India’s ties with Iran have been hogging the limelight once again. Even as New Delhi was playing host to the US Secretary of State, Hillary Clinton, a trade delegation from Iran was visiting India to boost bilateral trade ties. For a long time now, India has been trying to strike a delicate balance between its burgeoning ties with the US and its historical relationship with Iran.
The government is involved in a high-wire balancing act, but it cannot be seen as jettisoning Teheran as it fears that its opponents would use that to portray it as caving under to American pressure. The reality, however, is that Iran’s share in Indian oil imports is declining and Iraq has replaced Iran as the second-largest crude oil supplier to India after the government unofficially asked its top importers to cut shipments from Iran.
India’s foreign policy toward Iran is multifaceted and a function of a number of variables, including India’s energy requirements, its outreach to the Muslim world, its large Shia population, and its policy on Afghanistan. There has been a lot of hyperbole about India-Iran ties in recent years, which some Western analysts have described as an “axis,” a “strategic partnership,” or even an “alliance.” The Indian Left has also developed a parallel obsession. It has made Iran an issue emblematic of India’s “strategic autonomy” and used the bogey of toeing an American line on Iran to coerce New Delhi into following an ideologically anti-American foreign policy.
A close examination of the Indian-Iranian relationship, however, reveals an underdeveloped relationship despite all the spin attached to it. While India’s stakes are growing rapidly in the Gulf, India’s ties with Iran remain circumscribed by the internal power struggle and economic decay in that country, growing tensions between it and its Arab neighbours, and its continued defiance of the global nuclear order.
India would certainly like to increase its presence in the Iranian energy sector because of its rapidly rising energy needs, and it is rightfully feeling restless about its own marginalisation in Iran. Not only has Pakistan signed a pipeline deal with Teheran, but China also is starting to make its presence felt there. China is now Iran’s largest trading partner and is undertaking massive investments in the country, rapidly occupying the space vacated by Western firms. While Beijing’s economic engagement with Iran is growing, India’s presence is shrinking, as firms such as Reliance Industries have withdrawn from Iran — partially under Western pressure — and others have shelved their plans to make investments. Indian oil companies are finding it hard to get vessels to lift Iranian cargo because of Western sanctions. Most recently, Shipping Corporation of India, India’s largest domestic tanker-owner, has refused to provide its tankers to the Indian Oil Corporation for lifting Iranian oil.
The Indian government has asked its refiners to cut their imports from Iran by 10-15 per cent even as Iran has tried to sell extra volumes to those refiners on long credit terms. India has also struggled to find ways to pay Iran after the United States made dollar transactions almost impossible under financial sanctions. New Delhi feels that it cannot replace Iran as an oil supplier overnight, and any drastic step by India to reduce its presence in Iran will only further entrench China’s role in the Iranian oil and gas sector.
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India would like to keep a diversified oil basket and is reluctant to rely solely on Saudi Arabia as its source for energy. Riyadh is the chief supplier of oil to India’s booming economy, and India is now the fourth-largest recipient of Saudi oil after China, the United States, and Japan. India’s crude oil imports from the Saudi kingdom will likely double in the next 20 years, and Riyadh has repeatedly emphasised its commitment to uninterrupted supplies to a friendly country such as India, regardless of global price trends. However, Riyadh’s traditionally close ties with Pakistan and its support for radical Islamist forces continue to stifle New Delhi-Riyadh relations and remain a major reason why India is not very comfortable with relying solely on Saudi Arabia.
As India’s crude oil imports from Iran decline and state-run buyers shun Iran, New Delhi hopes that the gradual steps it is taking to reduce its reliance on Iran will ameliorate some of the concerns in Washington about India’s reliability as a partner in managing the issue of Iranian nuclear programme.
The nuclear issue is very complex for Indo-Iranian relations. New Delhi and Teheran have long held significantly different perceptions of the global nuclear order. Iran was not supportive of the Indian nuclear tests in 1998, and it backed the UN Security Council Resolution asking India and Pakistan to cap their nuclear capabilities by signing the Nuclear Non-Proliferation Treaty (NPT) and the Comprehensive Nuclear Test Ban Treaty (CTBT). Iran repeatedly has called for universal acceptance of the NPT, much to India's chagrin. Although Iran has claimed this was directed at Israel, the implications of such a move are far-reaching for India. After the conclusion of the US-India civilian nuclear deal, Iran had warned that the pact endangered the NPT and would trigger new “crises” for the international community.
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, such as those imposed by the United States.
It is not often appreciated how important the Af-Pak issue is to India's future security, its strategic planning, and its relationship with Iran. The uncertainty surrounding the future of Afghanistan is forcing India to coordinate more closely with Iran as a contingency plan. If the United States does decide to leave Afghanistan with Pakistan retaining its pre-2001 leverage, New Delhi and Teheran will likely be drawn closer together to counteract Islamabad’s influence in Kabul, which has been largely detrimental to their interests in the past. The recent strategic partnership agreement that Washington has signed with Kabul has brought some respite to New Delhi and will perhaps go some way in further reducing India’s dependence on Iran.
India-Iran ties will continue to bedevil the India-US partnership for the foreseeable future. But given India’s declining stake in Iran, the choice should not that be that hard for New Delhi.
The writer teaches international relations at King’s College, London