Kazakhstan Bets on Iranian Port Investment

Landlocked Kazakhstan is seeking port access, and Astana is banking on Iran to provide it. On July 8, Kazakhstan signed an agreement to build a logistics and transport terminal at Iran’s largest seaport and sanctions evasion hub, Shahid Rajee Port in Bandar Abbas. Under the terms of the 27-year Build-Operate-Transfer agreement, Kazakhstan will construct the terminal in two years, operate it for 25, and then turn control over to Iran.

Kazakhstan’s decision to pursue infrastructure development with Tehran is part of a careful diplomatic balancing act. Over the past year, Astana signed onto the Abraham Accords and joined the U.S.-led Board of Peace. It also called for closer collaboration between Kazakhstan and Iran and sent a delegation to the funeral of the late Iranian Supreme Leader Ayatollah Ali Khamenei. Kazakhstan has decades of experience in balancing partnerships — maintaining billions in Western investment, becoming a leading transshipment hub for Russia, and benefiting from China’s Belt and Road Initiative — and likely expects it can continue to do so.

Iranian Ports Are Logistical Launching Pads

Iran’s Bandar Abbas and Chabahar ports are critical hubs in the International North-South Corridor (INSTC), an emerging system of railroads, highways, and ports stretching from India through the Caspian Sea region to Russia. Indian sources estimate that the INSTC cuts transit times by roughly 40 percent and costs by 30 percent versus trade through the Suez Canal. For Central Asia, this route provides the shortest path to an ocean. For India, this route also offers access to Afghanistan and Central Asia without use of Pakistan’s Gwadar port. India signed an agreement to operate and equip its own terminal in Chabahar until May 2034.

The level of U.S. secondary sanctions risk for investing in the INSTC has fluctuated. In 2018, Washington granted an India-backed Chabahar port project a sanctions exemption to move non-sanctionable goods to Afghanistan. In September 2025, Washington revoked that exemption, only to issue a temporary reprieve in October conditioned on India’s agreement to wind down Chabahar-based operations.

On July 8, Washington launched a new wave of strikes against Iran that reportedly struck both Chabahar and Bandar Abbas. Kazakhstan may face elevated risk of secondary sanctions by operating through Bandar Abbas, in close proximity to a main container terminal run by Tidewater Middle East Co., which was designated by the U.S. Treasury Department in 2011 as owned by Iran’s Islamic Revolutionary Guard Corps (IRGC) and used for illicit shipments.

Investment in Iranian Ports Will Likely Fund the Regime

Investment in Iranian port infrastructure likely provides a direct revenue stream to the clerical regime in Tehran and the IRGC. The eastern rail spur of the INSTC, which links the Chabahar port northward toward Central Asia, is being built by Khatam al-Anbiya Construction Headquarters — an entity that both the U.S. Treasury and the UN Security Council designated in 2010 as controlled by the IRGC. This provides an opportunity for the regime to extract transit rents, which could help fuel terrorism and repression.

Iran projects that full INSTC corridor operation could bring in about $20 billion in transit profits annually. Though this amount is hyperbolic, equating to almost a third of 2025 India-Russia trade, Iran has much to gain from such a consistent revenue stream. In the case of Kazakhstan’s terminal, its Build-Operate-Transfer model indicates that ownership will transfer to Tehran in the future, providing a direct revenue stream.

U.S. Should Provide Alternatives to Investment in Iran

The United States must convey that negotiations with Tehran are not a green light for others to invest. At the same time, Washington should increase investment in a competing corridor connecting Central Asia to port infrastructure: the Middle Corridor.

The Middle Corridor runs from Central Asia, across the Caspian Sea, through the Caucasus, then through Turkey and Europe. The current 74 percent U.S. stake in the Azerbaijan-Armenia portion of this corridor — the Trump Route for International Peace and Prosperity (TRIPP) — gives America greater oversight of this route. Through Development Finance Corporation and Export-Import Bank funding, Washington can make the Middle Corridor a better, lower-risk alternative to the INSTC.

Angela Howard is a research analyst at the Center on Economic and Financial Power (CEFP) at the Foundation for Defense of Democracies (FDD), where Antonia Laura-Pup is an intern. For more analysis from the authors and FDD, please subscribe HERE. Follow FDD on X @FDD and @FDD_CEFP. Follow Angela on X @angela__howard. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.