India’s Chabahar Plans Stumble After US Waiver Reversal

Islamabad: February 10, 2025. — In a move with significant regional implications, the United States has rescinded the sanctions waiver on Iran’s Chabahar port project, following an executive order issued by President Trump on February 6, 2025. The decision, aimed at tightening economic pressure on Iran, is expected to ripple through South Asian trade corridors, directly affecting India, Afghanistan, and the broader region.

The executive order directs the Secretary of State to “modify or rescind sanctions waivers, particularly those that provide Iran any degree of economic or financial relief, including those related to Iran’s Chabahar port project.” This marks a shift in U.S. policy that previously allowed India to develop and utilize the strategic port to facilitate trade with Afghanistan, bypassing Pakistan.

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US Justifies Decision on Security Grounds

In a statement, President Trump emphasized national security concerns: “Iran remains the world’s leading state sponsor of terror and continues to pose an existential threat through its nuclear ambitions, support for terrorist groups, and aggressive regional activities.” The administration cited Iran’s involvement in supporting Hezbollah, Hamas, and the Houthis, as well as its ballistic missile programs and human rights abuses.

The U.S. aims to impose “maximum pressure” to curtail Iran’s nuclear capabilities and regional influence, with specific measures targeting Iran’s financial and shipping sectors. “We must deny Iran all paths to a nuclear weapon and end the regime’s nuclear extortion racket,” the statement added.

Regional Reactions: India Faces Strategic Setback

India, which has invested billions into Chabahar as part of its strategy to establish an alternative trade route circumventing Pakistan, now faces a major geopolitical hurdle. The project was not just about commerce; it symbolized India’s aspirations for regional hegemony and influence. Analysts suggest that India’s ambitions may face a significant reality check as the U.S. decision injects uncertainty into Chabahar’s future.

“Chabahar was never just about trade—it was India’s geopolitical tool to assert dominance. With the waiver in question, its ambitions now seem to face a serious reality check,” said Haleema Khaldi, Editor of South Asia Times (SAT).

“Afghanistan, which had touted Chabahar as an alternative to reliance on Pakistani routes amid Pakistan-Afghanistan tensions over Tehreek-e-Taliban Pakistan (TTP), is also left in limbo. The port was seen as a lifeline for Afghan trade, especially after the Taliban’s return to power. With the waiver rescinded, Kabul must reassess its trade dependencies”, said Salman Javed, Director South Asia Times while commenting on the development.

Pakistan’s Strategic Advantage

Pakistan, meanwhile, appears to gain an inadvertent advantage. As Chabahar’s prospects dim, Pakistan’s role as a vital trade corridor, bolstered by projects like the China-Pakistan Economic Corridor (CPEC), becomes more prominent. “While India’s investment hangs by a thread, Pakistan’s connectivity projects move forward without the risk of sanctions. Stability beats uncertainty,” noted a trade analyst.

Geopolitical Ramifications

The move is expected to further complicate the already tense dynamics between the U.S., Iran, and South Asian countries. It also raises questions about Washington’s commitment to supporting India’s strategic goals in the region, despite the growing Indo-U.S. partnership in other areas.

As the dust settles, countries like India and Afghanistan are left grappling with the repercussions of a shifting geopolitical landscape, where economic investments can be upended by political decisions beyond their control.