Right after India signed a 10-year contract with Iran to manage operations at the Chabahar Port on the 13th of May, the United States has ‘warned’ that any country considering any business deal with Iran is exposing itself to the “potential risks of sanctions”.
During a daily press briefing on Monday, State Department Deputy Spokesperson Vedant Patel said: “We are aware of these reports that Iran and India have signed a deal concerning the Chabahar port. I will just say, as it relates to the United States, U.S. sanctions on Iran remain in place and we’ll continue to enforce them.”
“Broadly, you’ve heard us say this in several instances, that any entity, anyone considering business deals with Iran, they need to be aware of the potential risk that they are opening themselves up to and the potential risk of sanctions,” Patel added.
When asked if there was a special exemption for the India-Iran Chabahar Port deal, the US State Department Deputy Spokesperson responded, “No!”
India-Iran Chabahar Port Deal
On May 13, India and Iran signed a 10-year contract under which India Ports Global Ltd. (IPGL) will invest approximately $120 million to equip and develop the Chabahar port terminal, which India has been working on as part of a trade corridor connecting Iran to Afghanistan, Central Asia, and Russia.
Tehran, #Iran | Historic vistas in 🇮🇳-🇮🇷 ties, regional connectivity and India's linkages with Afghanistan, Central Asia and Eurasia under the dynamic leadership of Hon'ble PM Shri @narendramodi ji.
— Sarbananda Sonowal (Modi Ka Parivar) (@sarbanandsonwal) May 13, 2024
📷 Signing of the long-term contract for the operation of Shahid Beheshti Port… pic.twitter.com/VOtOTDPMBd
In May 2015, India signed a memorandum of intent to develop the Chabahar port. The contract was executed on May 23, 2016, during Prime Minister Narendra Modi’s visit to Iran.
The 10-year long-term lease arrangement strengthens bilateral ties and builds trust among trading groups in the region.
The Chabahar Port is a landmark project between India and Iran, serving as a transit port for trade with landlocked Afghanistan and Central Asian countries. India has played an important role in the development and operation of Chabahar port.
US takes a U-turn from the 2018 exemption
USA’s ‘warning’ against indulging in business deals with Iran hours after India inked the Chabahar Port agreement comes even as the country had back in 2018 granted an exemption to India saying that Chabahar Port would be kept out of the sanctions for the development of Afghanistan.
“After extensive consideration, the Secretary has provided for an exception from the imposition of certain sanctions under the Iran Freedom and Counter-Proliferation Act of 2012 concerning the development of Chabahar Port and the construction of an associated railroad and the shipment of non-sanctionable goods through the Port for Afghanistan’s use, as well as Afghanistan’s continued imports of Iranian petroleum products, a US State Department spokesperson said back then.
The US’s reversal on Chabahar port comes shortly after US Ambassador Eric Garcetti appeared to be making a U-turn on India’s import of Russian energy. Last week, when asked about India acquiring Russian energy, he stated, “We wanted somebody to buy Russian oil at a price cap; that was not a violation.”
⚡️ 🇺🇸🇮🇳 US says it ALLOWED India to buy Russian Oil
— The Macro Story (@themacrostory) May 11, 2024
"India brought Russian Oil, because we wanted somebody to buy Russian oil…", says US ambassador to India, Eric Garcetti, ".. no Price Cap violation, we did not want oil prices to go up.." #india #Russia #America pic.twitter.com/Vlk79B5T9V
This comes even as in the year 2022, the White House and other top US officials openly urged India to reduce its reliance on Russian energy.
Chabahar Port’s significance
Chabahar, located near the mouth of the Gulf of Oman, is Iran’s first deep-water port. The port positions the country on the international oceanic trade route map. The port is located to the west of Iran’s border with Pakistan, around the same distance as Gwadar, a competitive port designed by China in Pakistan to the east. For India, Chabahar Port serves as a counterbalance to Pakistan’s Gwadar Port and China’s Belt and Road Initiative (BRI).
US sanctions on Iran
The early sanctions aimed to cut off the region’s financial and economic resources. In the years since, the United States has imposed sanctions on firms and industries, ranging from military spending to scientific research. In September 2019, the then-US President Donald Trump added Iran’s space agencies—the Iran Space Agency, the Iranian Astronautics Research Institute, and the Iranian Space Research Center to the existing sanctions. A year before, the Trump administration had also withdrawn from the Joint Comprehensive Plan of Action (JCPOA) also known as the Iran Nuclear Deal in 2018.
The United States, under the Joe Biden administration, has placed over 600 sanctions on Iran-related individuals and businesses, as well as those who do business with Tehran, the US President stated last month. Biden announced additional sanctions against Iran following its missile and drone attacks on Israel, describing them as the “largest the world has ever seen.”
