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US Warns of Sanctions Risk Amid India’s Chabahar Port Deal: ‘Be Aware of Potential Risk,’ Says Washington

The United States has cautioned that its sanctions on Tehran are still in effect and that anybody thinking about doing business with them should be “aware of the potential risk” just after India inked a 10-year contract to manage Iran’s Chabahar port.

In an effort to increase commerce with Central Asia, New Delhi inked a contract Wednesday to run the Chabahar port. The International North-South Transport Corridor is a road and rail project that would allow Indian commodities to access landlocked Afghanistan and Central Asia through the port on the Gulf of Oman.

This route bypasses Pakistan. India had first proposed this plan back in 2003, but US sanctions on Iran over its suspected nuclear programme slowed down the port’s development.

Responding to a question on India’s pact with Iran, deputy spokesperson of US Department of State Vedant Patel told the media, “We’re aware of these reports that Iran and India have signed a deal concerning the Chabahar port. I will let the government of India speak to its own foreign policy goals vis-a-vis the Chabahar port as well as its own bilateral relationship with Iran. I will just say, as it relates to the United States, US sanctions on Iran remain in place and we will continue to enforce them.

He added that “anyone considering business deals with Iran, they need to be aware of the potential risk that they are opening themselves up to and the potential risk of sanctions”. When a reporter asked if there’s any exemption for this, Mr Patel responded, “No”.

What Is The Port Plan

A long-term agreement to develop the Chabahar port was signed by Indian Ports Global Limited and the Port and Maritime Organization of Iran, an official statement has said. IPGL will invest about $120 million and another $250 million will be raised as debt.

The ceremony for the signing of the pact was signed was attended by Sarbananda Sonowal, Union Minister for Ports, Shipping and Waterways, and Iran’s Transport and Urban Development Minister Mehrdad Bazrpash in Tehran.

The new pact replaces a 2016 agreement, which covered India’s operations at Shahid Beheshti terminal in Chabahar port and was renewed annually.

This is the first time India takes over the management of an overseas port that is expected to boost exponentially trade among India, Iran and Afghanistan.

The Ministry of External Affairs has allocated ₹ 100 crore for the Chabahar Port for 2024-25.

“This 10 years long term lease agreement further strengthens the bilateral ties between the two countries while bolstering confidence and boosting trust of trading communities from the region,” the statement added.

“With the signature of this contract, we have laid the foundations of India’s long-term involvement at Chabahar,” Union Minister Sonowal said on the occasion.

The Chabahar port is being projected as a key hub for the International North-South Transport Corridor project — a 7,200-km-long multimode transport project for moving freight between India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia and Europe.

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Discussions on developing Chabahar Port were first held in 2003 during then Iranian President Muhammad Khatami’s visit to India. In 2013, India committed to investing $100 million towards its development. A Memorandum of Understanding to develop the port was signed in May 2015. The contract was executed in 2016 during Prime Minister Narendra Modi’s trip to Iran.

The Kandla port in Gujarat is the closest to Chabahar port at 550 Nautical Miles. The distance between Chabahar and Mumbai is 786 Nautical Miles.

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