Iran's Chabahar Port Scores an India- and Afghanistan-Inspired Sanctions Exemption

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The sanctions that came into force Monday target Iran's energy, financial and shipping sectors and mark the end of USA participation in the 2015 nuclear deal that President Donald Trump withdrew from in May.

Saudi-led oil cartel and its allies, including Russian Federation, decided in June to relax output curbs in place since 2017, after pressure from United States (U.S.) President Donald Trump to reduce oil prices and make up for supply losses from Iran.

The idea behind the SPV is to have it act as a clearing house into which buyers of Iranian oil would pay, allowing the European Union to trade oil with Iran without having to directly pay the Islamic Republic.

The South Korean government is breathing a sigh of relief this morning after it was confirmed that Seoul has been granted a waiver from newly-imposed US sanctions on Iran.

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As the US sanctions snapped back into place, Washington issued what Pompeo called "temporary" exemptions for eight countries (China, India, Italy, Greece, Japan, South Korea, Taiwan, and Turkey).

The U.S. sanctions on Tehran come as the Trump administration withdrew from the 2015 nuclear deal with Iran in May, saying it had not stopped Iran from developing its ballistic missile program and intervening in neighboring countries.

The spokesperson cited the strategy to say it "underscores our ongoing support of Afghanistan's economic growth and development as well as our close partnership with India".

India has seen Chabahar as a key way both to send supplies to Afghanistan and to step up trade with Central Asia as well as Africa. The port project is simply too critical for India and can benefit Afghanistan immensely.

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The Chabahar Port is considered a gateway to golden opportunities for trade by India, Iran and Afghanistan with central Asian countries besides ramping up trade among the three countries after Pakistan denied transit access to India. The port stands in contrast to China's own port project in Gwadar, Pakistan.

The top U.S. diplomat has granted an exception to certain USA sanctions that will allow the India-led development of a port in Iran as part of a new transportation corridor created to boost Afghanistan's economy, a State Department spokesman said on Tuesday.

Afghanistan's imports of Iranian petroleum products were also being exempted from sanctions, the spokesperson added.

Zahedan is also in Iran but closer to the Afghanistan border. If the sanctions are meant to "convince the [Iranian] regime to abandon its current revolutionary course", as Pompeo said on Monday, such exceptions surely undercut that effort.

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While Iranian oil exports are expected to fall because of USA sanctions that took effect on October 5, reports from OPEC and other forecasters have indicated that the global market could see a 2019 supply surplus as demand slows. Meanwhile the Trump administration's South Asia policy all but necessitates a pass for Afghanistan.