Iran looks to remote port to beat US sanctions

Official cites 56% increase in activity in Chabahar, the country’s only port outside of Persian Gulf and only one with exemptions from sweeping sanctions

A cargo ship is docked during the inauguration ceremony of the newly built extension in the port of Chabahar on the Gulf of Oman, southeastern Iran, near the Pakistani border, December 3, 2017. (AP Photo/Ebrahim Noroozi)
A cargo ship is docked during the inauguration ceremony of the newly built extension in the port of Chabahar on the Gulf of Oman, southeastern Iran, near the Pakistani border, December 3, 2017. (AP Photo/Ebrahim Noroozi)

CHABAHAR, Iran — With the web of US sanctions tightening, Iran faces a host of challenges as it looks to an isolated port in the country’s far southeast to maintain the flow of goods.

The port in Chabahar, only about 100 kilometers (62 miles) from the Pakistan border and located on the Indian Ocean, is Iran’s largest outside the Gulf.

It is also the only Iranian port with exemptions from unilateral economic sanctions reimposed by the United States in 2018 after it pulled out of the Iran nuclear deal signed in 2015.

That is due mainly to the pivotal role of the port, and a planned railway line, in breaking landlocked Afghanistan’s dependence on Pakistan for trade with the world, especially India.

Afghan trade as well as plans for a trading route by rail between central Asia and the Indian Ocean called the North-South Corridor are the main reasons the Islamic Republic has invested one billion dollars in Chabahar’s Shahid Beheshti port, official sources say.

“We will keep on developing this port… our rail network, road network and airport are all being developed, so that we can implement the North-South Corridor,” Roads and Urban Development Minister Mohammad Eslami told AFP while visiting Chabahar for a development conference.

‘Traffic will pick up’

Almost 500 acres (more than two square kilometers) of land have been reclaimed from the sea for the project and over 17.5 million cubic meters (618 million cubic feet) dredged, creating a 16.5-meter (54-foot) drought.

But more than a year since the new installations became operational in December 2017, business has yet to pick up.

The ships that officials say have docked in the past year have only loaded and unloaded 2.1 million tonnes of cargo, a far cry from the port’s annual capacity of 8.5 million tonnes.

Only 20 ships have docked at the new section of the port and most of its three kilometers of waterfront remains unutilized, with new machinery and neatly lined-up cranes standing idle.

But authorities remain upbeat about the prospects for growth.

Iranian President Hassan Rouhani poses during the inauguration of a newly built extension of the port of Chabahar, near the Pakistani border, on the Gulf of Oman, southeastern Iran, December 3, 2017. (Ebrahim Noroozi/AP)

Hossein Shahdadi of the provincial ports and maritime authority said that in the first 11 months of the past Iranian year, which started on March 21, 2018, “there has been a 56 percent increase in cargo handled at the port compared with the previous year.”

“We’ve also had a 25 percent rise in the number of ships calling at the port” on the Gulf of Oman, he said.

Arun Kumar Gupta, managing director of India Ports Global Limited which has a 10-year concession at the new port, played down the startup issues.

“Any port will have a gestation period, there will be lulls but we are very sure that traffic will pick up,” Gupta told AFP.

‘Born with sanctions’

The Indian company began work in December and has so far handled only an average of 60,000 tons of cargo per month.

But Gupta is counting on the port’s proximity to India and Afghanistan to attract business.

US President Donald Trump signs a document reinstating sanctions against Iran after announcing the US withdrawal from the Iran nuclear deal, in the Diplomatic Reception Room at the White House in Washington, DC, on May 8, 2018. (AFP PHOTO / SAUL LOEB)

Chabahar’s location, however, carries its own risks as it lies in the volatile Sistan Baluchistan province where militant jihadists operate.

In December, a suicide attack on the local police headquarters killed two policemen.

During an investment conference in February, security was tight with many roads cut off and hundreds of armed security personnel deployed to protect delegates.

Apart from security concerns, US sanctions banning financial transactions with Iran make it ever harder to pay or receive payments.

Some like Afsaneh Rabiani, who runs a freight forwarding company, see Chabahar as an opportunity for “those willing to take the risk.”

“I’ve been researching Chabahar for the past year and a half, and the infrastructure is now in place to do serious work here,” she said.

As for the sanctions, Iran’s roads minister said the challenge was nothing new.

“We were born with sanctions. Ever since the (1979 Islamic) revolution, we have been under sanctions and we are working on how to counter them,” Eslami said, as he oversaw the unloading of a first shipment of Afghan goods lined up to be re-exported from Chabahar.

Times of Israel staff contributed to this report.

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