Two days after the Indian government announced a substantial cut in budgetary allocation for the Iranian port of Chabahar which it is helping develop, India’s Ambassador to Iran Gaddam Dharmendra suddenly visited the port city on Sunday to reaffirm his country’s commitment.
The next day he tweeted: “I reviewed progress and reiterated that India remains fully committed to developing Chabahar port but no plans now for setting up EXIM Bank branch.”
The tweet appeared to be aimed at reports in the Iranian press that India’s EXIM Bank would begin operations in Chabahar. Sources told SNI that the Iranians had suggested that an EXIM Bank branch could facilitate payments. The Iranian Mehr News Agency also reported Ambassador Dharmendra as conceding that the port is facing severe banking challenges owing to U.S. sanctions.
India has allocated only Rs 50 crore (about $7.3 million) for Chabahar’s development in last week’s annual budget against Rs150 crore (about $21.9 million) budgeted last year. The budget cut reported by SNI suggests the ambitious project is in the doldrums. U.S. sanctions on Iran make it clear that only humanitarian assistance can be shipped to Afghanistan from Chabahar. Escalating tensions in the Persian Gulf have also rendered bleak any growth or expansion in trade ties between India and Iran, for now.
Tehran is concerned over the future of the project and is expected to raise the matter during the visit of India’s Foreign Secretary Vijay Gokhale. He was to have gone in May but due to “scheduling issues”, it was put off. Nevertheless, the New Delhi-Tehran engagement has continued apace at the highest levels with External Affairs Minister S. Jaishankar meeting his Iranian counterpart Javad Zarif on the margins of the 5th CICA (Conference on Interaction and Confidence Building Measures in Asia) Summit in Dushanbe last month.
SNI learns that the meeting was at India’s request; it was conveyed to Tehran just a week before the CICA Summit. Sources disclosed that Jaishankar and Zarif know each other well, having served in New York around the same time. But no matter how strong their personal chemistry, the U.S. shadow over Iran is impossible for India to ignore. India has already cut to zero oil purchases from Iran but Donald Trump’s determination to make Iran hurt makes it certain that this confrontation will continue for some more time.