A Bal­anc­ing Act

In­creas­ing ties be­tween In­dia and Iran may ring alarm bells for the in­ter­na­tional com­mu­nity.

Southasia - - Contents - By Semu Bhatt

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?

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