Welcome to Foreign Policy’s South Asia Brief.
The highlights this week: India weighs the future of a port project in Iran amid new U.S. tariffs, exiled members of Bangladesh’s ousted government voice frustrations ahead of elections in the country, and the Maldives leads the region in passport power.
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India’s Chabahar Conundrum
U.S. President Donald Trump’s new 25 percent tariff on countries doing business with Iran has put India in a tough spot, jeopardizing the future of an investment project teeming with geopolitical and strategic significance.
Nearly a decade ago, in May 2016, India struck a major transport corridor deal with Iran and Afghanistan. New Delhi agreed to provide $500 million in investments to develop a port in the southern Iranian city of Chabahar. The agreement also included plans for new roads and a railroad from Chabahar to the Afghan border.
The plans fell short in part because New Delhi held back on investments due to U.S. sanctions on Tehran—even as it received several U.S. sanctions waivers that allowed it to keep working on the project. (U.S. sanctions on Tehran scaled back up after Trump took office in 2017 and withdrew the United States from the Iran nuclear deal a year later.) Trump’s new levy poses the latest challenge to the project.
Soon after Trump’s tariff announcement, India’s Economic Timesclaimed New Delhi had transferred its entire current financial commitment to Chabahar—valued at $120 million—to Tehran. India reportedly told the U.S. Treasury Department that it would “wind down all activities at the Port of Chabahar.” New Delhi’s latest sanctions waiver is set to expire in April.
Last week, however, unnamed Indian government sources disputed claims that New Delhi was halting participation in Chabahar. “Exiting the port is not an option,” the sources told NDTV, adding that India is seeking a “middle-ground” with the United States.
Chabahar remains a strategically critical investment for New Delhi. It is meant to enable India to reach, via Afghanistan, Central Asia—a region rich with natural gas and critical minerals. New Delhi has sought to deepen engagement in the region in recent years but lacks direct land access because Pakistan doesn’t grant India transit rights. Chabahar offers the next best option.
New Delhi has an added incentive to make Chabahar work: Afghanistan under the Taliban is now relatively stable, and the regime has friendly and growing ties with India.
India could conceivably cut its losses and pull out of the project—and not just because it can’t afford a new 25 percent U.S. tariff on top of the 50 percent with which it is already saddled. New Delhi’s ties with Tehran, while friendly, have receded since U.S. sanctions prompted India to dramatically scale back Iranian oil purchases.
India also has diplomatic and strategic alternatives to Chabahar. It is pursuing deeper relationships in the Middle East, including ramping up defense ties with the United Arab Emirates (UAE) and committing to the fledgling India-Middle East-Europe Economic Corridor and I2U2 Group, which comprises India along with Israel, the United States, and the UAE.
Furthermore, given that transactionalism is the currency of Trump’s foreign policy, India may calculate that backing away from Chabahar could be prudent. Washington has recently made several notable gestures to India, including inviting it to join a defense supply chain initiative and Trump’s Board of Peace.
Still, pulling out of Chabahar would be a dicey proposition politically. The Trump administration has angered much of the ruling Bharatiya Janata Party’s base with its tariff policies and harsh criticism of India. And yet, New Delhi continues to make concessions to the administration.
India reduced oil imports from Russia—a closer friend to India than is Iran—after Washington imposed new sanctions on Moscow in November. Additionally, New Delhi, which views itself as a champion of the global south, gave a muted reaction to the Jan. 3 U.S. military operation in Venezuela. Any public perception in India that New Delhi is now also ending a strategically significant investment because of U.S. pressure could pose political risks for the government.
Rather than withdrawing from Chabahar, India will likely look into potential new financing arrangements for the project that shield it from more tariffs or new sanctions. This could entail investing in the project through a third party. For now, Indian officials have suggested that they may try to get an extension on the current sanctions waiver.
For New Delhi, achieving the ambitious vision it once had for Chabahar may no longer be possible. But because of strategic considerations and domestic political factors, the country has good reasons not to back out of the project altogether—even if holding firm angers the White House and adds strain to an already sputtering U.S.-India relationship.
What We’re Following
Trump’s Board of Peace. Pakistan’s foreign ministry announced on Wednesday that it would join Trump’s Board of Peace. The White House is also courting India for the initiative. They are the only South Asian governments known to have received invitations.
Pakistan’s move is not surprising. Islamabad is keen to build influence wherever it can and to continue to strengthen ties with the Trump administration. But the decision of whether or not to accept the invitation will be trickier for New Delhi.
Some analysts contend that the idea of an outside board overseeing peace and governance in conflicted states has colonial undertones; India sees itself as a proud post-colonial state. Additionally, concerns that the new board could undercut the United Nations may worry New Delhi, which views the U.N. as a key platform to project influence—and has long sought a permanent seat on the U.N. Security Council.
If New Delhi declines the invitation, however, it could gall Trump at a moment when India is involved in sensitive negotiations to lower U.S. tariffs on its exports.
U.S. immigration visa freeze. Bangladesh, Bhutan, Nepal, and Pakistan are on the list of 75 nations targeted as part of the Trump administration’s suspension of immigration visa processing, announced last week. All four countries, according to a chart posted by Trump on social media, have among the highest percentage of immigrant households in the United States receiving public assistance. (The chart doesn’t list any sources.)
Bhutan is listed as no. 1, with 81 percent. The figure for Pakistan, listed at 40 percent, is especially surprising. Data have long showed that Pakistan’s U.S.-based diaspora is highly affluent. According to Pew figures published last year, only 12 percent of Pakistanis in the United States are living in poverty, with Pakistani-headed households having a median annual income of $108,100 in 2023.
Because the visa freeze only applies to immigrant-related visas, the impact on Pakistanis shouldn’t be overstated. Still, of the four South Asian states hit by the freeze, Pakistan has by far the largest diaspora in the United States, with estimates ranging from nearly 600,000 to 1 million.
Additionally, at a moment when the U.S.-Pakistan relationship has enjoyed a resurgence, the administration’s move could have a deleterious impact on people-to-people ties, especially if the freeze is an extended one. Pakistani officials have reportedly been in touch with their U.S. counterparts and hope the suspension ends soon.
Awami League leaders speak out. On Saturday, two senior figures from Bangladesh’s ousted Sheikh Hasina government held a press conference in New Delhi and excoriated the country’s interim government.
Hasan Mahmud, Hasina’s foreign minister, slammed the administration in Dhaka for excluding her party—the Awami League—from next month’s elections, contending that “no stability will return to Bangladesh” from an “arranged” vote. Former Education Minister Mohibul Hasan Chowdhury warned of the growing risks of radicalization and a worsening law and order situation.
Bangladesh’s interim government will likely be annoyed not only by the criticisms, but by the fact that the two men were given platforms in India to voice them. There is no indication the press conference was sponsored by the Indian government.
The interim government and other Awami League critics have long been unhappy that Hasina has been able to speak freely ever since she fled to India in 2024. At times, she has given inflammatory online speeches that have incited angry and violent protests in Bangladesh. Even though the former ministers’ comments weren’t provocative, many in Bangladesh will likely see their press conference as more of the same pattern.
FP’s Most Read This Week
- The Grand Strategy Behind Trump’s Foreign Policyby A. Wess Mitchell
- What Spheres of Influence Are—and Aren’tby Stephen M. Walt
- Faulty Assumptions About Iran Have Driven a Failed U.S. Policyby Steven A. Cook
Under the Radar
The Maldives, which has been struggling with serious economic stress, received some good news this month: It continues to have by far the most powerful passport in South Asia. The latest Henley Passport Index, which ranks passports based on how many destinations they can access visa-free, is viewed as a measure of the degree of mobility enjoyed by a country’s citizens. The Maldives is now ranked 52nd globally (up from 53rd last year). In South Asia, the next closest country is India, which is ranked 80th.
However, the Maldives’ ranking is far worse than other Indian Ocean island states, such as the Seychelles and Mauritius; it also trails a number of passports in Southeast Asia. Critics contend that the Maldives has not taken steps that have helped its higher-ranked Asian neighbors—such as pursuing visa waiver agreements with more countries. Given that global mobility is an important prerequisite for commercial relations, growing the Maldives’ passport power could help the country fight its economic problems.
Regional Voices
Writer Selim Jahannotes in Prothom Alo that there is a lack of women candidates in Bangladesh’s upcoming elections—even though the 2024 uprising that ousted Hasina had numerous female leaders. He attributes this to a patriarchal society that “does not wish for women to participate in the political structure of the country, resulting in lower female representation.”
Researchers Bhargavi Zaveri-Shah and Harsh Vardhan, writing in the Print, criticize a new Indian financial law—the Securities Markets Code—that was recently introduced in Parliament. The law, they contend, “entrenches New Delhi’s longstanding grip over commodity markets, perpetuating a regressive streak in an otherwise modernizing financial landscape.”
Analyst Huma Yusuf argues in Dawn that Islamabad must be careful about how it navigates the Iran issue, both now and over the longer term, across a variety of scenarios: “Any celebration of the regime’s downfall by official elements … or even perceived support for American puppeteering, would risk fueling sectarian tensions within Pakistan and across the region.”
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