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IRAN has leased India a part of Chabahar port for 18 months. Both countries also plan to build a rail link from Chabahar to Zahedan, which is just 100 kilometres from Taftan, the Pakistani border town. Pakistan already has a rail link with Zahedan via Taftan but the track is in poor condition.
India was interested in the development of Chabahar port way back in 2003. However, the development work slowed down considerably with the onset of American sanctions.
There has recently been a flurry of effort to develop economic corridors, especially in Europe and Asia. On forefront is China’s Belt and Road Initiative (BRI), of which the China-Pakistan Economic Corridor (CPEC) is of great significance for Pakistan.
The BRI aims to create a web of infrastructure on land and sea, connecting the East to the West. Under the plan, China will develop six wide-ranging economic corridors. Of them, four aim to connect China to Europe through Central Asia via road and rail. Two are maritime corridors across Southeast Asia, South Asia, the Middle East and Eastern Africa.
There has recently been a flurry of effort to develop economic corridors, especially in Europe and Asia
BRI’s basic objectives are facilitating cross-continent trade, geo-economic integration and ensuring the availability of multiple supply routes for Chinese shipments.
Initially apprehensive of China’s concept of the Silk Road Economic Belt, Russia ultimately joined BRI after the Ukraine crisis erupted. On the other hand, India didn’t join BRI from day one, with major concerns over CPEC.
CPEC constitutes an important component of the BRI. Over the years, Pakistan had faced downward trends in foreign direct investment, owing primarily to difficult security environment in the region. Viewed as such, the upcoming $62 billion investments in energy, infrastructure, communication and port development are expected to add much value to Pakistan’s GDP.
Resultantly, India is in search of alternatives. Acquiring a part of Chabahar port is one such move. In partnership with Iran and Russia, India wants to operationalise 7,200km International North South Transport Corridor (INSTC), which is a multi-mode sea, road and rail network among India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia and Europe.
Iranian daily Financial Tribune reported that India plans to move goods from Indian ports to Iran’s Bandar Abbas by sea (bypassing Pakistan) and then to Russia and Europe. The corridor may become operational in a few weeks.
Further, India has plans to use TIR carnets for transiting cargo through the INSTC, as it apprehends that Pakistan will not allow it to use them at its Wagah land route. China may also use the carnets soon for transit across member countries, including Pakistan.
India is also reactivating a 1,360km road project linking north-eastern India with Thailand and beyond. A Bloomberg report suggests New Delhi may extend the Myanmar-Thailand link with Cambodia, Laos and Vietnam.
Similarly, according to The Australian Financial Review, the United States, Japan, India and Australia are contemplating an alternative to China’s Belt and Road Initiative.
As for Chabahar, India intends to use the port for transit of cargo to Afghanistan bypassing Pakistan, as the country does not allow transit facility to India through the Wagah land route, though this facility is available through the sea route.
Under the Afghanistan–Pakistan Transit Trade Agreement, Pakistan provides transit facility to Afghanistan via sea ports as well as one-way traffic to India through Wagah. The flow has been steadily increasing in recent years.
When Chabahar port becomes operational, it will have a distance almost equal to the Karachi-Gwadar-Chaman route to Afghanistan.
However, the development of the Chabahar route will not reduce the significance of the Karachi-Torkham-Kabul route as it caters to a different area inside Afghanistan. On Chabahar-Gwadar routes, distances are almost equal and much will depend upon available port facilities, customs procedures, costs and time involved and corridor security. Earlier completion of rail link with Afghanistan will be an added advantage.
Pakistan is also a signatory of the ECO Transit Trade Agreement and a Quadrilateral Transit Agreement. After the start of transit operations under TIR, intraregional trade within ECO countries may pick up. Tajikistan is also interested in gaining transit access through Pakistan. Upon the activation of the CPEC transit corridor, Tajikistan can be encouraged to use it through China, as Afghanistan is hesitant to allow the use of its territory unless Pakistan allows India to use its land route.
Additionally, infrastructure development on the route and at border crossing is of utmost significance to enhance regional trade connectivity. Under Integrated Transit Trade Management System, Pakistan plans to modernise border crossing terminals at Torkham, Chaman and Wagah. Similar steps are needed at Taftan. Pakistan should also consider linking Gwadar and Quetta through rail and upgrade the Quetta-Taftan track.
Information exchange is another area where Pakistan needs to electronically link all bordering countries. The use of juxtaposed customs offices at borders can further facilitate trade and save costs and time.
Published in Dawn, The Business and Finance Weekly, March 12th, 2018
