Japan agrees to invest in the Chabahar Port Project

Japan’s Ambassador Kenji Hiramatsu had stated on May 8^th, 2017 that the Japanese government looks forward to investing in the Chabahar Port project with the Indian government. Chabahar Port is a seaport located in Southeastern Iran on the Gulf of Oman. In 2016, India attained the rights to develop 2 berths of the port out of the 10 berths. As of 2016, India had agreed to invest $85 million in equipment and lend $150 million for the development of two terminals and five jetties. 

Motives behind Japan’s investment

Japan pitching in with funds in support for India’s development of the port would reinforce the project’s economic viability as well as strategic value. The reason why Japan showed keen interest in investing in the project is because Japan’s dependence on the Gulf for energy requirements accounts for 80% of its total hydrocarbon imports as it is one of the prime exporters of hydrocarbons from the Persian Gulf. Tokyo’s prime agenda is to thus, strengthen its ties with Iran, an oil producing nation.

Japan’s agenda to financially support India in the project arises out of its conflict with China and China’s ongoing construction of the China Pakistan Economic Corridor (CPEC) which poses a threat to the sovereignty of India.

Chabahar Port and the CPEC

The distance between the Chabahar port and the CPEC’s Gwadar port is a mere 72 km. While the string of pearls (ports in Pakistan, Sri Lanka and Bangladesh) pose a military threat to India, China’s funding in the PoK (Pakistan occupied Kashmir) as part of the CPEC would also internationalize the Kashmir conflict, which India is strongly against. Economists and political analysts call the Chabahar port a counter to the CPEC as it breaks Pakistan’s and China’s encirclement around India. Apart from this, the quadrilateral formed between Japan, India, US and Australia for combined military exercises and training would also be beneficial for India in the region.

Analysis

The Chabahar port is seen as an alternative for trade between India and Afghanistan. Since the construction of the port, Afghani businesses have started to shift from Karachi port to Chabahar. As of May 8^th, 2017, there have been reports of the CPEC triggering the socio- economic collapse of Pakistan as the country remains under a huge debt with the Chinese government because of the construction of the economic corridor along with the rates of interest to Pakistan being as high as 8%.

Assessment

Japan’s financial support to India is seen as a flagship program as the strengthening of ties of the two nations brings along with it peace and prosperity in the Asia-Pacific region. Japan’s keen interest in countering terrorism would mean that India would gain support in terms of security with China and Pakistan causing social and political unrest in the region. Trade with Russia, Afghanistan, Iran, Europe and Central Asia is expected to increase considerably with Pakistan no longer being able to control India’s trade route with these countries.

With Japan boosting investment in India’s projects in Chabahar, Indian workers would be trained under the Japanese and there are also possibilities of exchange of technology within the workforce which would ultimately increase their productivity.