Alwaght- Thanks to its rapid economic growth over the past two decades, India has established itself as a prominent emerging economic hub. With this achievement, it is now actively striving to secure a substantial share in global markets for its products. To accomplish this goal, New Delhi is devising plans to expand its foreign trade network.
To this end, according to Indian media outlets, the Indian government in one of its latest initiatives is seeking to use the Greek Port of Piraeus as the gate for its exports to the European markets. Prime Minister Narendra Modi is set to visit Greece by the month’s end and discuss with Athens leaders use of the port.
Over the past decade, India has strengthened bilateral ties with Greece as it extends its interests from the Indian Ocean to the Eastern Mediterranean. Last year, bilateral trade between the EU and India reached an all-time high of $130 billion. This has caused New Delhi to take a greater role in controlling the sea routes that connect India to Europe in order to maintain its economic security and interests.
The important point about New Delhi’s plan is that Indian engagement in development of the Greek port is part a broader regional project that is slated to link India to Greece and then Europe through the Persian and Israel, said Indian media. The idea for this transit route was agreed upon by these countries in 2021 at the I2U2 group meeting consisting of India, Israel, the UAE and the US. At that time, the main goals of this group were to encourage joint investment among member countries in six sectors of energy, food security, health, space, transportation, and water.
Actually, according to this plan, using the I2U2 group, India expects developing capability to easily access Port of Piraeus and then the European markets through Emirates ports and Israeli port of Haifa.
The major point about this plan is that in recent years, India followed main strategy of access to Europe through Iranian Port of Chabahar and involvement in North-South Corridor. Therefore, the new plan raises a question: Does announcement of the new plan mean decline in importance of Port of Chabahar for New Delhi?
Doomed competition with China
One of the main and the biggest challenges India is facing in its pursuit of plans for access to the Mediterranean ports is domination of the rivals over these ports. China by buying a large stake of Piraeus from years ago gained a firm foothold in this Greek port to hinder Indian access to it. China Ocean Shipping Company (COSCO) with a share of 67 percent controls a major stake in the port.
Since 2011, the Greek government, under the pressure of the debt crisis and the strict economic instructions of the Western Troika (the European Commission, the European Central Bank and the International Monetary Fund) had to sell almost all of the country's important port and airport operation rights to foreign companies. The Chinese announced their readiness for presence in Port of Piraeus years before the economic crisis struck Greece, and when Greece underwent an economic predicament in 2009, Athens gave the initial green light to the COSCO. At that time, Beijing was the only foreign side willing to invest in the debt-stricken Greek economy. Also, rights of 14 Greek regional airports, including Thessaloniki airport, were sold to Germany’s Fraport company.
During this time, the Chinese modernized the port. In 2009, COSCO won a 35-year right to operate a container terminal and build a new terminal in Piraeus with a €100 million ($112 million) contract. Over the next seven years, China invested around €280 million ($308.3 million) to renovate Piraeus' docks and increase its handling capacity from 880,000 containers per year to 3.7 million containers.
In 2016, COSCO acquired 51 percent of the port's shares for €280 million , and the agreement was extended until 2052. Five years later, COSCO acquired a further 16 percent and committed to investing €300 million ($326.5 million) more in the port.
The port is the largest one in the Eastern Mediterranean and the seventh largest in Europe. In his visit to the port, Chinese leader Xi Jinping described Port of Piraeus an “exemplar project” and an important center for fast ground and sea connection of China and Asia with Europe.
It seems that Greek government is up to now satisfied with COSCO performance in the port. Prime Minister Kyriakos Mitsotakis of Greece in February 2021 in the first China summit with 17 Central and Eastern European countries said that Chinese investment in Port of Piraeus is “beneficial” for both sides.
Given the status of Piraeus, and since the biggest US goal behind forming I2U2 bloc was to drag India into the Persian Gulf to take on the growing Chinese influence amid the tendency of regional countries to join China’s Road and Belt Initiative (RBI), certainly Beijing will take action to foil the Indian plans for Greek ports.
The key port of Alexandroupolis in northern Greece is also about to be privatized and the way for Indians to enter this port is also not easy as the US plans to buy the port, which is currently a major sea hub for American arms shipments.
Vague future of normalization
From another dimension, the plan to connect the Persian Gulf to Greek ports is challenging for the Indians. If the new Indian transit project seeks ground connection of the Persian Gulf to the Israeli ports and from there to Greek ports for lower costs, higher security, and shorter time, it has a unclear future due to ambiguity surrounding Saudi-Israeli normalization, as the railway to Israel from the Persian Gulf should inevitably pass through Saudi Arabia.
In 2017, Israel Katz, then Israeli transportation minister, outlined his vision for railway connection of the occupied territories to the Persian Gulf. But in addition to the vagueness surrounding the normalization, logistics challenges, as well as popular opposition to connection with Israel, can bring the project into an impasse.
Chabahar, the most accessible and reliable route
Though unveiling the new Indian initiative triggers speculations that Iranian Port of Chabahar may have lost its significance to the Indians, the recent phone conversation between PM Modi and President Sayyed Ibrahim Raeisi of Iran and the renewed emphasis of the Indian side on faster completion of Chabahar project once again highlighted the importance of Chabahar as Iran's only oceanic port to the Indians.
Analysts believe that the operation of the Chabahar project is a strategic paradigm shift with huge geopolitical implications for India with capability to change the country's role in the Eurasian economic order.
Recently, the Reuters, citing two informed Indian officials, reported that it is expected that Iran and India by September and before World Maritime Summit that is set for October in India sign a long-term pact for development of Port of Chabahar. The pact comes after years of negotiation and will see Indians developing Shahid Beheshti Terminal in the southeastern port.
In 2016, during PM Modi's visit to Tehran, India, Iran and Afghanistan signed an agreement to develop Chabahar as a trade and transport corridor to link their economies. However, the reinstatement of US sanctions against Iran in 2019 and the fall of Afghanistan to the Taliban in 2021 complicated and slowed down the work at the port. But talks for development of the port were resumed last year when an Indian delegation led by Indian Minister of Ports, Shipping and Waterways Sarbananda Sonowal visited Iran.
Currently, India and Iran have a one-year pact to develop a terminal in the Iranian port. But India eyes a long-term deal to operate the port.
Talks on a long-term deal hit a snag after the two sides differed over the arbitration article in the contract.
However, Mint news website of India reports that they are set to reach a compromise deal allowing the cases to be referred to international arbitration courts in neutral regions like Singapore or Dubai. The differences over other articles like ensuring the minimum Iran-eyed traffic will also be settled, paving the way for development of the port, the Indian outlet further reported.
Experts maintain that if the Iranian port is connected to the rail network, the shipment amount can increase considerably. In 2016, a pact was signed between India’s IRCON International Limited and Iran Railway Transportation Infrastructure Construction and Development Company to construct Chabahar-Zahedan railway. According to Iranian officials, the final part of the project will be finished earlier next year.
Having in mind that the main reason for delay of Chabahar project is the underperformnce and procrastination of the Indian side under the pretext of American sanctions and concerns about the tense situation in mountainous Karabagh, with show of seriousness by New Delhi for advancing Chabahar project and connection of India to North-South Corridor as the leading regional transit corridor in West Asia and Central Asia, Chabahar will be the most favorable option for Indian access to central Asia and Europe in terms of cost efficiency, security, distance.
