India’s Iran Dilemma
As India’s relations with US are moving on the fast track and the two largest democracies which were in the opposite camps during the Cold War come together, Iran remains the major stumbling block on the smooth progress of Indo-US relations. One of the most challenging tasks for the Indian policy makers today, is to balance their continuing interaction with Iran and growing convergence with the US. As Iran inches its way towards acquiring nuclear weapons, there is constant pressure from visiting American diplomats on India to reduce its trade with Iran. On the other hand many in New Delhi claim that India and Iran share centuries old civilizational links. However, India has also had similar links with China, and Pakistan was once its part, sharing a common history, culture and language, but none of these linkages ever stopped China or Pakistan from going to war with India. Moreover Iran provided material assistence to Pakistan in its wars with India both in 1965 and 1971. So the real compulsions that prevent India from snapping its links with Iran must be different.
It is not that India supports Iran’s quest for nuclear weapons and has categorically asked Iran to fulfill its obligations under the Nuclear Non-proliferation Treaty (NPT). However, as the US is dependent on Pakistan for its access to Afghanistan and Central Asia, so is India on Iran for access to Afghanistan and Central Asia. The US cannot visualise accessing Afghanistan and Central Asia through Iran, similarly, India this juncture cannot access this region through either Pakistan or China. Iran’s geostrategic location, which links West Asia, Caucasus, Central Asia and South Asia with one another, also provides India the shortest access to the energy resources of the Caspian Basin and the Caucasus. In the past, the US strategic interests in Pakistan forced it to look the other way as AQ Khan and his network smuggled in nuclear technology using dubious means. It not only condoned proliferation to Pakistan, but also from Pakistan, going to the extent of sacrificing a US counter proliferation official, Richard Barlow, to cover up Pakistan’s misdemeanor. Similarly, India, despite realizing that Iran’s nuclear weapons pose a grave threat to regional security, is constrained by its national interests to ignore Iran’s violations of NPT.
As one of the fastest growing economies, with few indigenous energy resources, India is overwhelmingly dependent on imported hydrocarbons for the sustenance of its growth. Iran with 10 percent of known oil reserves and 15 percent of global natural gas is an important player in the global energy market and its proximity to Indian refineries further enhance its significance to India. Currently it accounts for 13 per cent of Indian crude imports and is the second largest source for Indian imports after Saudi Arabia. With the reduction of Chinese crude imports from Iran, India has emerged as the largest destination for Iranian oil. However despite large crude reserves, Iran lacks adequate refining capacity and imports a significant part of petroleum products that it consumes. Many Indian refineries are not only dependent on the import of Iranian crude, but also on the export of petroleum products to Iran. As the US has imposed sanctions on institutions dealing with Iran’s central bank, use of normal banking channels for Iranian trade has become impossible. Barter could have been an option, but as on date the balance of trade is heavily tilted in favour of Iran, which is still scouting for goods that it can import from India to balance it. Currently Iran is selling 45 per cent of its oil in Indian rupees, but India will still find it difficult to pay for the rest. India is trying to reduce its dependence on Iran and is sourcing its petroleum imports from Saudi Arabia instead, but this will entail a price to be paid, both economic as well as poliitical. It will make India overwhelmingly dependent on Saudi Arabia, which has been the primary supporter of Pakistan and an ardent proponent of radical Wahabi Islam.
Another significance of Iran lies in its capacity to stir up the entire Persian Gulf regionand interfere with the movement of cargo to and from the region, which is home to 54 per cent of global oil and 40 per cent of natural gas. It is also the source for a quarter of India’s imports and almost a fifth of India’s exports. Moreover India as the largest beneficiary of global remmittances cannot have instability in this region as most of the foreign exchange that comes to India as remmittance originates in this region.
In addition, there is no denying the deep influence of Iranian culture, language and religion on India. In recent times, Iran, the largest Shia state, has emerged as the undisputed leader of Shia Islam and over 25 million Shias in India seek theological guidance and strategic direction from it. Cities like Lucknow and Hyderabad have emerged as significant centres of Shia thought and people in these cities have strong emotional bonds with Iran. India’s tiny but economically powerful Zoroastrian community also views Iran as a destination for pilgrimage.
It is therefore quite clear that India is in the throes of a serious dilemma, it needs both the US and Iran for its growth and development. The best option for India would be to try and bridge the gap and bring the two seemingly intractable foes closer. It may not be as difficult after a clear declaration by Iranian supreme leader that nuclear weapons are immoral and not sanctioned in Islam.
Alok Bansal is New Delhi based security Analyst.