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Flying Under the Radar: Iranian Alternatives to Suez and Belt and Road

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Map of North South Transport Corridor (NSTC) from India to Europe

As Eurasia’s geopolitical sands shift, Iran is touting a sea and rail hook-up involving Iranian, Russian, and Indian ports that would link the sub-continent to northern Europe as a viable alternative to Egypt’s Suez Canal and addition to China’s Belt and Road Initiative.

Iranian and Indian officials suggest the route would significantly cut shipping time and costs from India to Europe. Senior Indian Commerce Ministry official B B Swain said the hook up would reduce travel distance by 40 and cost by 30 percent.

The Iranian-Indian-Russian push is based on a two-decades old agreement with Russia and India to establish an International North-South Transport Corridor (INSTC) as well as more recent free trade agreements concluded by the Russia-dominated Eurasian Economic Union (EAEU) with Iran and Singapore.

The agreements have fuelled Central, South, and Southeast Asian interest in the corridor even if the EAEU itself groups only a handful of countries: Russia, Kazakhstan, Belarus, Armenia, and Kyrgyzstan.

Exploiting the momentum, Russia has been nudging India to sign its own free trade agreement with the EAEU while the grouping is discussing an accord with the ten-member Association of Southeast Asian Nations (ASEAN).

If successful, the Iranian push, backed by Russia and India, would anchor attempts by Iran to project itself as opposed to Saudi Arabia and the United Arab Emirates as the key Middle Eastern player in Russian and Chinese ploys for regional dominance.

Leveraging geography and Central Asian distrust of past Saudi promotion of its ultra-conservative strand of Islam, Iran expects that kickstarting INSTC will give it a significant boost in its competition with the kingdom and the Emirates for the region’s hearts and minds.

INSTC would also strengthen Iran’s position as a key node in the Belt and Road on the back of a two-year old rail link between western China and Tehran that runs across Kazakhstan, Uzbekistan and Turkmenistan.

India’s ambassador to Russia, D B Venkatesh Varma, told a webinar hosted by the Federation of Indian Chambers of Industry and Commerce that he expected to bring shipping and insurance companies as well as other businesses and stakeholders together to advance the INSTC.

The Iranian-Indian-Russian push suggests that Iran is playing multiple cards in the geopolitical jockeying for the future of Eurasia amid much speculation about a draft Iranian proposal for a 25-year strategic partnership with Beijing that if agreed and implemented would inextricably hook the Islamic republic to China.

The INSTC would link Jawaharlal Nehru Port, India’s largest container port east of Mumbai, through the Iranian deep-sea port of Chabahar on the Gulf of Oman, funded by India to bypass Pakistan, and its Caspian Sea port of Bandar-e-Anzali to Russia’s Volga River harbour of Astrakhan and onwards by rail to Europe.

Suez Canal Authority spokesman George Safwat dismisses assertions by Iranian and Russian officials that the link would cut shipping time from 40 days through the Suez Canal to somewhere between 25 and 28 days.

Speaking to Al-Monitor, Mr. Safwat said it takes only 19 days for a container shipped from India through the Suez Canal to reach the German port city of Hamburg.

A search on Searates, Dubai ports management company DP World’s search engine for shipping times puts the transit time at 21 days.

Mr. Safwat further insisted that INSTC would be unable to match the Suez Canal’s capacity to accommodate more than one billion tons of cargo a year.

The Iranian push was boosted in March by an agreement between Russia and India that would enable the shipment of goods through the corridor on a single invoice within a matter of months.

“Within three months, traders from India and Russia could move goods between the two countries through Iran,” said V. Kalyana Rama, the chairman of India’s state-owned Container Corporation (Concor).

Indian sources close to the Chabahar project said in interviews that the ability to issue one bill of lading that would allow exporters to get a bank letter of credit coupled with an agreement by state-owned Russian Railways (RZD) to act as the carrier had removed key obstacles for INSTC.

The sources said shipping costs were likely to be pushed upwards by the fact that much of the cargo traffic would be originating in India rather than destined for India. “Empty containers on one leg adds to the freight cost,” one source said.

The Russia-India agreement nevertheless takes on added significance as countries seek to diversify their supply chains after the experience of bottlenecks during the coronavirus pandemic.

If successful, the corridor could benefit men like Adar Poonawalla whose Serum Institute of India is the world’s largest vaccine manufacturer.

It may however not all be smooth sailing.

Chabahar, located in the Iranian province of Sistan and Baluchistan, is not immune to the fallout of renewed Baloch nationalist violence in neighbouring Pakistan.

The violence, effecting investment in Gwadar, the Chinese backed port 70 kilometres down the coast in the Pakistani province of Balochistan, may give Chabahar a leg up but raises the spectre of proxy battles with Saudi Arabia and India suspected of supporting the nationalists for different reasons. Saudi support targets Iran while India’s focus is Pakistan, it’s longstanding nemesis.

In a further twist, Iran this week denied Indian media reports that it had dropped India as a partner in the development of a rail line from Chabahar to the border with Afghanistan because of delays in Indian funding.

Iran’s IRNA news agency, however, quoted Farhad Montaser, an official of the country’s Ports and Maritime Organization, as saying that Iran and India had failed to agree on Indian participation in developing Chabahar’s railway infrastructure during the original talks that secured Indian support for the port.

This would have included a 1,000-kilometre line to Sarakhs on the Iranian border with Turkmenistan. Iran has said it would fund the construction of railway infrastructure.

Indian analysts said in interviews that the government in Delhi had put participation by a state-owned Indian infrastructure company on the backburner because it may violate harsh US economic sanctions against Iran.

“We are very much in the game, but progress is slow due to the current political environment,” India’s Zeenews quoted government sources as saying.

That offers Gulf states at best temporary consolation. Uncertainty about the outcome of the November election in the United States that could sweep presumptive Democratic presidential candidate Joe Biden into office holds out the prospect of an administration that would be more critical of Saudi policies and more willing to return to negotiations with Iran.

Author’s note: An initial version of this story was first published in Inside Arabia

Dr. James M. Dorsey is a senior fellow at the S. Rajaratnam School of International Studies, co-director of the University of Würzburg’s Institute for Fan Culture, and the author of The Turbulent World of Middle East Soccer blog, a book with the same title, Comparative Political Transitions between Southeast Asia and the Middle East and North Africa, co-authored with Dr. Teresita Cruz-Del Rosario and three forthcoming books, Shifting Sands, Essays on Sports and Politics in the Middle East and North Africaas well as Creating Frankenstein: The Saudi Export of Ultra-conservatism and China and the Middle East: Venturing into the Maelstrom.

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Israel-Palestine Conflict: A Way Forward

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The first Prime Minister of Israel, David Ben Gurion, confessed (as mentioned in the book The Israel Lobby and US Foreign Policy), “If I were an Arab leader, I would never make terms with Israel. That is natural: we have taken their country. Sure, God promised it to us, but what does that matter to them? Our God is not theirs. We come from Israel, it’s true, but two thousand years ago, and what is that to them? There has been Anti-Semitism, the Nazis, Hitler, Auschwitz, but was that their fault? They see but one thing: we have come here and stolen their country. Why should they accept that?” 

Why did Ben Gurion say this? He knew that, initially the land did belong to the Jews, but when it was taken over by the Babylonians long ago, it remained no longer theirs. The Muslims had no role, whatsoever, in that occupation since the Babylonian captivity occurred around a thousand years before the emergence of Islam, implying that Muslims did not besiege this land from the Jews. In other words, when Jews were living there, it was their national homeland and when Muslims became the dominant force there, it turned out to be their national homeland. 

This piece of land has remained sacred to both Jews (as Ben Gurion said, above) and Muslims. It is the place containing the first Qibla of Muslims and associated with the Prophet Muhammad’s (PBUH) journey to the heavens. For Jews, it contains the Temple of Solomon. Thus, both historically and religiously, Muslims have the equal right on this land as Jews. On these bases, neither Muslims nor Jews are ready to give up this land, hence a conflict continues between them. 

Following the realization of the unjust Balfour declaration, two prominent solutions have been proposed: one state of two nations (Muslims and Jews) or two states of two nations.

One-state two-nation solution refers to a unitary state which includes the whole territory of Israel, West Bank and Gaza Strip. The federating units can be autonomous for the better functioning of the one state of two nations. The state would be shared and owned as equals by Jews and Muslims alike. Culturally, it would remain a salad bowl – the two peoples would retain their distinct cultural identities yet live together. If better sense prevails, the coexistence of Muslims and Jews would enable them to utilize each other’s potential and pursue their common interests, i.e., peace and stability.

In this regard, the Prophet Muhammad (PBUH) set a guiding principle for the mutual co-existence of two nations (i.e., Muslims and non-Muslims) in the charter of Medina. This charter was democratically agreed by the leaders of all local tribes in such a way that all the parties to the agreement committed to defend the Medina state from any external aggressor. One example to illustrate the level of commitment is noteworthy. A prominent Jewish scholar, Makhreeq, took part in the battle of Uhud and fought alongside Muslims against the Mushriqin of Mecca. He was killed in the battle performing the commitment made under the Medina charter. He even made sure that if he was killed, his family must donate all his wealth to the state treasury for the protection of the homeland. The Medina charter valued religious differences by not making one religion superior to others. One of its clauses was that Muslims would abide by their religious laws and Jews by theirs. They were not to lose their religious identities but live together as politically equals while maintaining the religious differences. 

The one-state solution can end the hostilities between the two peoples. A multicultural nation can be inclusive for all, and be a state to be recognized by other states. The Balfour Declaration of 1917 outlined the notions of a national home for the Jewish people without infringing the religious as well as civil rights of the non-Jewish people. However, it contained a fundamental flaw. It provided Jews national rights but did not give the Palestinians the same status.

On similar lines, Yousef Munnayer, a Palestinian-American writer and the former Executive Director of the US Campaign for Palestinian Rights, proposed a one state formula, which provides equal rights to all the citizens in every essence of the word. He wrote in the Foreign Affairs magazine, “The question, then, is not whether there will be a single state but what kind of state it should be. Will it be one that cements de facto apartheid in which Palestinians are denied basic rights? Or will it be a state that recognizes Israelis and Palestinians as equals under the law?” If we analyze the latter state in the light of Medina charter, it would be feasible and acceptable for two nations to exist as political equals. While protecting and preserving the religious identities of both nations, a one-state solution must provide equality to them in the political realm.

If the one-state solution is not possible, then the alternative could be the two-state solution, which means that the Gaza Strip and West Bank would unitedly become Palestinian territory and the remaining part would remain Israel. This is something on whose basis Pakistan also supports the Palestinian cause and backs a pre-1967 border solution. In such a scenario, Palestine would resemble Pakistan before the fall of Dhaka – Gaza and West Bank separated by Israel in between, just like East and West Pakistan separated by India before 1971. 

The aggression by Israel every now and then must end. Human security should become the focus. A binational secular state accepting the religious differences and considering all the people as equals can work in the benefit of all. A peaceful settlement to the dispute is the only thing that is beneficial for both of them, especially the Palestinians. 

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Will Oman Succeed In What The UN And US Envoys Failed In Yemen?

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Since taking office on January 20, US President Joe Biden has made a priority for Yemen and appointed Tim Linderking as the US special envoy to Yemen to seek an end of the war that has been going on for more than six years, which made Yemen live “the worst humanitarian crisis in the world”, as described by the United Nations.

Nearly four months after his appointment as a special envoy to Yemen, and after several visits to the region, and several meetings through Omani coordination with representatives of the Houthi movement in Muscat, Linderking returned to the United States empty-handed, announcing that the Houthis are responsible for the failure of the ceasefire to take hold in Yemen. The US State Department said “While there are numerous problematic actors inside of Yemen, the Houthis bear major responsibility for refusing to engage meaningfully on a ceasefire and to take steps to resolve a nearly seven-year conflict that has brought unimaginable suffering to the Yemeni people”.

Two days only after the US State Department statement, which blamed the Houthis for the failure of the peace process in Yemen, an Omani delegation from the Royal Office arrives in Sana’a. What are the goals behind their visit to Sana’a, and will the Omani efforts be crowned with success?

Houthi spokesman Muhammad Abdul Salam said that “the visit of a delegation from the Omani Royal Office to Sanaa is to discuss the situation in Yemen, arrange the humanitarian situation, and advancing the peace process”. However, observers considered that the delegation carried an American message to the Houthi leader as a last attempt to pressure the Houthis to accept a ceasefire, and to continue the peace efforts being made to end the war and achieve peace, especially after the failure of all intensive efforts in the past days by the United Nations and the United States of America to reach a ceasefire as a minimum requirement for peace.

Oman was the only country in the Gulf Cooperation Council that decided not to participate in what was called “Operation Decisive Storm”, led by Saudi Arabia following its consistent policy of non-interference. Due to its positive role since the beginning of the crisis and its standing at the same distance from all the conflicting local and regional parties in Yemen, it has become the only qualified and trusted party by all the conflicting parties, who view it as a neutral side that has no interest in further fighting and fragmentation.

On the local level, Oman enjoys the respect and trust of the Houthis, who have embraced them and their negotiators for years and provided them with a political platform and a point of contact with the international parties concerned with solving the Yemeni problem, as well as embracing other political parties loyal to the legitimate government, especially those who had a different position to the Saudi-Emirati agenda during the last period.

At the regional level, Oman maintains strong historical relations with the Iran, and it is a member of the Gulf Cooperation Council, and this feature enables it to bring the views between the two sides closer to reach a ceasefire and ending the Yemeni crisis that has raved the region for several years as a proxy war between the regional rivalries Saudi Arabia and Iran.

Oman now possesses the trust and respect of all local, regional and international parties, who resorted to it recently and they are all pushing to reach a ceasefire and ending the crisis, after they have reached a conviction that it is useless. So the Omani delegation’s public visit to Sana’a has great connotations and an important indication of the determination of all parties to reach breakthrough in the Yemeni crisis.

The international community, led by the United States, is now looking forward to stop the war in Yemen. Saudi Arabia also is looking for an end to the war that cost the kingdom a lot and it is already presented an initiative to end the Yemeni crisis, as well as Iran’s preoccupation with its nuclear program and lifting of sanctions.

Likewise, the conflicting local parties reached a firm conviction that military resolution is futile, especially after the Houthis’ failed attempt for several months to control Marib Governorate the rich of oil and gas and the last strongholds of the government in the north, which would have changed the balance of power in the region as a whole.

Despite the ambiguity that is still surrounding the results of the Omani delegation’s visit to Sana’a so far, there is great optimism to reach a cease-fire and alleviate the humanitarian crisis and other measures that pave the way for entering into the political track to solve the Yemeni crisis.

The situation in Yemen is very complicated and the final solution is still far away, but reaching a ceasefire and the start of negotiations may be a sign of hope and a point of light in the dark tunnel of Yemenis who have suffered for years from the curse of this war and its devastating effects.

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Saudi Arabia steps up effort to replace UAE and Qatar as go-to regional hub

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Saudi Arabia has stepped up efforts to outflank the United Arab Emirates and Qatar as the Gulf’s commercial, cultural, and/or geostrategic hub.

The kingdom has recently expanded its challenge to the smaller Gulf states by seeking to position Saudi Arabia as the region’s foremost sport destination once Qatar has had its moment in the sun with the 2022 World Cup as well as secure a stake in the management of regional ports and terminals dominated so far by the UAE and to a lesser extent Qatar.

Saudi Arabia kicked off its effort to cement its position as the region’s behemoth with an announcement in February that it would cease doing business by 2024 with international companies whose regional headquarters were not based in the kingdom. 

With the UAE ranking 16 on the World Bank’s 2020 Ease of Doing Business Index as opposed to Saudi Arabia at number 62, freewheeling Dubai has long been international business’s preferred regional headquarters.

The Saudi move “clearly targets the UAE” and “challenges the status of Dubai,” said a UAE-based banker.

A latecomer to the port control game which is dominated by Dubai’s DP World that operates 82 marine and inland terminals in more than 40 countries, including Djibouti, Somaliland, Saudi Arabia, Egypt, Turkey and Cyprus, the kingdom’s expansion into port and terminal management appears to be less driven by geostrategic considerations.

Instead, Saudi Arabia’s Red Sea Gateway Terminal (RSGT), backed by the Public Investment Fund (PIF), the kingdom’s sovereign wealth fund, said it was targeting ports that would service vital Saudi imports such as those related to food security.

PIF and China’s Cosco Shipping Ports each bought a 20 per cent stake in RSGT in January.

The Chinese investment fits into China’s larger Belt and Road-strategy that involves the acquisition regionally of stakes in ports and terminals in Saudi Arabia, Sudan, Oman, and Djibouti, where China has a military base.

RSGT Chief Executive Officer Jens Floe said the company planned to invest in at least three international ports in the next five years. He said each investment would be up to US$500 million.

“We have a focus on ports in Sudan and Egypt. They weren’t picked for that reason, but they happen to be significant countries for Saudi Arabia’s food security strategy,” Mr. Floe said.

Saudi Arabia’s increased focus on sports, including a potential bid for the hosting of the 2030 World Cup serves multiple goals: It offers Saudi youth who account for more than half of the kingdom’s population a leisure and entertainment opportunity, it boosts Crown Prince Mohamed bin Salman’s burgeoning development of a leisure and entertainment industry, potentially allows Saudi Arabia to polish its image tarnished by human rights abuse, including the 2018 killing of Saudi journalist Jamal Khashoggi, and challenges Qatar’s position as the face of Middle Eastern sports.

A recent report by Grant Liberty, a London-based human rights group that focuses on Saudi Arabia and China, estimated that the kingdom has so far invested in US$1.5 billion in the hosting of multiple sporting events, including the final matches of Italy and Spain’s top soccer leagues; Formula One; boxing, wrestling and snooker matches; and golf tournaments. Qatar is so far the Middle East’s leader in the hosting of sporting events followed by the UAE.

Grant Liberty said that further bids for sporting events worth US$800 million had failed. This did not include an unsuccessful US$600 million offer to replace Qatar’s beIN tv sports network as the Middle Eastern broadcaster of European soccer body UEFA’s Champions League.

Saudi Arabia reportedly continues to ban beIN from broadcasting in the kingdom despite the lifting in January of 3.5 year-long Saudi-UAE-led diplomatic and economic boycott of Qatar.

Prince Mohammed’s Vision 2030 plan to diversify and streamline the Saudi economy and ween it off dependency on oil exports “has set the creation of professional sports and a sports industry as one of its goals… The kingdom is proud to host and support various athletic and sporting events which not only introduce Saudis to new sports and renowned international athletes but also showcase the kingdom’s landmarks and the welcoming nature of its people to the world,” said Fahad Nazer, spokesperson for the Saudi Arabian embassy in Washington.

The increased focus on sports comes as the kingdom appears to be backing away from its intention to reduce the centrality of energy exports for its economy.

Energy minister Prince Abdulaziz bin Salman, Prince Mohammed’s brother, recently ridiculed an International Energy Agency (IEA) report that “there is no need for investment in new fossil fuel supply” as “the sequel of the La La Land movie.” The minister went on to ask, “Why should I take (the report) seriously?”

Putting its money where its mouth is, Saudi Arabia intends to increase its oil production capacity from 12 million to more than 13 million barrels a day on the assumption that global efforts to replace fossil fuel with cleaner energy sources will spark sharp reductions in US and Russian production.

The kingdom’s operating assumption is that demand in Asia for fossil fuels will continue to rise even if it drops in the West. Other Gulf producers, including the UAE and Qatar, are following a similar strategy.

“Saudi Arabia is no longer an oil country, it’s an energy-producing country … a very competitive energy country. We are low cost in producing oil, low cost in producing gas, and low cost in producing renewables and will definitely be the least-cost producer of hydrogen,” Prince Abdulaziz said.

He appeared to be suggesting that the kingdom’s doubling down on oil was part of strategy that aims to ensure that Saudi Arabia is a player in all conventional and non-conventional aspects of energy. By implication, Prince Abdulaziz was saying that diversification was likely to broaden the kingdom’s energy offering rather than significantly reduce its dependence on energy exports.

“Sports, entertainment, tourism and mining alongside other industries envisioned in Vision 2030 are valuable expansions of the Saudi economy that serve multiple economic and non-economic purposes,” “ said a Saudi analyst. “It’s becoming evident, however, that energy is likely to remain the real name of the game.”

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