The United States’ shifting stance on Chabahar Port, in light of the decade-long India-Iran contract, has sparked considerable controversy. On May 13, the US State Department issued a stark warning, emphasizing that entities engaging in business with Iran, including those involved with Chabahar Port, face the potential risk of sanctions.

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The “potential risk” is present for Indian companies involved in the Chabahar Port project, according to Washington’s State Dept Spokesperson on Monday.

Vedant Patel, a spokesperson for the State Department, when asked about exemptions, he categorically stated, “No.” This was in response to the long-term agreement inked between Indian and Iran in Tehran on Monday.

“Anyone considering business deals with Iran, they need to be aware of the potential risk of sanctions”, US State Dept said on impact on Indian firms in the backdrop of signing of Chabahar contract.

Financial Express Online has reported on Monday (May 13, 2024) that India, Iran have inked a long-term deal for Chabahar Port. This agreement allows for the flow of goods between India, Iran, Afghanistan, and Central Asia.

Former foreign secretary Kanwal Sibal said on twitter: “Earlier US had excluded Chabahar from sanctions as desirable alternative route to Afg. US handed over Afghanistan to Taliban. Why publicly threaten sanctions? Crude diplomacy. C’ld have said US is in touch with India on this issue & leave it at that. Will just put our backs up.

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U-turn on Chabahar Port

This position marks a significant departure from the US State Department’s 2018 policy, which had granted a waiver specifically for Chabahar Port. This waiver was intended to support Afghanistan by allowing the development of the port and its associated railway, and facilitating the transport of non-sanctionable goods for Afghanistan’s reconstruction and economic development. At the time, the State Department underscored the exemptions’ critical role in bolstering Afghanistan’s growth and providing humanitarian relief.

The recent policy reversal is perplexing, especially given the strategic importance of Chabahar Port to India’s regional connectivity plans. The port serves as a crucial gateway for Indian goods to reach Afghanistan and beyond, enhancing trade and connectivity in the region, particularly with Central Asia. Moreover, it provides Afghanistan with an alternative route to international markets, thereby reducing its dependency on Pakistan.

This U-turn on Chabahar Port coincides with another noticeable policy shift by the US concerning India’s energy imports from Russia. Last week, US Ambassador to India, Eric Garcetti, acknowledged that India’s import of Russian oil at a price cap was acceptable, marking a departure from the 2022 stance where the White House had urged India to reduce its dependency on Russian energy.

These inconsistencies in US policy raise questions about the rationality and consistency of its diplomatic strategies. The Chabahar Port policy change is particularly significant as it undermines a project that is important for India’s connectivity and trade.

Furthermore, it complicates US-India relations at a time when both countries are navigating complex geopolitical landscapes.