Iran-China-India: The complex geopolitics

  09-Aug-2020 12:03:17

Chabahar IranChina. India geopolitics

India’s and Iran’s relationship in the past

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India and Iran shared a border till 1947 and have several common threads like language, culture, traditions, etc. The diplomatic relations between the two countries were established on March 15, 1950, when both signed a treaty of friendship and perpetual peace. However, the relationship between India and Iran diverged until the 1990s because the former fostered a strong military link with the Soviet Union while the latter joined the Baghdad Pact in 1954. Following the 1979 revolution, a war took place between Iran and Iraq and this era was also swept by the hostage of U.S. Diploats, which led to a range of political and economic sanctions in Iran thereby separating it from the world. In the 1990’s the interest of both the countries converged around energy, central Asia and security mostly around the Pakistan-Afghanistan region. The relationships between the two countries were strengthened when they signed a defense cooperation agreement in December 2002.

From the geopolitical perspective, even though the two countries share some common strategic interests, India and Iran have different opinions on other issues. India has had strong reservations on Iran's nuclear program and while both nations have spoken against the Taliban, unlike Tehran, New Delhi supports US intervention in Afghanistan. From an economic perspective, India and Iran have bilateral trade agreements. The trade agreements rose in the fiscal year of 2018-19, wherein, the value of India’s exports was US$3.5 billion and import value from Iran was US$13.5 billion. Major commodities exported from Iran include rice, tea, iron & steel, organic chemicals, pharmaceuticals, etc. Major imports from Iran are petroleum and its products, inorganic/organic chemicals, edible fruits and nuts, etc.

China and Iran relationships in the past

During 1947-1991, the cold war period, it was difficult for many countries to cope up with the after-effects of war and it took nearly four decades for setting the ground to a new order. Since the early 2000’s China has emerged as a new global power. China and Iran share a pragmatic, business-oriented and non-ideological relationship from the 1979 revolution to the present. They have been instrumental in forming an anti-US block that sees the west, especially the US, as a threat to their culture. Iran’s regime views China as a political ally, against their nemesis, U.S. China has supported Iran in many ways, such as it has helped Iran in Military Modernization during the Iran-Iraq war. China has helped in starting Iran’s nuclear program; it has also shielded Iran from the effects of U.S. sanctions and China serves as Iran’s biggest economic partner. China has strategically contributed towards Iran as it views Iran as a source of energy and also as a source for countering U.S. power in the middle east.

Although China and Iran may appear united in their opposition to the U.S, the reasons for their opposition are different. The United States is a key component of China’s economic growth, whereas, for Iran, the sanctions have badly hurt the country's economy. China, even though it wants to impose its dominance in the world, is constrained by the intertwining of its economy with the US. Iran, on the other hand, has a strong presence and interests in the middle east: The insurgents in Iraq, fighting against the US, have received its support. So have the militants in Afghanistan, though on a smaller scale, and Iran’s pursuit of nuclear weapons capability is perceived by the United States as a direct threat to its national security interests.

Chabahar Deal


Chabahar port is situated on the Gulf of Oman and is just 72 km away from the Gwadar port in Pakistan which is owned by China. Apart from Chabahar, there are two maritime ports in Iran named Shahid Beheshti and Shahid Kalantari. The Chabahar Port project was conceptualized in 2003, when Iran permitted Afghanistan to use it for transit, amidst growing tensions between Afghanistan and Pakistan. This was also seen by India as an important step to contribute towards the development of Afghanistan, while also addressing its long-standing plan to bypass Pakistan and secure safe transit access. But, this deal was not implemented due to the U.S. sanctions on Iran. The lifting of the sanctions in 2015, opened up the gates for trade, investment, infrastructure and energy with Iran. During the visit of Prime Minister Shri Narendra Modi to Tehran in May 2016, the contract on Chabahar was signed, which comprised an investment of $85 million for equipping the port. The contract also consists of the provision of a credit of approximately USD 150 million for the development of the 1st Phase of Shahid Beheshti port at Chabahar. The Trilateral Transit Agreement (Chabahar Agreement) was signed by the transport ministers of India, Iran and Afghanistan in the presence of Prime Minister Shri Narendra Modi, President Dr. Rouhani and President Ashraf Ghani in May 2016.

Why was this deal signed?

This deal was considered as a golden opportunity for India because firstly, it was to give direct access to India to trade with Afghanistan, Russia and Europe, by circumventing Pakistan. Secondly, the strategic location of the port on the South-Eastern coast of Iran would have enabled fast transport of goods to Iran and onwards to Afghanistan and Russia through a new rail and road link. Thirdly, the Chabahar port was touted as India's answer to China's Gwadar port development in Pakistan, which is being built to develop China-Pakistan Economic Corridor to open up new trade and transport routes in Asia. Lastly, it would have opened up new opportunities for India both in terms of industries and workforce and of course, it was thought as a deal for improving and strengthening the ties between Iran and India.

How has China shaped the policies of the Chabahar Deal?

As the familiar axiom goes 'The enemy of my enemy is my friend', China has well understood the meaning of this axiom and applied it in real life. China has struck a deal with America's foe Iran. As India has restricted the use of China's applications, and also cut the imports from China, it has shaken the economy of China. America and other European countries are ready to invest in the tech-savvy markets of India and the consideration America is providing for India has made the whole anti-American countries unite against India. As a counter of sorts, China has reached out to Iran.

China has signed with Iran a 25-year key accord, which is an 18-page understanding between Iran and China and it has given more than 400 crores to Iran. This agreement will bring China into Iran's banking, media communications, ports, and railroad segments and many different ventures. Consequently, China will get consistent flexibility of Iranian oil at a cheap rate for 25 long years, and China will put 400 crores in these undertakings. Iran is under American sanctions and henceforth, Iran can't offer its colossal reserves of oil to numerous nations. Indeed, even the nations, for example, India can't accept oil from Iran because of the dread of American sanctions. However, the Chinese have no such dread and this exchange of oil from Iran and products from China will benefit both the countries. The arrangement, additionally, has a military measurement to it as it incorporates various key plans like joint preparing and exercise, joint examination, and weapons improvement, and even knowledge sharing. This would be the key collaboration between Iran and China. This agreement was followed by China canceling the Chabahar deal with India, citing funding delays

How has this cancellation of the Chabahar deal impacted India?

Regardless of a few site visits by IRCON specialists and arrangements by Iranian railroads to build the Chabahar port, the decision can only be seen as an opportunity lost. The impression is that India wavered in its dealing with Iran due to U.S. pressure, especially after India canceled oil imports from Iran. This deal also questions India’s commitment to strategic autonomy. Though Tehran has claimed that it will fund the railway using its resources, it seems to have embarked on the Chabahar-Zahedan project with a confidence borne from out of its strategic partnership with Beijing. In a world where connectivity is seen as the new currency, India’s loss could well become China’s gain, and India must watch this space, created by its exit, closely. Every one of these conceivable outcomes ought to be observed intently by India and it should try to strengthen its support and ties with other countries. For being a superpower India should act in a planned manner.

By: Nandini Gupta

(Cover image credits: بندر-چابهار.jpg)