In major setback to India, Iran pulls out of Chabahar rail project

Saturday, 18 Jul, 2020

The Chabahar-Zahedan port, the rail project and the International North-South Corridor (INSTC) from Mumbai to Moscow that passes via Chabahar are key connectivity projects both India and Iran are working on.

India and Iran had held their last meeting on a railway line from Iran's Chabahar port to the Afghan border over seven months back during which financial issues dominated, especially against the backdrop of tough sanctions imposed on Iran by the US.

Iran has seen weekly incidents including explosions at a missile-production facility on June 22; the Natanz nuclear facility, Iran's largest uranium-enrichment facility, on July 2; and an important shipyard in the port city of Bushehr on Wednesday.

"I don't know which ones exactly and wouldn't tell you anyway because the entire point is for the Iranians to feel considerable stress trying to decide what might have been our work", they said.

After sanctions were eased in 2015 following the signing of a nuclear deal between Iran and Western countries, India showed its willingness to return to the project. Since then New Delhi has been waiting to hear from Tehran on some of its technical queries, said the Ministry of External Affairs (MEA). While India officially says that it is still committed to the project, the truth is it has found it hard to find equipment suppliers over fears that they could be targeted by USA sanctions. In such a scenario with the USA continuing with its maximum pressure campaign against Iran, the latter is literally being pushed towards China.

The government cited policy changes by the Iranian government, Iran's precarious finances, and the USA sanctions situation as the reasons behind the decisions on Indian infrastructure projects in Iran, which would both be undertaken through local companies instead.

"Farzad B is a gas field in Iran where OVL (overseas arm of oil and gas behemoth ONGC) is part of the consortium along with two other Indian companies". Upon completion of substructure, India will supply the stock and the operationalisation is to be done jointly.

The New York Times also recently published a report arguing that Israel is behind the Iranian explosions. The Indian side was to provide "requisite services for construction of the Chabahar-Zahedan railway line" with around $1.6 billion committed as financing.

"Insofar as the proposed (Chabahar-Zahedan) railway line is concerned, IRCON was appointed by the government of India to assess the feasibility of the project".

It is not yet clear if the top brass of the Communist Party has signed off on it but the details of the deal that have leaked are reportedly part of the "final version".

However, the two sides failed to reach an agreement, sources said.