INSUBCONTINENT EXCLUSIVE:
India has pledged more than $500 million to develop the strategically located port of Chabahar.WASHINGTON/KABUL:
US President Donald Trump's decision to pull out of the Iran nuclear accord and re-impose sanctions on Tehran threatens to derail a project
to help build Afghanistan's economy, endangering a key goal of the US strategy to end America's longest war.The Chabahar port, which India
is developing with a $500 million commitment, is being developed as part of a new transportation corridor for land-locked Afghanistan that
could potentially open the way for millions of dollars in trade and cut its dependence on Pakistan.Building Afghanistan's economy would also
slash Kabul's dependence on foreign aid and put a major dent in the illicit opium trade, the Taliban's main revenue source.But Trump's
decision to re-impose sanctions on Iran and penalise financial institutions for doing business with Tehran is clouding Chabahar's viability
as banks, nervous they could be hit with crippling penalties, pull back from financing."President Trump's decision has brought us back to
the drawing board and we will have to renegotiate terms and conditions on using Chabahar," a senior Indian diplomat said
"It is a route that can change the way India-Iran-Afghanistan do business, but for now everything is in a state of uncertainty."The White
House did not respond to requests for comment.Launched in 2016, the joint Iran-India-Afghanistan Chabahar project already was facing holdups
It has yet to see significant traffic apart from some containers of donated wheat from India, and the first shipments of Afghan dried fruit
to India are not expected before July.At least three contracts to build infrastructure at the port now have been delayed, with two Chinese
companies and a Finnish group left hanging while bankers seek clarity from Washington before approving guarantees, a person close to the
project said. India is developing the Chabahar port with a $500 million commitment.In addition, Afghan traders, who were hoping for an
alternative to Pakistan's port of Karachi, now find themselves cut off from funding and forced to rely on the traditional hawala money
transfer system, which is insufficient on its own to transform an economy
Hawala is a trust-based system commonly used in Afghanistan that involves the movement of funds between agents in different countries."We
know our correspondent banks would not let us pay for imports coming through that port," said a senior executive at one major Afghan
lender.Chabahar is among a number of projects of transport and energy networks projects designed to boost Afghanistan's trade and lay the
foundations for a mining industry capable of exploiting its billions of dollars in untapped mineral reserves.Bypassing the border with
Pakistan, which last year was closed for some 50 days over various disputes, Chabahar is seen as a way for Afghanistan to consolidate its
relationships with India and other regional powers."The only way to get India more involved" in Afghanistan's economic development "is
through Chabahar," said Barnett Rubin, an expert with New York University's Center for International Cooperation and a former adviser to the
State Department and the United Nations
"Our Iran policy is headed for a train wreck with our Afghanistan policy."FOREIGN AIDSome 17 years after the US-led invasion to oust the
Taliban from power, Afghanistan remains one of the world's poorest countries, highly dependent on foreign aid.Apart from illegal opium
exports estimated at some $2 billion by the International Monetary Fund, its main products are dried and fresh fruits, and carpets, none of
which amount to more than a fraction of the value of the drugs trade.Initially Afghanistan would export agricultural produce - such as
pomegranates and grapes - through Chabahar, utilizing a section of a road India paid for and then an extension to the Iranian border that
New Delhi built, experts said.Eventually, those exports could expand to mineral resources, something Trump has expressed an interest in
firms.For India, this would mean using a planned railroad to Chabahar to export iron ore from two tracts at the Hajigak iron mine in central
Afghanistan that it won the rights to exploit, the experts said."The economic piece is really important to get a glimmer of hope for
Afghanistan to move beyond a land-locked, poppy-based economy
We are now shooting that in the head," said Thomas Lynch, a National Defense University expert and a former U.S
Army officer who advised the chairman of the Joint Chiefs of Staff on South Asia policy."There is no other legitimate and reliable way to do
You can't do it by air, you can't do it through Pakistan because they just extort for everything they do," said Lynch
"The lifeline runs through Chabahar."In addition, by hindering the development of Chabahar, the US will leave Afghanistan dependent on
Pakistan, historically its main trade partner and outlet to the world.That would undermine another Trump goal of pressuring Islamabad to
shutter Afghan insurgent sanctuaries on its side of the border and force the terrorists into peace talks.Afghan officials have lobbied hard
for exemptions to the sanctions for Afghan companies operating though Chabahar without success and are waiting for clarity from
Washington.© Thomson Reuters 2018
