Economy

US warns of “potential risk of sanctions” after India-Iran Chabahar Port agreement

A 10-year deal for the management of a terminal at Iran's strategically significant Chabahar port was signed by India and Iran on May 13.

The United States has issued a warning to all nations regarding the potential risk of sanctions if they consider any business deals with Iran. This warning came just hours after Iran and India signed the Chabahar Port Agreement on Monday, May 13th, 2024.

Strategic Significance of Chabahar Port:

US State Department Deputy Spokesperson Vedant Patel on Monday, May 13, during his daily news conference said, “Any entity, anyone considering business deals with Iran, they need to be aware of the potential risk they are opening themselves up to, potential risk of sanctions,” while claiming that the country is aware of Iran-India deal concerning the Chabahar port.

Strategic Significance of Chabahar Port:

At a press briefing on Monday, Vedant Patel issued a veiled warning to India after New Delhi and Tehran signed the deal saying, “We are aware of these reports that Iran and India have signed a deal concerning the Chabahar Port, I would let the government of India speak to its own foreign policy goals, vis-a-vis the Chabahar Port as well as its own bilateral relationship with Iran.”

“I would just say…US sanctions on Iran remain in place and we will continue to enforce them,” Vedant Patel added.

According to a series of posts on X by the Indian Embassy in Iran, the deal between India and Iran was signed in Tehran by India Ports Global Ltd and the Ports and Maritime Organisation of Iran in the presence of Ports, Shipping, and Waterways Minister Sarbananda Sonowal.

Strategic Significance of Chabahar Port:

India is taking over the administration of an international port for the first time. Three Chinese businesses were among the suppliers that the US sanctioned in April of this year for their involvement in Pakistan’s ballistic missile project.

“The sanctions were made because these were entities that were proliferators of weapons of mass destruction and the means of their delivery. These were entities based in the PRC (People’s Republic of China), in Belarus, and that we have witnessed to have supplied equipment and other applicable items to Pakistan’s ballistic missile programme,” Patel had then said.

A few days later, the US imposed penalties on more than a dozen organizations, people, and ships—three of which were from India—for their role in enabling illegal commerce and the transfer of unmanned aerial vehicles on behalf of the Iranian military.

Strategic Significance of Chabahar Port:

According to the US Department of Treasury, these businesses, people, and ships have been instrumental in enabling and funding the covert transfer of Iranian unmanned aerial vehicles (UAVs) to Russia for use in the conflict in Ukraine.

The Chabahar Port will undoubtedly see additional investments and communication links pouring out of it after Iran and India inked a long-term deal for the management of its Shahid Beheshti Port terminal on Monday, according to External Affairs Minister S. Jaishankar.

“Right now the port has not grown. If you don’t have a long-term agreement, it is difficult to invest in a port. So the very clear expectation is that part of the Chabahar that we are involved in will definitely see more investments, it will see more connectivity linkages coming out of that port,” Jaishankar said.

“We believe today that connectivity is a big issue in that part. Chabahar will connect us with Central Asia,” he added

A 10-year deal for the management of a terminal at Iran’s strategically significant Chabahar port was signed by India and Iran on Monday. This development would strengthen commercial relations and regional connectivity.

“The Ministerial visit and signing of the Long-term Contract will further strengthen ties between the two nations and highlight the importance of Chabahar as a gateway for trade with Afghanistan and broader Central Asian countries. The development of the Chabahar Port Project is an India-Iran flagship project,” said Ministry of Ports, Shipping and Waterways in a statement.

The Long-Term Bilateral Contract for Chabahar Port operation was signed on May 13 by the Port & Maritime Organisation (PMO) of Iran and Indian Ports Global Limited (IPGL) of India. As a result of this agreement, IPGL will have ten years to manage Shahid-Behesti Port as part of the Chabahar Port Development Project.

During this ten-year long-term leasing arrangement, IPGL plans to invest around USD 120 million in equipping the port. Additionally, India provided a USD 250 million in-credit window for projects that both parties agreed upon that would enhance the infrastructure in the Chabahar region.

The Chabahar Port is anticipated to play a key role as a transit hub for commerce with Afghanistan and other Central Asian landlocked countries. India has contributed significantly to the construction and management of the Chabahar Port.

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