As tensions rise between the West and Iran, the international community is looking anxiously to the emerging powers of the East — China and India — to provide some answers in restoring the delicate balance of power in West Asia. China’s response has been to steadfastly reject Western overtures to impose sanctions on Iran even as Beijing has signed a civilian nuclear energy cooperation pact with Saudi Arabia. This is standard Chinese diplomatic practice in the region, trying to be all things to all parties, even when the parties concerned stand on two starkly opposite sides of the nuclear divide — Saudi Arabia and Iran. India’s response so far has been low-key, but New Delhi too is readying itself.
Petroleum Minister S Jaipal Reddy has suggested that India should be prepared for all eventualities, and might have to replace a part of its Iranian oil supplies with other sources like Saudi Arabia. But India remains firm in opposing American and EU unilateral sanctions on Iran as concerns rise that the US might persuade Turkey to block the use of its banks as intermediaries by India to make payments to Iran for the crude worth $12 billion it imports annually. India is working with Iran to find the best way to ensure uninterrupted supply at a time when the US is ready to sanction firms that do business with Iran’s Central Bank, and has been reaching out to its Asian partners such as Japan and South Korea in order to isolate Iran. Twelve per cent of India’s oil is imported from Iran, its second largest supplier after Saudi Arabia. Finance Minister Pranab Mukherjee was categorical in suggesting that it was not “possible for India to take any decision to reduce the imports from Iran drastically.”
Iran clearly is feeling the impact of several rounds of economic sanctions, imposed by the West over three years. The Iranian economy is faltering; the rial has slipped to an all-time low against the dollar. And the Iranian government’s troubles have intensified, as the European Union too has imposed a new ban on the import of Iranian oil. The Gulf States have signalled that they would be willing to fill any gap in energy supplies for those states that decide to curtail purchases of Iranian crude.
India’s broader position on the Iranian nuclear question is relatively straightforward. Although India believes that Iran has the right to pursue civilian nuclear energy, it has insisted that Iran should clarify the doubts raised by the International Atomic Energy Agency regarding Iran’s compliance with the Non-Proliferation Treaty. India has long maintained that it does not see further nuclear proliferation as being in its interests. This position has as much to do with India’s desire to project itself as a responsible nuclear state as with the very real danger that further proliferation in its extended neighborhood could endanger its security. India has continued to affirm its commitment to enforce all sanctions against Iran as mandated since 2006 by the UN Security Council, when the first set of sanctions was imposed. However, much like Beijing and Moscow, New Delhi has argued that such sanctions should not hurt the Iranian populace and has expressed its disapproval of sanctions by individual countries that restrict investments by third countries in Iran’s energy sector.
India would like to increase its presence in the Iranian energy sector because of its rapidly rising energy needs, and is rightfully feeling restless about its own marginalisation in Iran. Not only has Pakistan signed a pipeline deal with Tehran, but China is also starting to make its presence felt. China is now Iran’s largest trading partner and is undertaking massive investments in the country, rapidly occupying the space vacated by Western firms. Where Beijing’s economic engagement with Iran is growing, India’s presence is shrinking, as firms such as Reliance Industries have, partially under Western pressure, withdrawn from Iran and others have shelved their plans to make investments.
There is a growing debate in China on China’s global responsibilities and how China could become a “responsible global stakeholder”. But, as the country’s strong negative reaction to EU sanctions demonstrates, China is not yet ready to side with the West on Iran. At the moment China’s priorities are energy security and secure oil supplies, especially as the economic climate in China is becoming tenuous. The West often forgets that China itself was one of the biggest proliferators, at least until its signing of the NPT.
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Moreover, western sanctions have, over the years, led to an entrenchment of Chinese companies in the Iranian oil and gas sector. They have signed a range of contracts, worth up to $40 billion, in the past few years, bringing much-needed foreign capital to Iran’s energy sector. China’s state-backed oil trading companies are likely to be the main beneficiaries of the Western embargo on Iranian oil exports.
China’s approach is to maintain a balance in its ties with Persian Iran and the Arab Gulf States. So earlier this month, while touring the region, while the Chinese premier was strong on rhetoric in opposing Iran’s pursuit of nuclear capability, he also defended China’s right to buy Iranian crude oil as normal trade activity. And to assuage Saudi concerns, China signed an accord with Saudi Arabia that laid the groundwork to jointly establish atomic energy facilities, and to combine efforts in spheres such as the generation of nuclear fuel — thereby giving China’s implicit support to Saudi Arabia’s own nuclear aspirations. As pressure mounts on India on the issue of Iran, New Delhi can think of emulating Beijing. China is a master of balance-of-power politics, and India should try to learn a thing or two.
The writer teaches at King’s College, London