Coastal competition in the Indian Ocean region

Investigating the geo-economic paradigms in the Indian Ocean Region in the wake of China’s Belt and Road Initiative (BRI), the evolving dynamics between the United States, China, India and Pakistan makes them appear as if a group of countries is ‘pursuing hedged policies towards each other, using their rival’s opponents to gain leverage, trying to maintain sufficient levels of cooperation to continue to extract economic benefits even as strategic competition persists’ notes analyst Andrew Small.

In a new strategy aimed at extracting bargains amidst fluctuating world oil prices, India is seeking bigger stakes in securing gas supplies first from (a) Iran and (b) subsequently its neighbour Turkmenistan. “Eyeing a foothold in the region barely 100 kms from Pakistan’s Gwadar port, built and managed by China, India has alloted $235 mn for expansion of Phase II of strategically-located Chabahar Port besides another $500 mn for development of the wider Chabahar Port complex including Special economic zone (SEZ)” reported Delhi’s Economic Times. At the opening ceremony for the Chabahar port, Iran has offered India management rights for Phase 1 of Chabahar Port launched by the Iranian President Hassan Rouhani on 3 December 2017 in the presence of the Indian Shipping Minister P. Radhakrishnan. By extending political backing and technical support to enable Iran to exploit and transport its gas production, big dividends for India are envisaged.

Ongoing energy agreements being discussed with Tehran reflect Delhi’s bid to seek wider coordination on future energy supplies to Indian markets with Iran’s exports addressing India’s energy needs. Iran considers that as a market, India, is significant as Delhi has hinted funding the constructing a gas refining and exporting terminal in Chabahar.. India is prepared to compete with China to secure a sizeable share of energy supplies. Thus, at a time when Iran is under “incessant pressure”, India is on the lookout for interacting on all issues in order to seize contracts to secure supplies to keep up to its envisaged growth potential.

India and Iran have taken initiatives to implement measures to counter and overcome not only any new restrictions but also the present economic sanctions that Iran faces. The thrust to raise the level of economic relations between the two countries comes in the wake of an unstable political situation for Iran since U.S. President Donald Trump wishes to quit the 2015 Iranian nuclear deal, unless it was changed to meet the new demands. Furthermore, Trump has threatened to re-impose some sanctions. One of Delhi’s main goals is to address the situation affecting Iran in the light of these new sanctions threatened by the US. Being at ‘the fulcrum of Trump’s Indo-Pacific and Afghanistan policy’, however, gives India the freedom to carry out its strategic and geo-economic objectives, which in this case is a close engagement with Iran, notes Sreemoy Talukdar, adding: The Trump administration encourages India to take leadership in the Indo-Pacific; and to emerge as a net security provider in South Asia as it remains “reliant on New Delhi as a stabilising influence in Afghanistan”.

During his February 2018 visit to Delhi, President Rouhani declared that Tehran was committed to supply all India’s energy needs as well as transportation requirements. This accompanied “positive developments” towards India having a stake in the Farzad B gas field in the Persian Gulf. Secondly, a gas pipeline project from Chabahar to the Indian port of Kandla in Maharashtra is being explored. However, the National Iranian Oil Company is in urgent need of an initial investment of $30 billion “for the upgrading and development of oil and gas projects in the country”.

India aims to expand its status as a key stakeholder in procuring future energy supplies for its sizeable and growing industrial needs in its aim of profiting from brokering Iranian gas supplies for its support build facilities at Chabahar. By joining hands with Iran, India seeks to deter prospects for China, another potential purchaser in the gas market and also defer potential Chinese investment in Iranian oil and gas projects at least in the short term. Writing for the Hindustan Times, Shishir Gupta claimed that “if India presses the accelerator and delivers on time, this route has the potential to rival the Chinese one-belt-one-road (OBOR) initiative”.

He added that the development of the Chabahar port with the trilateral trade and transit agreement between India-Iran-Afghanistan will also open the international north-south transport corridor all the way up to Central Asia, Russia and Europe. Referring to the massive Gwadar project which reflects China’s regional power play, South Asia expert Adam V Larkey declares that “there is no comparison in scale and intent between China’s role in Gwadar and India’s in Chabahar, but the Americans are pleased that India is pushing back against the Chinese expansionist mindset”.

*The author is a London-based analyst of Eurasian Affairs covering strategic trends in South, Western and Central Asia as well as China.