The Haifa port in Israel
NEW DELHI: Even as China’s People’s Liberation Army (PLA) continues to occupy disputed territory on India’s eastern border and build infrastructure, Indian officials working in tandem with other countries, mostly on the Western side, are gradually chipping away at the Chinese influence at a much larger strategic level.
The recent acquisition of the Haifa port in Israel by the Adani group, along with the local Gadot group, has come as a rude shock to the Chinese establishment, which was allegedly backing one of the three groups that remained standing in the last round, apart from Adani, to acquire Haifa port. The Chinese interest in taking control of the Haifa port and develop it as one of its jewels of the “Belt and Road Initiative” was part of a well thought out strategy as a Chinese entity, the Shanghai International Port Group (SIPG), had earlier won a 25-year-old contract to operate Haifa’s new terminal till 2056.
The Adani group’s offer to take control of the Haifa port was 4.1 billion shekels ($1.18 billion), 55% more than the second highest bid, according to Israeli media. In January 2020, when the Israeli government had announced its decision to privatise the Haifa port, it had stated that the winning bidder must agree to make a minimum investment of $290 million, including at least $115 million for infrastructure investments.
In June 2020, a leading newspaper of China, seen as the mouthpiece of the Chinese Communist Party (CCP), had written about how the Shanghai Zhenhua Port Machinery Company (ZPMC) was the main supplier of heavy logistical equipment to the Haifa’s new 18,000-container terminal, which China had won in 2015. It has so far invested $3 billion in this project, for the strategic benefits that it is expected to bring to China in the coming years.
The newspaper wrote, “Haifa Port, a symbolic project along the Belt and Road Initiative, will be the largest container terminal in Israel. Haifa port is the home base of the Israeli navy, including a new facility for the new Dolphin class submarines that Israel purchased from Germany.”
The strategic value of Haifa port, situated 90 km from capital Israel, can be made out from the fact that it shares close coordinates with the Haifa naval base, which is the primary base of the Israel defence force. The Chinese “intrusion” into Haifa port through its investment in developing the new terminal had become a matter of big concern for the United States as there were apprehensions that it would be used to carry out covert operations against its naval forces, specifically the Sixth Fleet, which uses the Haifa naval base very frequently.
The Israelis, who woke up late to the fact that Chinese capabilities will be working from their backyard, in 2019 established an advisory board whose job was to review foreign investment in infrastructure related assets.
As a result of this, a strategic document was created that classified the infrastructure in Israel on the basis of their sensitivity and importance and whether they would be eligible to be bought over by international companies. It also specifically mentioned that some projects cannot be given to China-backed companies and companies operating from a few other countries.
It is in this context that the recent winning of the Haifa port contract by India-backed Adani becomes important. Gautam Adani himself had tweeted that Haifa was a “strategic” investment. The successful bid announcement by Adani came on the same day when the heads of the “I2U2” grouping’s virtual summit comprising India, Israel, the UAE, and the US, also referred to as the “West Asian Quad”, were sharing their thoughts. Brigadier General (retired) Assaf Orion, who is the director of Israel-China Policy Program at the Tel Aviv based Institute for National Security Studies (INSS), told The Sunday Guardian that the renewal of Israel’s ports is a long-awaited step seeking to unclog the logistic bottleneck in the old ports and to spur efficiency through competition and modernization.
“An India-based partner is a welcome development, reflecting the strengthening Israel-India relations on the bilateral level, also seen in the I2U2 grouping with the UAE and US. China’s strategic interest in the region is based on Beijing’s focus on energy and strategic lines of communications and logistics between Asia and Europe. However, it chose not to bid in the recent Haifa port tender,” Orion, who was the head of strategy, Israel Defence Forces general staff, contended. According to him, however, the “hype” about China’s takeover of the Haifa port was “exaggerated”.
“Haifa Bayport is neither Piraeus nor Hambantota; its Chinese operator, SIPG, neither owns nor controls the port, and cannot be used as an inroad for PLA Navy ships. Fifth Fleet’s USS O’Kane’s port call to Haifa last October wordlessly showed the US navy’s current risk assessment of SIPG presence near the Haifa port, and speaks louder than assessments in an academic conference four years ago, from which the hype began. China is not an enemy of Israel nor its rival, yet Washington’s concerns about Beijing are taken seriously in Jerusalem and considered a national security issue. Israel is also aware of other nations’ experiences with China and some challenges in their relations with it. Israel conducts itself accordingly, seeking fruitful and safe relations with the PRC, while safeguarding its alliance with the US,” he said.
Orion indicated that Israel was not looking to take sides in this rivalry between the US and China. “Israel is blessed by its strategic alliance with the US, by strategic ties with India and by fruitful economic partnership with China. Israel is also concerned by China’s ties with Iran, especially military cooperation and China’s help to Iran to withstand sanctions and persist on its nuclear path. China’s positions on the Israeli-Palestinian conflict and its vote record in international fora, such as the UNHRC, are also unpleasant to Israel. The recent joint US-Israel statement about cutting-edge technology cooperation between them shows where Israel stands in the great power competition: alongside America, though not against China,” he asserted.
Similarly, the bilateral ties between Delhi and Tehran, which lies at a distance of about 2,500 km east of India’s national capital and were going south since the last few years, are now witnessing better times due to the political intervention done through diplomatic tools which included one-to-one meetings between officials of the two sides to talk freely about the differences that had cropped up between the two sides.
In early 2021, India lost the Farzad-B oilfields that were discovered by the ONGC after the Iranian government awarded the contract to a local company. In the same year, Iran signed a 25-year comprehensive long-term deal with China.
This “Comprehensive Strategic Partnership” agreement between Iranian Foreign Minister Mohammad Javad Zarif and his Chinese counterpart, Wang Yi, spanning 25 years, was signed on 27 March, while the National Iranian Oil Company (NIOC) awarded the $1.87 billion contract to the Tehran-based Petropars to develop the Farzad-B gas field on 17 May, fewer than 50 days later.
As it became evident that Chinese influence on Tehran was impacting the centuries old bilateral ties between India-Iran, who have never been hostile to each other, orders were given at the highest level to take steps to iron out the differences that had cropped up between the two countries. India’s thought process that ancient friendships should not be sacrificed for new transaction-based relations was one of the cornerstones of these bilateral discussions. As a result, Dr Subramanyam Jaishankar, India’s External Affairs Minister, in a rare move, visited Iran twice within a period of one month, on 7 July 2021 and then again on 5 August.
Jaishankar, during his visit, met President Sayyid Ebrahim Raisi and thereby became the first foreign dignitary to call on President Raisi, following his election. Post that, multiple meetings were held at other locations, including on the sidelines of the 21st Shanghai Cooperation Organization Heads of State Council Summit in September 2021 and the 76th United Nations General Assembly session in New York in the same month and then during the Munich Security Conference in February 2022.
In November 2021, Ali Shamkhani, Secretary of Iran’s Supreme National Security Council, came to Delhi for the Delhi Regional Security Dialogue on Afghanistan. This was followed by the February 2022 visit of Brigadier General Amir Hatami, Defence Minister of Iran to Delhi, to attend the First Indian Ocean Defence Ministers’ Conclave. Last month, Iran’s Foreign Minister Dr Hossein Amir-Abdollahian came to India and was granted a not-so-common opportunity that is rarely accorded to foreign ministers, to meet Prime Minister Narendra Modi, apart from Jaishankar.
The results of these multiple meetings have started giving results. In June this year, India was one of only three countries, other than Pakistan and Libya, which abstained from the resolution criticising Iran for flouting IAEA requests for inspections of its nuclear programme and other processes. Of the 35-nation Board of Governors of the IAEA, 30 countries voted for the resolution while Russia and China voted against it.
Earlier this month, the first Russian cargo heading for India via the International North-South Transport Corridor (INSTC) arrived in Iran, making the transportation corridor operational nearly 22 years after it was launched in September 2000.
On 12 July, the first rail transit cargo from Russia to India that will use INSTC entered Iran. The Russian train was welcomed into the Iranian border by First Vice President Mohammad Mokhber along with transport, oil, industry, and agriculture ministers, as well as the vice president for science and technology. The train containing 39 containers had left Chekhov station on 6 July and travelled 3,800 km through Kazakhstan and Turkmenistan to enter Iran. The cargo will be transported to Bandar Abbas port in southern Iran through a 1,600 km rail route to finally be sent to India’s Nhava Sheva Port via sea. In the trial run on this corridor, that was done in June, containers that were shipped from Astrakhan Port in southern Russia reached the Iranian ports of Anzali on the Caspian Sea and from there, they were sent to Bandar Abbas port on the Persian Gulf, after which they reached the Nhava Sheva Port, Maharashtra, a journey that took around 25 days.
The INSTC, which is a 7,200 km long multi-modal network of ships, rail, and roads for moving freight between Eastern Europe and South Asia, initially had three members, Iran, Russia, and India. Later, Turkey, Oman, Syria, Belarus and Ukraine, Tajikistan, Kyrgyzstan, Kazakhstan, Armenia, and Azerbaijan also joined the agreement, while Pakistan, Turkmenistan, and Afghanistan have expressed their willingness to use this travel corridor.
The corridor is expected to increase trade connectivity between cities such as Mumbai, Moscow, Tehran, Baku, Bandar Abbas, Astrakhan, Bandar Anzali and as per independent studies, transport costs will be reduced by as much as $2,500 per 15-tonne of cargo compared to the older existing methods and routes. In what was called a desperate attempt by the Chinese to dissuade countries from joining the INSTC by ignoring BRI, in April 2022, Chinese State Councillor and Minister of National Defense, Wei Fenghe went to Kazakhstan, Turkmenistan, Iran, and Oman. However, he could not extract any promises.
The corridor comes with a win-win situation for the member countries. It reduces the time, the resources needed to transport goods between the three countries, it gives a more economical option than using the Suez Canal and it generates income from Iran for facilitating the transfer of goods between India and Russia without falling into any debt trap. The Islamic Republic of Iran Shipping Lines (IRISL) recently announced that it has assigned 300 containers to transport goods between Russia and India.
Similarly, earlier this month, Iran announced that the strategic Chabahar port was ready to provide a trade centre for the Indian private companies and confirmed that talks between the two countries at diplomatic levels have already been held on this matter. This came after the Iranian Ambassador to India, Ali Chegeni, in May, had stated that the two countries were working to diversify the channels of payments to expand bilateral trade.
The Chabahar port consists of Shahid Kalantari and Shahid Beheshti terminals, each of which has five berth facilities. The port is located in Iran’s Sistan-Baluchistan Province and is about 120 km southwest of Pakistan’s Baluchistan province, where the China-funded Gwadar port is situated. In May 2016, India, Iran, and Afghanistan had signed a trilateral agreement for developing the strategically-located Chabahar, which will give New Delhi access to Kabul and Central Asia. As per the agreement, India is going to install and operate modern loading and unloading equipment, including mobile harbour cranes in Shahid Beheshti Port. Since its operationalization in December 2018, the port has handled cargo from Russia, Brazil, Germany, Bangladesh, Thailand, Romania, UAE, Kuwait and Australia, among other countries.