On the eastern edge of the Arabian Sea, a pair of ports located just 160 kilometers apart (roughly 100 miles) lies at the heart of a multifaceted struggle for power among regional heavyweights in South Asia. For India, the Chinese-funded Gwadar port in Pakistan has heightened its concerns of encirclement under China’s Belt and Road Initiative. This has fueled New Delhi to secure its own infrastructure projects across the Indian Ocean, including Iran’s Chabahar port. Meanwhile, for Pakistan, India’s growing presence in nearby Iran feeds into its own concerns of encirclement.

Iran — which counts India, Pakistan and China as partners — recently floated the idea of linking the two ports. However, such a juncture is highly unlikely because of these vying global strategies. The grandiose visions of spurring greater economic prosperity will instead continue to propel the two ports’ development for years to come, even as both projects face key obstacles toward realizing their potential. 

The Big Picture

The Iranian port of Chabahar and the Pakistani port of Gwadar fit into various overlapping dynamics shaping the geopolitics of South Asia. India and Pakistan, the subcontinent’s enduring rivals, view the ports through the lens of encirclement. For Asian military rivals India and China, the ports fit into their plans of forging ambitious trade corridors across the region. And for Iran, the ports fit into its own balancing act between India and Pakistan.

India Bets on Iran’s Port of Chabahar

India’s involvement in Chabahar has been central to the port’s development, which lies on the coast of Iran’s Sistan-Baluchistan province near the Pakistan border. Iran and India first discussed cooperating on the development project in 2003, though it wasn’t until the United States lifted sanctions against Iran in 2015 that the two countries began placing their words into action. In 2016, India pledged to invest $500 million in the port’s development, before going on to sign an 18-month deal to take over operations of the port in December.

Iran’s Motives. The port is currently able to process 8.5 million tons of cargo annually, which Iran’s development plan sets out to increase tenfold by 2024, in addition to making it a deepwater facility. In doing so, Iran hopes that the port will lessen its reliance on the busy Bandar Abbas port, which lies inside the Strait of Hormuz and lacks a deepwater facility — forcing larger ships to first offload cargo to smaller ships in the Emirati port of Jebel Ali. Iran also sees Chabahar as a global access point by linking Indian Ocean traffic to the markets of Central Asia, Russia and Europe via the proposed International North-South Transport Corridor.

India’s Motives. India, for its part, counts Iran as a key oil supplier and partner in the Middle East. (Renewed U.S. sanctions, however, have forced India to halt its Iranian oil purchases.) If completed, Chabahar would allow India to access what it sees as untapped export markets and energy reserves in Central Asia by building a trade route that runs directly from Iran to Afghanistan — thereby circumventing its archrival Pakistan. The port also fits into India’s wider efforts to expand its relationships with countries in Southeast Asia, East Africa and the Middle East in an effort to counter China’s global expansion.

Potential Hitches. The United States’ renewed sanctions push against Iran, however, risks stalling progress on Chabahar. U.S. sanctions have so far spared the project since the port supports Washington’s core interest in boosting the region’s trade with Afghanistan. But the fear of potentially coming under the United States’ financial wrath has nonetheless left India with room for pause. India, in fact, withdrew a tender this month seeking a partner firm for the project due to a lack of clarity on U.S. sanctions. The war in Afghanistan is another factor that can further thwart development plans, as any prospects of building trade corridors through Afghanistan en route to Central Asia will largely depend on resolving the conflict in the country.

 

While China Bets on Pakistan’s Port of Gwadar

Gwadar, meanwhile, is located in Pakistan’s vast southwestern province of Balochistan, which borders Iran and Afghanistan. Featuring three multipurpose berths, the port can currently process about 30 million tons of cargo annually. But China and Pakistan’s new development plan aims to increase this amount to 400 million tons, once the third phase of the port is complete in 2045. A Chinese state-owned firm first took over management on a 43-year lease in 2013. Two years later, Beijing then lavished Islamabad with $46 billion worth of China-Pakistan Economic Corridor (CPEC) deals, drawing Gwadar under the umbrella of the Belt and Road Initiative. Then in 2017, Pakistan awarded a Chinese state-owned company a 40-year lease over the port.

Pakistan’s Motives. Pakistan sees the Gwadar port as vital to its transformation from a developing economy into a thriving transit hub on the Arabian Sea — serving, in essence, as its gateway to the world. A bigger and better Gwadar would also allow Pakistan to diversify beyond its ports of Karachi and Qasim, whose upstream locations hinder Islamabad’s ability to expand in order to meet increasing trade demands.

China’s Motives. For China, which borders northern Pakistan and is the country’s strongest ally, the Gwadar port marks the western terminus of its multibillion-dollar CPEC — the most important branch of Beijing’s Belt and Road Initiative. The surrounding city of Gwadar is also home to some of the CPEC’s most ambitious projects, including a six-lane highway linking the port to the national highway system, and a proposal to build Pakistan’s biggest airport. The port’s expansion would lessen China’s reliance on the Strait of Malacca by providing an overland trade and energy route connecting the Middle East and Africa with its western Xinjiang province. Gwadar’s location could also offer China a military advantage in a potential conflict against India by serving as a naval base — adding to the project’s strategic significance.

China’s stronger relationship with Pakistan will give it the upper hand over India regarding the speed and scope of Beijing and New Delhi’s vying port developments.