US warns India of ‘sanctions’ over 10-year Chabahar port deal with Iran

US State Department alerts businesses of potential sanctions risks when engaging in deals with Iran

A glimpse of the Chabahar port in Iran. — The Economic Times
  • US reaffirms its stance on enforcing Iran sanctions.
  • Indian companies could face sanctions risks.
  • India and Iran consent to a decade-long port agreement.

The United States has issued a cautionary reminder regarding sanctions to India following the signing of a decade-long agreement with Iran for the Chabahar port operation.

At a recent press conference held in Washington, State Department spokesperson Vedant Patel cautioned, “… any individual or business mulling over deals with Iran should be cognizant of the sanctions risks they could incur.”

He emphasized that the US sanctions on Iran are actively enforced and will continue to be so.

Patel also warned that these sanctions risks extend to Indian businesses.

This warning comes in the wake of the signing of a significant 10-year accord between India and Iran for operating and upgrading the Chabahar port facility.

As India aims to boost its trade reach into west and central Asia, this deal allows India usage rights to the port, strategically positioned near the southeastern border of Iran, close to Pakistan, as outlined by the Iranian Ministry of Roads and Urban Development.

Under this deal, India Ports Global Limited (IPGL) is set to inject $370 million into the port, providing key strategic equipment and enhancing its transportation infrastructure.

The contract’s official signing by Iran’s Minister of Roads and Urban Development, Mehrdad Bazrpash, along with India’s Minister of Ports and Shipping, Sarbananda Sonowal, was broadcast live via state television in Chabahar town.

Initially, in 2016, India committed to finance this development to transform it into a central trade hub, with Prime Minister Narendra Modi looking to rejuvenate connections with Tehran following the lifting of international sanctions.

Modi, together with former Iranian President Hassan Rouhani, supervised the 2016 memorandum of understanding which involved an EXIM Bank line of credit from India for the port’s advancement.

However, despite sanction waivers, progress on the port faced delays due to the 2018 re-imposition of US sanctions following the withdrawal from the 2015 nuclear accord.

“Chabahar has the potential to be a crucial hub for regional transit,” commented Bazrpash during the ceremony.

“Our contentment with this agreement is great, and our trust in India is solid,” he added. “Both nations, Iran and India, aim to collectively elevate the Chabahar port to the fullest, bearing in mind mutual benefits and access to regional markets,” stated the Indian minister.

He mentioned that this “long-standing contract is a testament to the resilient partnership and trust between India and Iran.”

In 2019, prior to the global spread of COVID-19, the two countries had agreed to expedite the project, following a visit by Indian External Affairs Minister Subrahmanyam Jaishankar to Tehran. Situated on the Indian Ocean, Chabahar port is about 100 kilometers (62 miles) from the Pakistan frontier.

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