India’s drift towards the US is happening at the cost of ties with Iran. The losses from this shift are evident.
The year 2019 ended with a significant event. An unprecedented joint naval drill conducted by Iran, China and Russia. The setting was crucial, so was the message from Iran. The four day long exercise was held in the Indian Ocean and the Gulf of Oman - the most crucial waters for international oil trade. An Iranian admiral told the state broadcaster that the result of this exercise will be “to show that Iran cannot be isolated.” While this was viewed as directed at the US, it held meaning for India too.
It is losing ground to China again. India has invested time and money in developing the very important Chabahar port in Iran. India views it as a gateway for trade in Central Asia and Afghanistan. But India has wavered and now succumbed to American pressure. China on the other hand has sided with Iran and is making swift moves to incorporate Iran’s transit infrastructure into its Belt and Road Initiative. Disappointed with Delhi’s decisions, Iran has hinted that Chabahar could be linked to Pakistan’s Gwadar port, which China is developing. The result isn’t hard to imagine. China’s economic domination of Central Asia, and India’s energy insecurity and shrinking options of connectivity.
The joint development of Chabahar was agreed upon in 2003. India’s position vis-a-vis Iran has been inconsistent since. India voted against Iran at the IAEA on multiple occasions. International sanctions on Iran put speed breakers on the port project. In 2018, the US under President Trump exited the Iran nuclear deal and imposed more sanctions. While Chabahar was exempted from the sanctions, business became unviable for Indian companies there. In 2019, India slashed the budget for the port by more than two-thirds — from Rs 150 crores to just Rs 45 crores, all the while saying that the government remains committed to the project. With China pushing more aggressively, India’s foreign minister visited Iran to reaffirm the government’s commitment and accelerate cooperation. But India isn’t putting its money where its mouth is.
Simultaneously, India stopped buying oil from Iran. For a country that maintains it only recognizes UN sanctions and not unilateral country-specific ones, this was a move that hurt India’s relationship with Iran further. India imports 84 per cent of its oil. Domestic production has fallen in recent years. India is the world’s third biggest oil consumer and Iran was India’s third-biggest supplier. Iran’s loss, not surprisingly, has been America’s gain. India’s oil imports from the US have shot up. Delhi has labeled this as “diversification of its energy sources.” But the decision puts a question mark on the government’s much talked about “strategic autonomy.”
The current escalation of the crisis between the US and Iran only means more bad news for India. Delhi’s response to Qassem Soleimani’s killing was mature and measured. Iran welcomed mediation from India to de-escalate the situation. This was an opportunity to take a stand, play a bigger role, try to broker peace and raise India’s stature as a global leader. Instead, India is pretending it did not notice the offer.
India’s acquiescence is a win-win for the US. It sells more oil to India. It uses India as a potential leverage against China. And it squeezes Iran further by depriving it of a major trading partner and oil buyer.
But what’s in it for India? Delhi’s relationship with Tehran is as much a factor of geography as of history. Cultural ties go back several millennia. We won’t dwell on that because this, we understand, is the phase of “pragmatic partnerships” sans romanticism. So here’s the business end of it. Even in terms of energy security and strategic connectivity, distancing Iran makes little sense for India. It has the world’s richest gas reserves and the fourth-largest oil reserves. It sits at a geostrategic vantage point, along the Strait of Hormuz. Two-thirds of the oil and half the LNG that India imports pass through this Strait.
India’s drift towards the US is happening at the cost of ties with Iran. The losses from this shift are evident — the alienation of an old and reliable economic and strategic partner like Iran and the cession of ground to China. The gains though, still remain the realm of possibility, guided by the idiosyncrasies and self-interest of a country led by Donald Trump.
(Views expressed above are the personal views of the author and do not reflect the views of ZMCL)