A Balancing Act
Increasing ties between India and Iran may ring alarm bells for the international community.
With fresh economic sanctions in place by the U.S. in order to isolate and pressurise Iran to abandon its nuclear program, and with the Iran-israel proxy war finding its way to New Delhi with the bombing of an Israeli diplomat’s car on February 13 – India is facing its biggest diplomatic challenge of recent times. Refusing to downgrade its ties with Iran and refusing to play along with Israeli claims of an Iranian hand in the Delhi blast, India’s stubbornness on the Iran issue is not going down too well with certain sections of the international community.
Contrary to the general perception, India’s energy requirement does not play the pivotal role in its strategic relationship with Iran. India’s emergence as the top importer of Iranian crude oil in January made headlines but it was a temporary surge caused by an agreement to trade in Indian currency to circumvent sanctions and the arrival of delayed shipments from Iran. The fact is that India’s dependence on Iran’s crude oil is on a steady decline – thanks to western sanctions that have made market conditions difficult for imports – and is now at around 10% of its total imports. Yet the Iranian component constitutes a significant part of an Indian energy scheme as domestic refineries are calibrated for Iranian crude oil; and switching to some other source will entail costly upgrades of plants and machineries.
Currently, the Indo-iran trade is in favor of Tehran, with Indian exports amounting to $2.7 billion out of a total trade of $13.6 billion. India is Tehran’s top supplier of rice and refined oil (70% and 40% respectively of Iran’s total imports). With few countries willing to trade with Iran as sanctions have disrupted the international payment mechanism, Tehran is looking at India for supply of food grains, which incidentally is not banned by the U.S.
India has taken a defiant stance about its trade with Iran. The Indian Trade Secretary, Rahul Khullar has made it clear that India is in no mood to follow the US-EU suit and stop business with Iran. Many blame India for taking advantage of the vacuum created due to the sanctions. However, most analysts fail to note that Indian exports to Iran are a mere one per cent of India’s total exports and the figure has remained between 1-1.5% in the ten-year period of 2001-11. Even if it doubles, due to lack of competition, it will still be insignificant as compared to Indian exports to USA (10%) and EU (18.64%). India will not risk relations with its larger trade partners for such a small percentage of trade and
crude oil, especially when Saudi Arabia has offered to substitute for Iranian crude oil.
The West has underappreciated Iran’s importance in India’s strategic environment by reducing Indo-iran relations to hydrocarbon politics. Considering Pakistan’s refusal to grant transit rights to India, Iran is India’s only surface route to Afghanistan (India is the fifth largest aid donor to Kabul) and Central Asia (a critical component of India’s global power aspirations). Indian and Iranian policies more or less converge on AF-CAR, as both have a lot to lose in case of Taliban resurgence in post-us Afghanistan, and a lot to gain through pipeline and transport networks with the Central Asian Republics (CAR). If Pakistan gains more leverage in the Afghan end game, India will be drawn even closer to Iran in an attempt to counter Islamabad’s influence on Kabul.
Iran is also vital to India’s maritime policy given the mutual stake and interest in the security of the Persian Gulf. India is providing financial and engineering assistance to Iran for developing the strategic Chabahar Port for trade with Central Asia. The Iranian port is not very far from the Chinese developed Gwadar Port in Pakistan, which India looks at apprehensively as part of China’s “string of pearls” strategy to encircle India. Iran’s stability is also critical for the security of India’s greater neighborhood. Iranian turmoil could have a spill over effect on the entire region.
India has the second largest Shia population in the world, hundreds of whom held protest rallies when India voted against Iran at IAEA. Any Indian role in isolating Iran can cause a backlash back home. Moreover, unlike the West, India does not view Iran as an “axis of evil.”
Beijing is Iran’s largest trading partner and is boosting its economic ties even further. Islamabad has fasttracked the gas pipeline project, disallowed the U.S. consulate to open in Quetta and has promised to crackdown on Jundallah – all to revive ties with Tehran. In such a scenario, it will be suicidal for India to let its strategic space in Iran shrink vis-à-vis China and Pakistan.
India understands American and Israeli concerns of a nuclear Iran and does not deem nuclear proliferation good for regional security. India has thrice voted against the Iranian Nuclear Programme at the IAEA and is of the view that as a signatory of the Non Proliferation Treaty, Iran should undertake its obligations. However, India is pro-diplomacy and not pro-sanctions or use of force. Nonetheless, India abides by the UN sanctions on Iran, but abhors sanctions by individual nations.
India no longer perceives its strategic alliances as zero sum games. The U.S., Israel and Gulf Cooperation Council (GCC) countries are of utmost significance for India. In fact, New Delhi’s relations with the U.S., the Gulf states and Israel are much more substantive than its ties with Tehran. India is the second largest trading partner of GCC and receives 45% of total crude oil from there. Not to mention, six million Indians are employed in Gulf countries, generating substantial remittances. India has a growing defence relationship with Israel and is the largest buyer of Israeli arms with imports of over $5 billion.
India and the U.S. are strategic partners, with the former increasingly becoming vital to core U.S. foreign policy interests in the region. Indian finance minister and foreign secretary in their recent visits to the U.S. have clarified India’s stand on Iran with the U.S. government taking cognizance of India’s geostrategic exigencies. But the anti-india lobby in the U.S. is making strong objections that India is not a reliable partner.
The U.S., in order to pursue its security interests in Afpak, has constantly overlooked Indian concerns regarding Pakistan’s double game in the war on terror. So much so that the U.S. never fully pressurised Pakistan to ban Lashkar-e-taiba even after the ghastly 26/11 Mumbai terror attacks. Now, for the U.S. to expect India to give up its strategic interests in favor of U.S. concerns, is too much to ask. India also finds the U.S. policy to target Iran a case of differential treatment, as the U.S. had for years ignored the AQ Khan network that helped Iran’s nuclearization.
In any case, Indian trade with Iran or its vote against it at IAEA has very little bearing on an adamant Tehran’s commitment to its nuclear program. However, with India being one of the very few friends and trading partners Iran has, there is a slim chance that India may be able to help bring Tehran to the negotiations table.
India, so far, has done a fine job of pragmatic engagement with all sides. India’s position in the Global South and its economic dynamism makes it a wanted partner across the spectrum; thus, giving New Delhi confidence to not subordinate its interests and to simultaneously work on strengthening ties with all its strategic partners.
A blossoming friendship?