Domestic Economy

No Rivalry Between Chabahar, Gwadar Ports

No Rivalry Between Chabahar, Gwadar Ports
No Rivalry Between Chabahar, Gwadar Ports

Chabahar Port will not be a threat to Gwadar Port as the two facilities will act as sister ports in the future and a great source of regional cooperation, peace and stability, Iran’s ambassador to Pakistan said.

Speaking at Islamabad’s Institute of Strategic Studies on Pakistan-Iran relations on Friday, Mehdi Honardoust dispelled the impression of any rivalry between the two countries in their quest to develop the two ports to provide a bigger platform for trade among regional countries through connectivity, the Pakistani financial daily Business Recorder reported.

He said the recent agreement signed between Iran, India and Afghanistan to develop Chabahar is in no way a threat to Gwadar Port and that in future, both Chabahar and Gwadar will act as sister ports.

Indian Premier Narendra Modi’s visit to Iran this week resulted in the signing of 12 agreements, including $500 million of financing for the development of the port of Chabahar.

An Indian firm and an Iranian firm will jointly undertake the 10-year port construction, while another Indian company will fund and develop the $1.6 billion Chabahar-Zahedan railroad.

India also plans to invest $16 billion in the Chabahar Free Trade Zone.

In a move seen by many as a direct response to the deal, extensive, long-term tax concessions were introduced for companies operating at Gwadar and its free trade zone earlier this week by the government of Pakistan, according to The Journal of Commerce.

The developer of the port, China Overseas Ports Holding Company Limited and its subsidiaries and contractors are included in the exemptions, as well as companies that invest in Gwadar Free Zone. Chinese banks are exempted from tax on profit related to debt generated in the construction and development of the port and zone.

“The doors are always open for other regional countries to join the venture and we are waiting for Pakistan and China,” Honardoust said, echoing similar remarks made by Iran’s President Hassan Rouhani in his meeting with Modi in Tehran.

He explained that Gwadar and Chabahar have been called rivals, but there was no competition between the two harbors, rejecting the impression that Tehran’s increasing ties with New Delhi will undermine Pakistan-Iran relations.

The ambassador’s remarks came after several media outlets spoke of “India-Iran vs. China-Pakistan” rivalry following the signing of the Chabahar agreement by Iran, India and Afghanistan.

Chinese state-media railed against attempts “to drive a wedge into China-India relations by hyping up competition between the two Asian giants”.

An editorial commentary published by the Xinhua news agency cited reports that implied India’s recent deal with Iran to develop Chabahar undermines China’s project to develop Gwadar and other China-Pakistan Economic Corridor projects.

New York-based news portal Blouin News went as far as calling the agreement “a clear riposte to the $46 billion China-Pakistan Economic Corridor, with its terminus in the Pakistani port of Gwadar, only 45 miles east”.

It added that the US is now indirectly backing the construction of Chabahar, claiming that “India is pushing back against the Chinese expansionist mindset”.

The CPEC is a collection of projects currently under construction, which is intended to rapidly expand and upgrade Pakistani infrastructure, as well as broaden economic links between Pakistan and China.

The corridor is considered to be an extension of China’s ambitious proposed 21st century Silk Road initiative and the importance of CPEC to China is reflected by its inclusion as part of China’s 13th five-year development plan.

According to Blouin News, China’s plans to turn Gwadar into an economic hub could reshape the region’s geopolitics. It would give China a new trade link from its relatively undeveloped West to key Arabian Sea shipping routes at the mouth of the oil-rich Persian Gulf, and might someday be a base for projecting Chinese naval influence.

This is while New Delhi is keen to expand economic links to Central Asia while completely circumventing archrival Pakistan.

India considers the current routes to those countries unreliable due to Islamabad stalling the Indian goods that pass through Pakistani territory. So India has had its eye on Chabahar for years, but its investment is only going through now after most US sanctions against Iran were lifted earlier this year.

No doubt with the perceived tension in mind, Indian President Pranab Mukherjee, on a four-day visit to China, sought to allay Beijing’s concerns by appealing to Chinese private business sector to invest in the development of India’s infrastructure and manufacturing industry, including planned industrial corridors and manufacturing trade zones.



Transport of Afghan Minerals Main Goal of Chabahar FDI

The primary goal of foreign investment in Chabahar Port is to facilitate the transport of Afghanistan’s minerals to India through Iran’s rail network, says the deputy head of the Islamic Republic of Iran Railways.

“Thanks to its strategic location, Chabahar enjoys better accessibility to regional countries compared to other Persian Gulf ports. Moreover, for investors and traders, the costs of getting to Chabahar are far lower than those of Shahid Rajaei Port,” IRNA quoted Hossein Ashouri as saying.

Noting that Afghanistan is sitting on mineral resources but this potential has remained largely untapped due to security issues, the Iranian official said Chabahar Port and its access to the Indian Ocean could be used to carry Afghan commodities to India and China.

Afghanistan is home to over 1,400 mineral fields containing copper, gold, iron ore, lead, sulfur, zinc and high-quality gemstones such as emerald, lapis lazuli, red garnet and ruby.

The country holds over $1 trillion in untapped mineral deposits, according to a USGS report.

The southeastern Ghazni Province may hold the world’s largest lithium reserves.

The Chabahar connectivity project signed recently by Afghanistan, Iran and India seeks to connect Chabahar by rail to the Iranian city of Zahedan near the border with Pakistan and Afghanistan—the construction of which kicked off last year.

From there, it links to Zaranj in Afghanistan and then it goes onward toward Delaram. If Afghan goods come up to Zahedan, they can be transported by a 1,380-km rail link to Chabahar and shipped to India.

India’s state-owned IRCON has agreed to build a 500-km rail line from Chabahar to Zahedan at a cost of $1.6 billion as part of the transit corridor to Afghanistan.

IRCON’s MoU with Construction, Development of Transport and Infrastructure Company of Iran for building the rail line was among the dozen agreements signed during the Indian Prime Minister Narendra Modi’s maiden visit to Tehran last week.

The agreement was signed by IRCON Managing Director Mohan Tiwari and IRIR President Mohsen Pourseyyed-Aqaei.

The agreements were signed in the presence of Iranian President Hassan Rouhani and Modi, who is the first Indian prime minister to have visited Iran in 15 years.

Ashouri noted that the Chabahar project would also help realize intermodal shipping in Iran, which exhibits significant growth in today’s transportation.

Intermodal shipping incorporates multiple modes of transportation to capitalize on the advantages of rail while recognizing the necessity of other shipping modes.