In recent months, Washington has swung from revoking to restoring India’s sanctions waiver for operating Iran’s Chabahar port. The ‘waiver on, waiver off’ routine, however, comes with a clear strategic intent.
Salman Rafi Sheikh
Waiver On, Waiver off
In September 2025, the United States pulled the rug out from under one of India’s most carefully nurtured strategic ventures: the Chabahar Port in Iran. Long viewed by New Delhi as a critical gateway to Afghanistan and Central Asia, Chabahar suddenly became a high-stakes chess piece in Washington’s policy game. On September 16, the US Department of State announced it would revoke the special exemption granted in 2018 under the Iran Freedom and Counter-Proliferation Act (IFCA), with the revocation taking effect September 29. Overnight, Indian companies, shippers, insurers, and banks involved in the port’s operations were cast into uncertainty: their assets could be frozen, their access to the US financial system curtailed, and their commercial contracts imperilled.
Even if the Trans Caspian route itself does not pass through Iran, the interconnected nature of regional logistics networks means that a disruption at Chabahar could ripple across supply chains
This move did not occur in isolation. At the same time, New Delhi was itself involved in a high-stakes game with the US over bilateral trade. Specifically, it is resisting US pressure to halt oil imports from Russia. By targeting Chabahar, Washington signaled that it was willing to leverage unrelated strategic projects to enforce compliance elsewhere, effectively turning Indian economic and geopolitical interests into bargaining chips. Yet the situation shifted quickly: reports emerged on October 28 that Indian firms had halted Russian oil imports, and the very next day, the US issued a fresh six-month waiver, allowing Chabahar operations to continue without immediate penalty.
The rapid “waiver on, waiver off” cycle exposes the transactional and unpredictable logic of US sanction policy. A project that represents over $120 million in Indian investment, long-term regional connectivity, and painstaking diplomacy is reduced to a geopolitical pawn, its fate dictated less by commercial or developmental imperatives and more by Washington’s strategic calculus. This particular calculus, however, is not meant for India only. The politics of granting and restricting waivers is also tied very closely to Washington’s relationship with Central Asia.
The Central Asian gamble
Chabahar port is important not only for India but also for the landlocked states of Central Asia, offering a rare direct link to the Indian Ocean and a potential route to India that bypasses Pakistan. Several Central Asian states have expressed interest in using Chabahar Port for this purpose. Tajikistan has emerged as the most active player, signing a formal cooperation agreement with Iran in early 2025 and committing to developing a logistics hub with terminals and storage facilities. Uzbekistan has held discussions about utilising the port for trade and storage. While a lot of this is still far from being fully operational, there is little denying that a major roadblock has been the US sanctions.
In the same vein, the waiver also signals to Afghanistan, where India has recently become very active. The Taliban regime is currently involved in a border standoff with Pakistan. Kabul has suspended its trade with Pakistan, and the reopening of this route remains highly uncertain. At the same time, Washington has been pressuring the Taliban to come to terms with handing over the Bagram airbase to the US military for its potential operations against China. In this context, if Afghanistan wants to continue—and even expand—its trade with Central Asia and other countries beyond the region, i.e., with India itself, as an alternative to Pakistan, its best route goes through the Chabahar Port.
Beyond this, the US decision to grant the waiver—and unless it restricts it again in the future—also puts it in a position where it can influence several other regional trade and connectivity projects, including the Trans‑Caspian and broader International North-South Transport Corridor (INSTC) projects. By granting or revoking waivers, the US is signalling that it can create opportunities and or introduce uncertainty for companies and governments contemplating investment or trade through corridors that touch Iran.
For example, Central Asian states considering cargo flows via Chabahar—or via the Caspian Sea to Azerbaijan and beyond—must now weigh the risk that US sanctions could suddenly be applied, making insurance, financing, or banking services problematic and/or unavailable. Even if the Trans‑Caspian route itself does not pass through Iran, the interconnected nature of regional logistics networks means that a disruption at Chabahar could ripple across supply chains, raising costs or forcing alternative routing through Russia, Turkey, or China.
In essence, the waiver policy acts as a geopolitical lever. Its application is meant to put pressure on countries and companies so that they align their foreign and trade policies with US preferences, discouraging full exploitation of alternatives like the Trans‑Caspian corridor that could reduce American influence. The US has, for some time, been trying to expand its geopolitical footprint in Central Asia. Its ability to strangulate or allow Chabahar helps it signal its continued relevance. On the whole, the uncertainty imposed by such sanctions creates a risk premium, slows governmental and private investment, and subtly nudges regional actors toward pathways that the US finds strategically acceptable, even if they are less efficient or commercially less viable.
Salman Rafi Sheikh, research analyst of international relations and Pakistan’s foreign and domestic affairs
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