The deals signed on Monday will also impact Pakistan, Afghanistan and China


Indian Prime Minister Narendra Modi concluded a two-day visit to Iran bysigning a raft of agreements Monday, including two key deals that will likely enable him to circumvent contentious neighbor and regional rival Pakistan � thereby establishing a crucial economic and strategic pathway toward the rest of the world.

The most noteworthy of the 12 agreements signed between Modi and Iranian President Hassan Rouhani is India�s investment of $500 million into developing Iran�s Chabahar port, considered an important entrep�t leading to Afghanistan and onward to Central Asia. Afghan President Ashraf Ghani also later joined the two leaders to sign a trilateral transit agreement that will significantly ease the passage of goods between the three countries and boost trade.

�The main significance is the explicit connection of this project to Afghanistan�s future economy and stability. In that sense, the presence of Afghan President Ghani in Tehran was very important,� Dhruva Jaishankar, a fellow for foreign policy at Brookings India, tells TIME, adding that the political importance being given to the Chabahar project makes it clear that it is �not just any commercial deal.�

Modi�s visit to Tehran is the first by an Indian Prime Minister since 2012, with both countries keen to capitalize on the lifting of U.S. sanctions last year � the sanctions had led to a partial deterioration of their previously cooperative relations. India is one of the largest importers of Iranian crude oil but built up a $6.5 billion backlog of payments during the sanctions. India�s role in the global condemnation of Iran�s nuclear program also soured the bilateral relationship.

Although both Modi and Rouhani refrained from specifically referencingPakistan � with the former speaking of �trust not suspicion, cooperation not dominance, inclusivity not exclusion� and the latter saying �today�s agreement is not against any other country� � the agreements are considered by many a counterbalancing effort against China�s growing influence in the region through Pakistan.

Chabahar is located near the Iran-Pakistan border, and is a little over 60 miles from the Pakistani port of Gwadar that is being developed by the Chinese. The proposed transit route through Iran and Afghanistan also appears to be a response to the China-Pakistan Economic Corridor (CPEC) announced last year.

�There is no denying that Pakistan�s intransigence on transit trade between India and Afghanistan via Pakistan is one reason transit through Iran is being realized now,� says Jaishankar, although he adds that the trilateral agreements would likely have been realized even without Pakistan in the picture.

�Beyond that, security concerns and Chinese investment in the [CPEC] necessitate a parallel route for India to access Afghanistan and Central Asia, for Iran to build up its own transportation infrastructure, and for Afghanistan to access the Indian Ocean,� he says.

Other potential partnerships inked by the two countries include theconstruction of a smelter in Iran by India�s National Aluminium Co., investment in an Iran-Afghanistan rail line by Indian state-run engineering company IRCON and several other strategic and cultural exchanges.

Several question marks do remain, Jaishankar adds, such as Afghanistan�s national security, the possibility of a reinstatement of sanctions on Iran, and India�s ability to overcome financial, bureaucratic and regulatory hurdles to deliver on its commitments.

�Iran has been disappointed in the past by India�s promises,� he says. �The Prime Minister�s visit was meant in part to convey the message that that will not happen again.�

This article was written by Rishi Iyengar for Time Magazine on May 24, 2016.