I recently did a phone interview with Stephanie Nolen, the South Asia Bureau Chief of Canada’s Globe and Mail newspaper. We talked about the US-India-Iran dynamic and how it fits into some of New Delhi’s broader strategic concerns in the Gulf, US, Central Asia, and domestically.
Some quotes from the interview were included in the article below, entitled “U.S. pressures India to alienate strategic partner Iran.”
U.S. pressures India to alienate strategic partner Iran
NEW DELHI— From Wednesday’s Globe and Mail
Published Tuesday, May. 15, 2012 8:46PM EDT
Last updated Tuesday, May. 15, 2012 8:52PM EDT
When Hillary Clinton visited the Indian capital last week, the prickly subject of Iran was top of her agenda for talks with Prime Minister Manmohan Singh.
But even as the American Secretary of State was bluntly asking India to get onside with Western sanctions against Iran and its nuclear program, another set of meetings with Indian officials was in progress just down the road. That one was full of Iranian government delegates and business people, here to sign new trade deals.
India is walking a precarious line these days, attempting to placate the U.S., with whom it has a rapidly growing trade and strategic relationship, while retaining close relations with Iran – a regional friend that’s a source of badly-needed fuel, and more.
Ms. Clinton’s main focus was India’s purchase of Iranian oil. India is currently the number-two buyer of Iranian crude, which makes up 12 per cent of the energy need of this fuel-hungry nation. When the U.S. and European Union sanctions aimed at ending Iran’s nuclear program started to squeeze the international banking system, making it hard for India to pay for Iranian oil, the two countries worked out a scheme that lets India pay nearly half its bill in rupees – which Iran then spends on Indian food and pharmaceutical imports.
“It’s a double win for New Delhi,” said Neil Padukone, a fellow with the Takshashila Institution, a think tank focused on Indian strategic issues.
Nevertheless India’s Deputy Oil Minister R. P. N. Singh told parliament on Tuesday that fuel imports from Iran will be reduced, to a total of 114 million barrels in the financial year ending next March, down from 128 million the previous year, saying bluntly that the country has to maintain its strategic relationship with the U.S.
It’s not clear that will be enough for the Americans, who sent another envoy here Tuesday to talk energy and Iran with senior officials. India wants a waiver to exempt it from sanctions; the U.S. has said it hasn’t cut back enough.
Anxious to feed an economy growing at about 6.5 per cent this year, and reliant on imports for 80 per cent of its energy needs, India insists it can’t afford to cut back much more than it already has. Its oil imports from Iran date back to the era of the Shah, and many major Indian refineries are outfitted specifically to process Iranian sweet, light crude; it is no small task to retrofit them.
That said, as the financial channels for trade are choked off, oil purchases from Iran will fall even further, predicted Gopalaswami Parthasarathy, a veteran diplomat and analyst of Indian foreign policy.
India’s main oil supplier is Saudi Arabia, and the Saudis have offered to bump up sales to India to cover a drop in supply from Iran – the Saudis would also like to see India cut Iran off further, as part of the Sunni-Shiite struggle for dominance underway in the Middle East, noted Anwar Alam, director of the Centre for West Asian Studies at Jamia Milia Islamia University in Delhi.
“India has a vital stake in the Persian Gulf,” he said. “It has six million workers there which constitute the largest remittances sent to India, and $120-billion in trade with [Gulf Cooperation Council] countries.”
Yet while oil is the most obvious tie between India and Iran at present, India has a number of other key strategic motives for maintaining this relationship.
The first is Afghanistan. India has a large and growing presence there: its public face an aid program (India is the largest individual donor to the Afghans), its private face a humming intelligence network aimed at checking the Pakistani influence and thwarting the export of Islamist fundamentalism.
When Pakistan denied India a land route to Afghanistan, India turned to Iran, and put money into the Chahbahar seaport in southeastern Iran and built a 900-kilometre road that leads from the Iranian port all the way to Kabul. This trade route to Afghanistan is now a serious rival to Karachi’s port. This, and a new railroad the Indians are building, will facilitate transport from the major iron ore mine for which India has contracted in Afghanistan: this economy also has a ravenous appetite for resources.
And India hopes to reach more than just Afghanistan through that port.
“More important than oil or gas is the whole question of Central Asia – that’s where Iran is important for India,” said Prof. Alam. “India wants to be export-led and would like to capture the Central Asian market – Turkey, Russia, China and Iran are all there already.”
Delhi is drawing on a lesson here that it learned from another case where its energy needs and foreign policy intermingled – in Burma. Initially, democratic India froze out the junta that took power in what became Myanmar. But then it saw China – which is today India’s most serious strategic rival – move in and secure access to gas fields and hydroelectric power at preferential rates, while India was shut out. Already, Chinese state-backed firms have secured more than $40-billion in contracts in Iran’s oil and gas industries, making up some of the capital gap caused by the sanctions.
“That was one case where India realized it’s not just a matter of disengaging and getting the results it wants,” said Mr. Padukone, of the Takshashila Institution. “India’s view is, ‘if we drop this country, China will pick up the pieces on preferential terms.’”
And finally there are domestic considerations: There is a sizable Shiite community in India’s 120 million Muslim minority, who look to Qom, Iran, as their spiritual centre. The government cannot afford to alienate them.
At the same time, India’s far-left parties, critical to the ruling coalition, make a show of decrying the U.S. attempts to meddle in foreign policy.
India has repeatedly voted against Iran at the International Atomic Energy Agency, and encouraged it to abide by the provisions of the non-proliferation treaty it signed. But Delhi endured its own years of sanctions and isolation over the nuclear issue; it doesn’t like the policy, and it doesn’t believe it works.
“In principle we resent sanctions that other people try to impose on us. We abide by sanctions that are internationally sanctified by the United Nations Security Council,” said Mr. Parthasarathy. “And beyond that it’s not for us to lecture others on this issue.”