Why Did Trump Threaten To Modify Or Rescind India’s Sanctions Waiver For Iran’s Chabahar Port?

Threatening the viability of the North-South Transport Corridor pressures Iran, India, and Russia in one fell swoop in a diplomatic-economic masterstroke.

Trump 2.0 is considered to be Indophilic in large part due to his team’s understanding of how India can serve as a partial economic-military counterweight to China in Eurasia, yet he just signed an Executive Order to “modify or rescind sanctions waivers…including those related to Iran’s Chabahar port project”. That port is pivotal to the North-South Transport Corridor (NSTC) that India relies on to balance China in Central Asia and prevent Russia’s disproportionate dependence on it, both of which align with US goals.

The Biden Administration also threatened to rescind this waiver, albeit not as directly nor in an official way like Trump 2.0 just did, in response to last May’s ten-year Chabahar Port deal between India and Iran. The latest threats coincided with an Indian government report about how maritime traffic along that route soared by 43% last year and container traffic by 34%. It also precedes Prime Minister Modi’s trip to DC late next week where they’re expected to discuss trade ties, military issues, and Russia.

The last part could take the form of India explaining the role that it plays in preemptively averting Russia’s potentially disproportionate dependence on China through its large-scale purchase of discounted oil and the plans that they have to scale real-sector trade across the NSTC. Modi might therefore request sanctions waivers otherwise India might either feel compelled to risk a crisis with the US by defying it on Russia-Iran or it’ll abandon its Eurasian balancing act to their mutual detriment.

Having explained Chabahar Port’s strategic importance to the US by way of India employing it to balance Chinese influence in Central Asia and on Russia, it’s now time to look at the reasons why Trump would risk jeopardizing this through that particular clause in his latest Executive Order. What follows are three explanations that aren’t mutually exclusive. It might even be that Trump only had the first one in mind but then realized that the second and third could also be used to his benefit.

There’s no doubt that modifying or rescinding India’s sanctions waiver for Chabahar Port is intended to coerce Iran into concessions to the US since the Executive Order in which this is decreed explicitly concerns the resumption of his first term’s “maximum pressure” policy. The future of the Iranian economy is even more dependent on the NSTC than the Indian and Russian ones are so threatening its viability is meant to raise the chances that it complies with his demands on missiles and nuclear energy.

Nevertheless, seeing as how India and Russia also have important stakes in the NSTC, he might also hope that one or both could then encourage Iran to cut a (likely lopsided) deal with the US in exchange for him then retaining the essence of his first term’s original sanctions waiver as a reward. Building upon that and regardless of whether or not the following was already what he was planning, another possibility is that his threat to modify or rescind that waiver is intended to put pressure on India in a bilateral context.

Trump earlier criticized Modi’s use of tariffs, but the run-up to their summit has seen rumors of them launching free trade talks, so Trump might think that threatening Modi’s Eurasian balancing act could prompt trade concessions. It’s of grand strategic importance for India to prevent Russia from becoming China’s junior partner so India might compromise on trade with the US for a Chabahar waiver in order to retain this balancing act without risking a crisis with the US by defying its Iranian sanctions threats.

The last explanation for why Trump threatened to modify or rescind this waiver is that he wants to pressure Russia by reminding it that the alternative valve from Western sanctions pressure that it’s relied upon for preemptively averting potentially disproportionate dependence on China could soon be cut off. The purpose could be to increase the odds that Putin accepts tough compromises on his maximum goals in the special operation in exchange for India retaining this waiver and thus keeping the NSTC viable.

In this scenario, Russia would be compelled to choose between these tough compromises or becoming China’s junior partner out of desperation to continue the special operation in pursuit of its maximum goals, which would entail selling all natural resources to China at bargain-basement prices. Putin has held off on that till now, even declining to clinch such an agreement over the long-negotiated Power of Siberia II pipeline during his most recent trip to Beijing last May, so he might cut a deal with Trump.

More clarity is expected by the end of the month since Modi’s trip to DC will take place from 12-14 February, the next Munich Security Conference is from 14-16 February, Trump’s Special Envoy for Ukraine and Russia Keith Kellogg will then reportedly visit Kiev on 20 February to share Trump’s peace plan with Zelensky after first briefing Western leaders about it in Munich, and then he might visit Moscow to talk with Putin about it since he’ll be in the neighborhood if Trump doesn’t call him first.

Bloomberg reported that Trump’s plan includes “potentially freezing the conflict and leaving territory occupied by Russian forces in limbo while providing Ukraine with security guarantees” in order to create the conditions for Ukraine to hold its long-delayed presidential and parliamentary elections. This sequence was forecast several days prior to that report here, which pointed out that it would necessitate compromises from Putin.

The Russian leader’s spokesman Dmitry Peskov then revealed that talks with Zelensky are hypothetically possible even though Moscow considers the Ukrainian leader’s continued tenure to be illegitimate in a reversal of Kremlin policy which suggests that Putin might be seriously considering some compromises. That might not be connected to Trump’s Executive Order from the day prior to Peskov’s remark, but it’s possible that forthcoming NSTC-related pressure might contribute to convincing Putin to cut a deal.

Reflecting on the insight that was shared in this analysis, it’s arguably the case that Trump’s threat to modify or rescind India’s sanctions waiver for Iran’s Chabahar Port is motivated by him wanting to pressure Iran, India, and Russia in one fell swoop in a diplomatic-economic masterstroke. This doesn’t mean that he’ll successfully extract the compromises (or even concessions in some cases) that he expects, but just that he’s trying to proverbially kill three birds with one stone, which is very clever.