The late Iranian President was keen on strengthening economic ties with Sri Lanka, India and Pakistan.
The tragic death of Iranian President Dr. Ebrahim Raisi in a helicopter crash in his country on May 19, will be mourned in Sri Lanka, India and Pakistan as he had built strong economic ties with Sri Lanka and India and wanted to have better ties with Pakistan despite quarrels over terrorism.
Asia formed the core of the Raisi government’s foreign policy. Raisi had criticised the “Western-oriented” foreign policy of his predecessor Hassan Rouhani (2013-21). The Raisi administration which began in August 2021 promised to be “Asia-centred” in its foreign policy.
Ties with Sri Lanka
Raisi visited Sri Lanka in April this year despite the growing tensions in the Middle East and Western sanctions against Iran. He came to Sri Lanka to sign five MoUs and participate in a public ceremony to mark the inauguration of the Uma Oya Multipurpose Development Project (UOMDP), a joint Sri Lanka-Iran venture.
Since 2013, Iran has also been using its economic ties with Sri Lanka to build a strategic partnership with the island nation. According to Michael Rubin of the American Enterprise Institute (AEI), Iranian outreach to Sri Lanka took advantage of Sri Lanka’s frustration with the West.
Between 1983 and 2009 when Sri Lankan Security Forces fought a war against the LTTE separatists, a war which the West opposed, Iran supported the Sri Lankan Government. When the UN Secretary General Ban Ki-moon agreed to appoint a special panel to investigate human rights violations by Sri Lanka during its final military drive to eradicate the LTTE, Iranian Minister of Transportation Ali Nikzad lambasted the UN panel, describing it as a “pet of the Western nations.”
If any organisation or country takes action that will harm Sri Lanka, Iran will always very strongly oppose such a move, Nikzad added.
The then Iranian Foreign Minister Manouchehr Mottaki called his Sri Lankan counterpart to congratulate him on successfully ending the war and remind him that Iran had always supported Sri Lanka’s unity. Mottakki also said, “Iran is sincerely committed to the development of Sri Lanka, whom we consider to be a true friend.”
According to Rubin, in 2005, during the war, Iran supplied USD 150 million worth of weaponry to Sri Lanka.
Iran’s Foreign Minister, the late Hossein Amir-Abdollahian (he also died in the helicopter crash along with Raisi on May 19) had held talks with President Ranil Wickremesinghe in April this year and said that Iran’s economic and industrial sectors, including the Ministry of Energy, were prepared to develop projects in Sri Lanka.
The Iranian-Sri Lankan Uma Oya Multipurpose Development Project (UOMDP) which was inaugurated by Dr. Raisi and President Wickremesinghe last month is one of the largest irrigation projects in Sri Lanka and the largest Iranian-Sri Lankan project in the island.
UOMPD’s primary objective is to alleviate water scarcity in the South-Eastern dry region by redirecting an annual average of 145 million cubic metres (MCM) of excess water from the Uma Oya basin to the Kirindi Oya basin. About 4,500 hectares of new land and 1,500 hectares of agricultural land in the Moneragala District will receive irrigation water.
Parts of Badulla, Moneragala, and Hambantota districts will also benefit from 39 million cubic metres (MCM) of water for drinking and industrial purposes, while generating and adding 290 GWh of electrical energy annually to the National Grid.
In 2007, the then President Mahinda Rajapaksa made an epoch-making visit to Iran and signed MoUs on development projects worth more than US$ 1.9 billion. The following year, Iranian President Mahmoud Ahmadinejad visited Sri Lanka and inaugurated a US$ 750 million project to upgrade Sri Lanka’s Sapugaskanda petroleum refinery.
Iran had agreed to provide no interest credit terms for petroleum purchases (US$ 700 million) and stated that it would finance the Uma Oya Project (US$ 450Mn).
Iran’s Deputy Oil Minister Roknoddin Javadi had said that Iran was prepared to provide 40,000 to 45,000 barrels per day, enough oil to supply Sri Lanka’s main oil refinery.
The Sri Lanka and Iran epoch-making ‘tea-for-oil’ barter agreement is now making strong progress and Sri Lanka has already settled payments to the tune of over US$ 20 million to Iran.
“This agreement was to settle US$250 million for purchases made by Ceylon Petroleum Corporation (CPC) for oil imported from Iran in 2012,” said Sri Lanka Tea Board (SLTB) Chairman Niraj de Mel in an interview with ‘Daily News Business’.
“Since then we have made very strong progress and up to December 2023, we have settled around US$ 20 million,” de Mel said.
In 2016, Iran used some of its hard currency windfall to lease Sri Lankan Airlines airplanes, effectively helping Sri Lanka’s national carrier to reduce its US$ 1 billion debt, Rubin said in his article.
Relations with India
President Raisi had very strong ties with India too. The Indian Shipping Minister Sarbananda Sonowal went to Tehran on May 13 for the inking of a 10-year contract between India Ports Global Ltd with the Maritime Organisation of Iran. Under the pact, India will invest around U$120 million to develop and operate the Shahid Beheshti Port in Chabahar besides offering a credit of US$ 250 million for infrastructure upgrading.
The new contract replaces the initial pact signed in 2016 to keep India’s operations at the Shahid Beheshti terminal of the Chabahar port going. The deal is extremely critical to India as it a faster route to lucrative world markets. The overall investment by India in the Chabahar port was expected to be US$ 500 million.
The Chabahar port’s unique location, just about 550 nautical miles from the Kandla port in Gujarat, gives India easy access to Afghanistan, the Central Asian countries and Europe.
Chabahar is also part of the proposed multimodal transport route also known as the International North-South Transport Corridor (INSTC). This corridor will link the Indian Ocean and Persian Gulf to the Caspian Sea via Iran and to Northern Europe via Saint Petersburg. According to industry estimates, shipments through the INSTC route will take 15 days less compared to the Suez Canal route.
India is already operating the Chabahar port under the existing limited-scope agreement.
India has so far avoided being caught in the US-Iran crossfire over the US sanctions by convincing the Americans about the strategic importance of its bilateral pacts and got a waiver. The Biden administration has, however, said on record that the latest deal is not exempt from sanctions.
India-Iran bilateral trade stood at US$17 billion in 2018-19. However, following the Donald Trump administration’s May 2018 withdrawal from the 2015 nuclear deal and re-imposition of sanctions on Iran, trade was badly hit. The value of commercial exchanges between Iran and India declined to US$ 4.8 billion in 2019-2020 and US$2.1 billion in 2020-2021.
Relations with Pakistan
President Raisi visited Pakistan also in April this year for three days, though the two countries had attacked each other militarily in January.
The border tensions escalated when Iran carried out air attacks across the border in Pakistan killing two children. The Iranian state media said the attack was targeting two bases of the armed group Jaish al-Adl. Pakistan retaliated by firing a missile into Iranian territory and recalling its ambassador from Tehran.
But the two neighbours decided to de-escalate tensions, with Tehran rushing its top diplomat to Islamabad to mend ties. They agreed to confront the “menace of terrorism” together, especially in the border region.
Islamabad and Tehran have been aiming to boost bilateral trade, which currently stands at US$2 billion. Raisi had set a target of US$ 5 billion.
However, there is a sizable informal trade between the two countries, including Liquefied Petroleum Gas (LPG) and crude oil. Iran also provides electricity to the Balochistan province and other border areas in Pakistan.
A plan to build a pipeline to export Iranian natural gas to Pakistan was stalled amid opposition from the United States over Iran’s nuclear program.
