Afghanistan And Iraq At Risk Of Being Caught Up In Web Of US Sanctions Aimed At Iran

As the US prepares to reimpose wide-ranging economic sanctions against Iran, most of its diplomatic energy has been focused on trying to persuade its European allies to support its more aggressive stance.  That is proving hard to achieve though, as secretary of state Mike Pompeo acknowledged in a speech to the conservative Heritage Foundation on May 21 when he said “I’ve spent a great deal of time with our allies in my first three weeks [in office]. I know that they may decide to try and keep their old nuclear deal going with Tehran.”

Whether European governments are able to devise a scheme to shield their companies and citizens from the US sanctions remains to be seen. But they do at least potentially have the strength to resist Washington’s efforts, and the knowledge that their trade with Iran forms a relatively tiny part of their overall trade networks.

However, two other US allies much closer to Iran have rather more to lose from the new trade restrictions, which are due to take effect in two waves, in August and November. Afghanistan and Iraq have a few things in common, including weak economies that have been ravaged by corruption and warfare – they also both have borders with Iran, which is an important trading partner.

Afghanistan’s economy is small and it is only the 145th largest exporter in the world. However, Iran plays a central role as the largest source of Afghan imports and the third largest destination for its exports, according to the World Bank. The importance of trade via Iran has been rising and was set to be further enhanced by the development of Chabahar port on Iran's Arabian Sea coast.

This port is being developed with the help of a $500m investment from India and the scheme includes a direct rail link to land-locked Afghanistan. The project was sealed with the tripartite Chabahar Agreement in May last year, signed by Iranian president Hassan Rouhani, Indian prime minister Narendra Modi and Afghan president Ashraf Ghani.

For Afghanistan, the port offers a welcome alternative to its current reliance on the seaport of Karachi in Pakistan – a country with which it has an uncomfortably complex relationship. For Iran, the project offers a way to develop its trading relationship with central Asian countries while also bypassing Pakistan. The first shipment of goods from India to Afghanistan via Chabahar arrived in the Iranian port in November last year, with the shipment of wheat hailed by Modi at the time as “a new chapter in regional cooperation and connectivity”.