Transit Trade Increasingly Important For Empty Coffers
BMI believes that transit trade and port development will become increasingly important to Iran in the coming years as a source of foreign income, given the increasingly stringent sanctions being placed upon the country as a result of its alleged nuclear weapons development programme. Investment by India in a port at Chabahar is the latest instance of this.
It has been announced that India is to invest in developing the port of Chabahar, in the south east of Iran, at a cost of around US$100mn. BMI notes that the arrangement has significant benefits for both India and Iran. The Indian government has also invested US$136mn in order to connect the port with Afghanistan's ring-road highway, while the Iranian government has itself invested US$340mn to date.
On the part of India the port will enable the BRIC nation to carry out trade with Afghanistan, trade that is currently limited due to restrictions by Pakistan, which lies between India and the war-ravaged country. While Afghani goods are permitted to be transported through Pakistan to its ports and its border crossings, the trade is allowed in the one direction only; Indian exports to Afghanistan are not permitted as Pakistan seeks to limit its influence in the country. Through developing the port at Chabahar India secures a trade route otherwise denied to it by geostrategic considerations; not only to Afghanistan but onwards to other markets in Central Asia.
|Effect Of Sanctions Clear|
|Iran Real GDP Growth, 2008-2017|