hardly any doubt that if it can link Gwadar with Chabahar—something that Iran itself suggested last year—it will mean yet another addition in China’s ‘pearl of strings’ in the Oceans around the globe. There is thus a real reason for why tension is developing within the Indian policy circles about Iran’s possible turn towards China. The Indian dilemma is that it doesn’t have a big enough investment to fully utilise and develop, on its own, the Chabahar port. Iran wants to make it fully operational, for the port is its life-line in an era of extreme US sanctions. If Iran wants to see this life-line in a healthy and productive shape, it must look elsewhere, and that elsewhere is, for Iran, China.

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