Chabahar: Where Trump is hurting India and helping China
Trump ends sanctions waiver on India-invested Iranian port, jeopardizing Quad cohesion and boosting China’s position and power
When Indian Prime Minister Narendra recently met with US President Donald Trump at the White House, Iran’s Chabahar Port wasn’t apparently on the two leaders’ broad agenda, judging by official readouts and news reports.
While Modi and Trump agreed to a de facto reset of bilateral relations, including India’s vow to buy more American goods, including weaponry, oil and gas and expand broad trade relations, India’s sustained involvement in Chabahar has the potential to become a future and significant sticking point.
The port, which India is developing and operating under a 10-year agreement signed in 2024, is critical to New Delhi’s drive to open trade with Central Asia and the Middle East while bypassing Pakistan’s rival Gwadar port.
China has made massive investments in Gwadar and maintains a presence there in the name of protecting its trade, giving Beijing a desired foothold in the Indian Ocean region, where India has long held strategic sway.
In the run-up to Modi’s trip to Washington, in a surprise move, Trump issued an executive order on February 6 instructing Secretary of State Marco Rubio to “rescind or modify sanctions waivers” on Chabahar.
The order clearly aims to resume Trump’s previous administration’s “maximum pressure” campaign on the Islamic Republic but will also squeeze India’s key strategic interests.
Chabahar, located in southeastern Iran, is the centerpiece of India’s efforts to increase its presence and power in Central Asia, providing connectivity access to Afghanistan and beyond while circumventing Pakistan’s control of traditional land routes.
Indian Ports Global Limited (IPGL) and the Port & Maritime Organization of Iran struck the Chabhar deal last year, under which IPGL agreed to invest about US$120 million. An additional $250 million in financing will bring the contract’s total value to $370 million, the two sides said last year.
IPGL first assumed operations of the port in 2018 and has since handled container traffic of more than 90,000 TEUs and bulk and general cargo of more than 8.4 million tonnes, an Indian government official quoted by Reuters said.
The broad project, in which India has already invested billions of dollars and plenty of political capital, also includes a railroad and free trade zones.
For India, the port represents more than just an economic lifeline: It is a strategic assetthat strengthens economic ties to a historically volatile neighboring region while counterbalancing China’s growing influence in South Asia, Central Asia and through to the Middle East.
Its strategic significance to New Delhi was underscored by its inclusion in the International North-South Transport Corridor, which aims to enhance trade between India, Iran, Russia and beyond.
Under the 2015 nuclear deal, known as the JCPOA, Iran agreed to curtail its nuclear program in exchange for sanctions relief. However, the first Trump administration unilaterally withdrew from the agreement in 2018 and reimposed harsh sanctions, though some were waived for projects related to Chabahar because of the port’s role at the time in facilitating the reconstruction of Afghanistan while under de facto NATO occupation.
The waiver allowed India to continue its investments in the port while avoiding sanctions penalties. However, Trump’s order to modify or rescind these waivers threatens to undermine not only India’s strategic position in the region but also spoil dynamics inside the Quad security partnership.
The Quad, comprised of Australia, Japan, India and the US, was formed to counterbalance China’s rising power in the Indo-Pacific but has been rendered somewhat ineffective by India’s neutral position on the Ukraine war and its crucial role in helping Russia dodge Western sanctions on its energy exports.
Significantly, at a time when Trump is disengaging the US from various multilateral commitments, bodies and fora, Rubio met with Quad counterparts during the president’s first day in office and reaffirmed Washington’s commitment to the format and its goals. In that direction, they suggested a new Quad summit should be held this year in India.
On one level, the sanctions waiver move is a clear reaffirmation of Trump’s “maximum pressure” campaign against Iran. It comes amid reports Iran had at one point plotted to assassinate Trump, who has already asserted strong support for Iran’s nemesis, Israel. The punitive sanctions policy aims at isolating Iran and forcing it into new negotiations on its nuclear program.
While that may be the immediate goal, the broader consequences of rescinding the waivers could run counter to broad US strategic interests in the region.
India’s reaction to the waiver decision, so far muted and not mentioned during Modi’s February 13 press conference with Trump in Washington, is still a wildcard. That may be because Modi’s emissaries are negotiating from behind the scenes to keep the waivers in place for its particular investments and activities in Chabahar.
If those overtures fail, New Delhi will likely push back against what it sees as unwarranted US encroachment on a key and crucial regional strategy.
India has long prioritized its non-aligned autonomy in foreign policy and the port’s development has been framed by New Delhi as central to India’s strategic interests, particularly in relation to its regional security concerns in Afghanistan, rivalry with Pakistan and great power contest with China.
Indeed, the revocation of sanctions waivers could cause India to reassess its options. If the waivers are completely rescinded without modification or compromise, India could be forced to reconsider its long-term commitment to a project in which it has invested massively, both diplomatically and financially.
In turn, this could erode India’s leverage in the Central Asian region while undermining its ongoing cooperation with the US in the context of its broader Indo-Pacific strategies, including counterbalancing and checking China’s expansionist designs.
Rescinding the waivers could also have negative ramifications for the Quad. One of the Quad’s key objectives is to ensure a free and open Indo-Pacific by safeguarding trade routes and promoting rules-based stability in the region.
India’s role in the Quad is underscored by its strategic positioning in the Indian Ocean region, where the Chabahar Port plays an important part in ensuring India’s trade access and, by extension, its security reach in Central Asia.
By nipping India’s Chabahar ambitions, Trump risks torpedoing the Quad. The US may argue that reaffirming the sanctions policy is necessary to curtail Iran’s influence and limit its ability to project power across the region, but the long-term cost of weakening India’s strategic position may outweigh any short-term benefits.
The Quad’s success relies on maintaining a unified front against China’s growing assertiveness, and any discord within the partnership, especially between the US and India, would shake its cohesion at a crucial juncture.
Many in New Delhi believe Trump’s withdrawal of America’s previous de facto support for India’s role in Chabahar will ultimately advantage China in Iran, Central Asia and the broad Middle East.
It will also give a comparative boost to Pakistan’s until now relatively inactive Gwadar port, where China has poured comparative billions. The China-Pakistan Economic Corridor (CPEC), part of China’s Belt and Road Initiative, is a key counterpoint to India’s initiatives in the region.
Trump’s order on Chabahar thus risks triggering a series of cascading events that could ultimately reset the region’s balance of power to India’s detriment and in China’s favor.
The immediate consequence of undermining India’s strategic interests will be a weaker Quad and strained US-India relations. The longer-term upshot will be a more, not less, powerful China in Central and South Asia at a time when the US is supposedly pivoting from Europe to Asia to challenge China’s influence.
With one stroke of the pen, Trump’s move to punish Iran has also hurt a key partner in India, risking the future cohesion among allies his administration will ultimately need to effectively check and balance China across the wider Indo-Pacific and beyond.
Haris Gul is pursuing a degree in international relations at the University of AJK. He may be reached at harisgul063@gmail.com.