What Happens to the India-Iran Chabahar Port With Trump’s New Tariffs?

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This week’s highlights: India weighs the future of A Port project in Iran Amid new American tariffs, members exile The ousted Bangladeshi government Expressing frustration ahead of the country’s elections, the Maldives leads the region Passport power.

The Chabahar dilemma in India

The new 25% tariffs imposed by US President Donald Trump on countries that trade with Iran have put India in a difficult position, putting the future of an investment project of geopolitical and strategic importance at risk.

Nearly a decade ago, in May 2016, India concluded a major transport corridor deal with Iran and Afghanistan. New Delhi has agreed to provide investments worth $500 million to develop a port in the southern Iranian city of Chabahar. The agreement also includes plans to establish new roads and a railway line from Chabahar to the Afghan border.

These plans failed in part because New Delhi halted investments due to US sanctions on Tehran, even as it received several waivers from US sanctions that allowed it to continue work on the project. (US sanctions on Tehran were escalated again after Trump took office in 2017 and withdrew the United States from the Iran nuclear deal a year later.) Trump’s new tax represents the final challenge to the project.

Shortly after Trump announced the tariffs, India Economic times New Delhi claimed that it had transferred its entire existing financial commitment to Chabahar – worth $120 million – to Tehran. India has reportedly informed the US Treasury that it will “end all activities at Chabahar Port”. The latest sanctions exemption granted by New Delhi is set to expire in April.

But unnamed Indian government sources last week cast doubt on claims that New Delhi had halted its involvement in Chabahar. “Exiting the port is not an option,” the sources told NDTV, adding that India was seeking to find a “compromise” with the United States.

Chabahar remains a strategic investment for New Delhi. It is intended to enable India to access through Afghanistan to Central Asia, a region rich in natural gas and important minerals. New Delhi has sought to deepen its engagement in the region in recent years but lacks direct access to the territory because Pakistan does not grant India transit rights. Chabahar offers the next best option.

New Delhi has an additional incentive to make Chabahar a success: Afghanistan under Taliban rule is now relatively stable, and the regime enjoys friendly and growing relations with India.

It is possible that India will cut its losses and withdraw from the project, not only because it is unable to bear new US tariffs of 25 percent, on top of the 50 percent it is already burdened with. New Delhi’s relations with Tehran, although friendly, have declined since US sanctions prompted India to significantly reduce its purchases of Iranian oil.

India also has diplomatic and strategic alternatives to Chabahar. It seeks deeper ties in the Middle East, including strengthening defense ties with the UAE and commitment to the emerging India-Middle East-Europe Economic Corridor and the I2U2 group, which includes India alongside Israel, the US and the UAE.

Moreover, given that trade is the currency of Trump’s foreign policy, India may see a retreat from Chabahar as wise. Washington has recently made several notable gestures toward India, including inviting it to join the Defense Supply Chain Initiative and the Trump Peace Council.

However, withdrawing from Chabahar would be a politically risky proposition. The Trump administration has angered much of the ruling Bharatiya Janata Party’s base with its tariff policies and harsh criticism of India. However, New Delhi continues to make concessions to the administration.

India reduced its oil imports from Russia – India’s closest friend than Iran – after Washington imposed new sanctions on Moscow in November. In addition, New Delhi, which considers itself a champion of the Global South, showed a muted reaction to the January 3 US military operation in Venezuela. Any public perception in India that New Delhi is now also ending a strategically important investment due to US pressure could pose political risks for the government.

Instead of withdrawing from Chabahar, India will likely consider possible new financing arrangements for the project that would protect it from further tariffs or new sanctions. This may require investment in the project through a third party. For now, Indian officials have suggested they may try to get an extension of the current sanctions exemption.

For New Delhi, realizing the ambitious vision it once had for Chabahar may no longer be possible. But because of strategic considerations and domestic political factors, the country has good reasons not to back away from the project altogether — even if sticking with it risks angering the White House and adding more tension to already faltering US-India relations.

What we follow

Trump‘Peace Council. The Pakistani Foreign Ministry announced on Wednesday that it would join Trump’s peace council. The White House is also courting India for this initiative. They are the only South Asian governments known to have received invitations.

Pakistan’s move is not surprising. Islamabad is keen to build its influence wherever it can and continue to strengthen relations with the Trump administration. But the decision on whether to accept the invitation or not will be more difficult for New Delhi.

Some analysts assert that the idea of ​​an external council overseeing peace and governance in conflicting countries has a colonial character. India considers itself a proud post-colonial country. In addition, fears that the new council would undermine the UN may worry New Delhi, which views the UN as a key platform to exert its influence — and has long sought a permanent seat on the UN Security Council.

However, if New Delhi rejects the invitation, it could anger Trump at a time when India is engaged in sensitive negotiations to reduce US tariffs on its exports.

US immigrant visa freeze. Bangladesh, Bhutan, Nepal and Pakistan were included in a list of 75 countries targeted as part of the Trump administration’s suspension of immigrant visa processing, which was announced last week. According to a chart Trump posted on social media, all four countries have among the highest percentages of immigrant families in the United States receiving public assistance. (The chart does not list any sources.)

Bhutan is listed as no. 1 by 81%. The figure for Pakistan, 40 percent, is particularly surprising. Data has long shown that Pakistani expatriates residing in the United States are very wealthy. According to Pew figures published last year, only 12% of Pakistanis in the United States live in poverty, with the average annual income of households headed by Pakistanis reaching $108,100 in 2023.

Since the visa freeze applies only to immigrant-related visas, its impact on Pakistanis should not be overstated. However, of the four South Asian countries affected by the freeze, Pakistan has the largest community in the United States, with estimates ranging from approximately 600,000 to 1 million people.

Additionally, at a time when relations between the United States and Pakistan have seen a new revival, the administration’s move could have a detrimental impact on people-to-people relations, especially if the freeze is extended. Pakistani officials have reportedly been in touch with their American counterparts and hope the suspension will end soon.

Awami League leaders speak out. On Saturday, two senior figures from Sheikh Hasina’s ousted government in Bangladesh held a press conference in New Delhi and criticized the country’s interim government.

Hasina Mahmood, Hasina’s foreign minister, criticized the administration in Dhaka for excluding her party – the Awami League – from next month’s elections, saying that “stability will not return to Bangladesh” through “arranged” voting. Former Education Minister Mehibul Hasan Chowdhury warned of the increasing risks of extremism and the deteriorating law and order situation.

The interim government in Bangladesh is likely to be upset not only by these criticisms, but also by the fact that the two men have been given a platform in India to express these criticisms. There is no indication that the press conference was sponsored by the Indian government.

The caretaker government and other critics of the Awami League have long been dissatisfied with Hasina’s ability to speak freely since she fled to India in 2024. At times, she has made inflammatory speeches online that sparked angry and violent protests in Bangladesh. Although the former ministers’ comments were not provocative, many in Bangladesh are likely to view their press conference as more in the same vein.

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Under the radar

The Maldives, which has been under serious economic pressure, received some good news this month: it still has the strongest passport in South Asia. The latest Henley Passport Index, which ranks passports based on the number of destinations they can access without a visa, is seen as a measure of the degree of mobility enjoyed by a country’s citizens. The Maldives is now ranked 52nd globally (compared to 53rd last year). In South Asia, the closest country is India, which ranks 80th.

However, the Maldives ranks much worse than other island nations in the Indian Ocean, such as Seychelles and Mauritius; It also tracks a number of passports in Southeast Asia. Critics assert that the Maldives has not taken steps that have helped its higher-ranking Asian neighbors – such as pursuing visa waiver agreements with more countries. Since global mobility constitutes an important prerequisite for trade relations, strengthening the Maldives’ passport power could help the country combat its economic problems.

Regional votes

author Salim Jahan Notes in Prothom Alu That there is a shortage of female candidates in the upcoming elections in Bangladesh – even though the 2024 uprising that ousted Hasina had many female leaders. He attributes this to a patriarchal society that “does not want women to participate in the country’s political structure, which leads to a decrease in women’s representation.”

Researchers Bhargavi Zaveri Shah and Harsh Vardhanwrite in Printing presscriticizes the new Indian financial law – the Securities Markets Act – that was recently introduced in parliament. They claim that the law “consolidates New Delhi’s long-standing grip on commodity markets, and perpetuates a regressive streak in a financial landscape that would otherwise be modernizing.”

analyst Homa Youssef argue in dawn And that Islamabad must be careful about how it deals with the Iranian issue, both now and in the long term, across a variety of scenarios: “Any celebration of the fall of the regime by official elements…or even perceived support for the American drive, would risk inflaming sectarian tensions within Pakistan and throughout the region.”