If the project goes forward, it can be expected to be a source of increased revenue for the Islamic Republic, as well as a new factor encouraging regional states like Iran and Pakistan to enhance their competition for a share of the Iranian market. As such, it is only natural that the agreement has come under scrutiny from individuals and groups that are opposed to the Iranian regime and thus interested in constraining the effects of sanctions relief upon its economic and political outcomes.
The majority of the US Congress has expressed either strong reservations or outright opposition to that sanctions relief, codified under the Joint Comprehensive Plan of Action, which was concluded last July. Radio Free Europe / Radio Liberty reports that some of the members of that Congress have raised questions about whether the Chabahar port deal would violate existing restrictions on doing business with the Islamic Republic of Iran.
Under the JCPOA, sanctions specifically related to Iran’s nuclear program have been lifted in exchange for restrictions on the country’s nuclear enrichment activities and stockpiles of nuclear material. However, sanctions related to Iran’s human rights violations and support of international terrorism remain in place. And because of such factors as the prevalence of money laundering in the Islamic Republic, its financial system remains isolated from international transactions involving the US dollar.
These persistent restrictions have been widely discussed in the media in recent weeks, highlighting the origins of Iranian frustration with the effects of the nuclear deal. Those restrictions have reportedly prevented a great many Western businesses from fully pursuing investments in the newly de-sanctioned Islamic Republic. This is in spite of the fact that the Obama administration has been at times accused of trying to drum up such investments for Iran.
Representatives of the administration have certainly made considerable efforts to communicate with international business leaders about the situation, emphasizing that they will not be penalized for legal transactions with Iran. RFE/RL reiterated this in its report, quoting a State Department official as saying that the administration has been very clear with the Indians and others about the extent of existing restrictions on Iran.
Although these restrictions have kept many investors and companies at bay despite the sanctions relief, the limits on those restrictions have been sufficient to entice some Western entities into signing agreements with Iran, including agreements for the sale of aircraft and motor vehicles to the Iranian market. Presumably, the competition initiated by these early adopters is continuing to entice others to join their ranks.
On Wednesday, RT reported that billionaire entrepreneur Vladimir Potanin had become the first Russian investor to buy a stake in an Iranian company, specifically the online retailer Digikala, which reportedly controls 91 percent of this Iranian market.
Meanwhile, some countries that are geographically close to Iran are using the post-sanctions environment to expand cooperation not just in oil and commodities but also in tourism cooperation. Last week, for instance, Xinhua reported that Iran and Turkey had entered into an agreement to allow 4,000 flights between the two countries over a period of about six months, on the expectation of heightened demand for tourist-oriented travel between the two countries.
This is particularly remarkable in light of the traditionally strained relations between Iran and Turkey, especially in light of their backing of different factions in the Syrian Civil War. Tensions between the two have diminished in recent weeks, however, in part because of Turkey’s need for Iranian oil at a time when the former’s relations with its Russian oil providers have deteriorating.
At the same time, Turkey’s outreach to Iran is partly attributable to the growing power of President Recep Tayyip Erdogan, who recently reorganized his cabinet following the removal of an adversarial Prime Minister. According to Quadrangle, the new cabinet and the newly empowered Turkish president have quickly moved to seek closer relations with Iran.
There are, however, still signs of tensions. One of these was presented by the Iranian propaganda outlet Press TV on Wednesday in a report upon Iranian plans for new railways linking it to Eastern Europe, and potentially also to Mumbai and Moscow. A spokesperson for Islamic Republic of Iran Railways indicated that the proposed route had been designed specifically with an eye toward avoiding Turkey.
As with the Chabahar port, such exclusionary treatment of one nation that is also a somewhat fledgling trading partner promises to increase pressure on that partner to compete with alternative markets. In the case of the railway plans, those alternative markets are mainly Western Europe, which will supposedly be reached via ports in Bulgaria and Romania. And of course, the primary commodity involved in such competition remains oil.
A number of Western European countries have already stepped up their imports of Iranian oil, although to a lesser extent than geographically nearer and more closely dependent countries like India. While India waits for an answer to US congressional challenges regarding expanded access to Iranian oil via Chabahar, it will already be pursuing plans to personally operate a new Iranian oil field. The Free Press Journal reports that this is part of a larger effort to “move away from buyer-seller relationship to a strategic partnership,” although Iran has not yet requested to Indian proposals on the matter.