New Delhi is learning the hard way on what it can do after the U.S. slapped sanctions on a big Indian port project in Iran. This sweeping advance has been met by skepticism as the federal government undermines its regional connectivity ambitions. The sanctions, which were signed into law by the Trump administration, specifically target the Chabahar port—home to India’s first overseas port—in southeastern Iran. Contested for centuries, this port has been very important for India. It has opened up access to landlocked Afghanistan and allowed access to the energy-rich markets of Central Asia.
These U.S. sanctions come just at the right time. They are an important external threat to New Delhi’s efforts to gain influence in Central Asia. Analysts suggest that the restrictions may inadvertently bolster China’s position in the region, as it seeks to expand its own economic initiatives. The port of Chabahar has been seen as a counterbalance to China’s increasing presence in neighboring countries. The sanctions could limit India’s ability to compete effectively.
Since the late 2010s, India has invested significant financial resources in establishing and upgrading the Chabahar port. They consider it to be a critically important strategic asset in order to improve their trade routes towards Afghanistan and Central Asia. The goal of the initiative is to match Indian firms with US-based energy resources. For producers, it creates meaningful new market access opportunities with these developing regions. A cargo ship docked at the port in late 2017, an indication that India is indeed making good on its promise to operationalize the port.
Even still, experts are cautiously waiting. At the same time, they are testing the limits of how far U.S. sanctions policy can be bent to pursue India’s wider regional strategy. They argue that Washington’s actions could significantly hinder New Delhi’s ambitions in Central Asia, limiting its ability to engage economically and politically with neighboring nations.
New Delhi would do well to think long and hard about its next moves. Furthermore, the government walks a tightrope in regional relations, weighing its relationships with the United States against its historic relationships with Iran and other Central Asian states. Yet this grim reality has impacts that go far beyond economic self-interest. Its intersection with geopolitical dynamics could further tilt – or stabilize – the power balances in the region.