Why is The U.S. Upset With The Chabahar Port Deal?

On Monday as India signed a 10 year deal with Iran to develop Chabahar port. The U.S is certainly not happy about it. It has cautioned India saying “needs to be aware of the potential risks”.

To which on Wednesday India’s EAM S. Jaishankar urged U.s not to take the deal with a “narrow viewpoint”

Why U.S is worked out about this deal?

Since, 1979 the united states has imposed restrictions on activities with Iran. After the Tehran’s seizure it has put many sanctions against Iran and countries doing trade with Iran. But, In November 2018, for the India-Iran Chabahar port deal, the U.S exempted India.
The U.S along with the waiver, stated many conditions on Indian entities and companies. Saying that if the conditions were not fulfilled, then the Indians would face sanctions.

so, what was allowed?

This exception allowed for “three-principal activities” – that included development and maintenance of Chabahar port and an associated railway link to Afghanistan; Afghanistan’s imports of refined petroleum products from Iran including gas, diesel, and liquid petroleum gas; and the shipment of non-sanctioned goods through Chabahar port to Afghanistan.

What was not allowed?
The exception didn’t allow for the import or export of Iranian crude. It did not allow transactions with individuals or entities designated under US counter-terrorism or non-proliferation authorities, including Iran’s Islamic Revolutionary Guard Corps (IRGC) and its officials, agents, and affiliates.

No entity with which Indian companies engage should have direct or indirect ties to the IRGC. Any financial transactions must not involve the Central Bank of Iran. “Current or future financial transactions that involve the Central Bank of Iran could expose Indian companies and individuals to sanctions risk,” it said.

Why the U.S. changed its stance on the port deal?

According to a report by Business standard, “the real change in US stance on Chabahar may have come in August 2021, when the US officially ended its military presence in Afghanistan. “The US exit from Afghanistan could be the reason why it no longer views the Chabahar port project favourably,”

And according to the sources to Reuters, the relationship between the US and Iran has strained over time. In April this year, the US military operating from undisclosed bases had shot down a number of Iranian drones in Sweida and Deraa provinces in southern Syria near the Jordanian border.

What is the Chabahar deal?

The development of the Chabahar Port Project is an India-Iran flagship project. Chabahar hold significance as it is seen as a gateway for trade with Afghanistan and broader Central Asian countries.

According to the Indian government’s statement in 2020, India is developing the 1st Phase of Shahid Beheshti Port at Chabahar. The Trilateral Transit Agreement (Chabahar Agreement) was signed by transport ministers of India, Iran and Afghanistan in the presence of PM Modi, President Rouhani and President Ashraf Ghani in May 2016.

The contract on the Shahid Beheshti port of Chabahar involved the investment of $85 million for procuring equipment of the port.

“The contract also comprises of provision of a line of credit of approximately $150 million for the development of the port. After operations began at the Chabahar port in December 2018, the port has handled more than 8200 TEUs and 1.28 million tonnes of bulk cargo,” the government said.