Anchor: Frank Rausan Pereira
Speakers: Ashok Sajjanhar, Former Diplomat: A.K. Pasha, Professor, Center for West Asian Studies, JNU: Rezaul Hasan Laskar, Associate Editor, Hindustan Times
Importance of this Episode:
- India has said that it will take necessary measures to offset any adverse impact on its interest due to the US President Donald Trump’s decision to dump the Iran nuclear deal. The external affairs ministry said that it is closely monitoring the situation after Trump’s announcement to pull the US out of the Iran deal.
- There have been several anxieties raised in the aftermath of this, most notably that this may affect India’s oil import from the Persian Gulf nation of Iran as well as the Chabahar port project. Iran is the third largest supplier of crude oil to India after Saudi Arabia and Iraq. The countries that have financial dealings with Iran are expected to be hit by the comprehensive sanctions regime announced by the Trump administration, post the withdrawal from the nuclear deal.
- On this edition of India’s World, we will discuss the implications of the US pulling out of the Iran nuclear deal for India.
Analysis by the Experts:
What are the implications for India as far as Donald Trump pulling out of the Nuclear Deal?
India has gone through the previous era where sanctions were imposed on Iran by the United States- importantly, the EU and the United Nations also joined this entire sanctions regime which affected quite a few things:
- The import of Oil: Iranian crude has been of great importance to us for decades. This was affected greatly during sanctions. The payments related to the import of crude was also a major issue. India tried many mechanisms- i.e. through Turkey, through Germany, through Indian banks. However, our own banks got stuck for various reasons.
- The pipeline to bring gas: The Iran, Pakistan, India pipeline also became a victim in one way or the other because the investments towards this pipeline got affected due to the US Congress’ legislation. Thus, although India started quite early- somewhere in the mid-90’s to look towards Chabahar as a potential port that would link our interests in Afghanistan, Central Asia, and beyond, but unfortunately, this also suffered for various reasons.
- Trade: India has substantial trade with Iran for a long time. This is true for the period even before 1979. But, for various reasons, trade suffered, investment suffered, and a whole gamut of issues were affected. The interesting thing was that we somehow managed to retain the links in all these areas- we did not abandon Chabahar, we did not abandon the idea of Iranian oil, and we kept the pipeline also in some way, linked to Iran.
- Thus, politically, economically, and commercially as well, India retained a semblance of normalcy. But the American and UN sanctions did affect a lot of India’s work in the neighbourhood.
Is it a tightrope walk for India going forward?
The situation that India finds herself in is a very happy situation in a manner of speaking, that we have excellent relations with the United States, and Mr. Trump may have come into the presidency with the avowed determination to do away with all the initiatives that his predecessor, President Obama had taken.
We see this across the Trans-Pacific-Partnership (TPP) agreement, we see this in the Paris Climate Accord, and now we are seeing this as far as the Iranian nuclear deal is concerned. Even on the domestic front as well of the US, we see this as far as Obama-care is concerned. But, Donald Trump is further strengthening the India-US bilateral relationship. There were a lot of doubts initially as he did not occupy a government position earlier, thus there was a lot of uncertainty. But, there have been developments which have put much of this uncertainty to rest- for example: PM Modi’s visit last year in June to the USA and then the pronouncement of the “South-Asian Strategy” by the Trump administration in terms of mentioning that India should get more actively involved in Afghanistan and put greater pressure on Pakistan. Thus, the relations between India and the US are strong and are vibrant. Also, our relations with Saudi Arabia are at this moment the best that we have ever had with Saudi Arabia; further with Israel we see the first ever visit of the Prime Minister of India to Israel after the establishment of diplomatic relations 25 years ago. Further, the Israeli PM also come to India for a 6-day visit, which was a successful trip.
PM Modi had visited Iran in the month of May 2016 and a trilateral agreement was signed on the Chabahar port. It is indeed a matter of satisfaction that although the agreement was signed in May 2016, the inauguration of the port was done on December 3, 2017. Thus, we had managed within the span of around 18 months to expand the capacity of the first phase of the ‘Shahid Bahesti’ sea-port from about 2.5 million tonnes to about 8.5 million tonnes. Thus, we are in a situation where we enjoy the best relations ever with all these countries which are major players. But, now, it will indeed be a tightrope walk because obviously we do not want to do anything to offend Mr. Donald Trump.
India would need to protect her interests as far as energy security is concerned as Iran used to be at one time the top oil exporter to India, but today she is at the third spot; although it is about 200,000 barrels per day that we are importing. Further, we had decided that during the current year and going forward, we would double this capacity and make it 400,000 barrels per day.
Further, the international price of oil, in the short term, has risen. Thus, what is the impact that this spike in oil prices would have as far as inflation is concerned within our country? As far as Chabahar is concerned, it is even in the interest of the USA to reach out to Afghanistan and to have greater development there. Even former United States Secretary of State, Rex Tillerson had mentioned that the USA has an understanding of what India’s needs and concerns are.
What are our interests as far as Iran is concerned and how can India safeguard them?
We need to look at what the French government is saying. The French are saying that they do not want to be seen as vassals of the US, and that French companies should be allowed to do business with Iran. In fact, Airbus has a huge lucrative contract lined up with Iran. But, it is not just about business- it is much more than that. Chabahar, the transit corridor that we are planning, was the first real attempt to bypass Pakistan and get into Afghanistan. We were able to move wheat via Chabahar. We have an opening to run Chabahar for about 18 months; but unfortunately, it is going to be extremely difficult for us to access international financing for the same as the sanctions could be imposed again on Iran.
Thus, while India’s foreign policymakers have made it very clear to the US, that the India-US bilateral relationship is very important, but India would have to do certain things which are important for our own security- just as much as Mr. Trump is keen on ensuring homeland security is not compromised in the USA. India also has concerns which are totally India centric and have nothing to do with the US. Thus, maintaining good relations with a country like Iran is very important to India and this needs to be made clear whenever India and the USA sit down and discuss issues together. India needs to send out a message that in our ability to clamp down on terrorism and terror financing, our concerns need to be addressed first. Also, on the other hand, we need to ask ourselves, is Iran a totally benign player? There are certainly doubts over that. There are concerns over that- for example: its alleged meddling in Syria. But, that is something that perhaps India can work with the world community to deal with.
West Asia is very important to India and that is something which has time and again been mentioned by the Prime Minister as something that is important- as seen by his visits to West Asia. Thus, how important is Iran from this perspective to keep the West Asia push going?
India’s core interest is energy as a bulk of her energy needs, around 85% of it comes from this region. Secondly, around 8 million plus workers are gainfully employed there. Their remittances, safety, security and welfare is very important. The third aspect is that of investments which have been promised by key Gulf countries. The silver lining is our good relations with the Gulf countries, particularly, UAE, Saudi Arabia and more importantly, with that of Israel. It is because these three are virtually in an unwritten alliance, as what Saudi Arabia does is converging with what Israel aspires to do, and also something that the UAE wishes to do- which is to isolate Iran. The policy of isolating Iran is not only due to the nuclear deal but also due to the alleged intrusions of Iran into the Arab arena and the Arab sphere of influence. India has a fairly good relationship with all these key players- UAE, Saudi Arabia, America, Israel, and the USA.
Can we see a role opening up for India on the lines of a negotiator in the near future? For example, when it comes to matters concerning Israel and Palestine?
The role of a negotiator can be a tall order. The Americans have tried this for quite some time. But there’s no harm in trying. The immediate requirement, however, would be to ensure India’s interests in Iran are secure- for example that of oil, Chabahar, Afghanistan, trade and our linkages. This is because, all said and done, the relationship that might emerge between Pakistan and Iran is also something which we need to keep in perspective. This is because Pakistan is a player in the region through the Taliban in Afghanistan. Thus, we should not do anything to identify completely with the Sunni block on one side of the gulf which would bring these two neighbours (Pakistan and Iran) together as such a development can impact our own strategic interests.
Further, because Iran is a major energy producer, in the long run, we need to have good ties with Iran.
Trump has pulled out of the deal, but there are other nations who say that they have worked extremely hard to come to an understanding and go through this particular deal. For example, Angela Merkel is meeting Vladimir Putin next week. Would this deal stand? What would be the likely output when the other players come into the picture?
We cannot call the deal completely dead with the US walking out on the same. But, it is definitely in a state of life support. Further, this life support is not going to last for too long. It is believed that what may be a happy augury at this moment is that Iran also over the last few days, ever since the US made its announcement of withdrawal, has behaved in a very responsible manner. In the sense that they have not jumped the gun immediately to say that we will now start our enrichment processes right now. We can also try and understand this from the internal dynamics in Iran as well- this is because, Mr. Rouhani who won a landslide majority in the elections last year, had won it basically due to the JCPOA. The electorate voted for him largely due to the perception that the living conditions and the economic conditions in Iran would definitely improve. But, unfortunately, this has not improved. This is why end December 2017 and beginning of January 2018, we saw a lot of protests in Iran by the conservatives, the right-wingers, the hardliners, etc. Thus, those groups are now feeling emboldened and Mr. Rouhani is now in a much weaker condition today as he was earlier, and would try everything he can to salvage the deal.
This is something that he is trying to do now- he is sending his foreign minister to various countries to have discussions and negotiations with them. But, we also see what Ayatollah Khomeini, the supreme leader has said. He was not in favour of this deal and maintained that the USA is not to be trusted. He also went on to say recently that the three European countries are not to be trusted. Thus, in a manner of speaking, the dice is now loaded against Mr. Rouhani. There is a big difference between what the governments decide to do and what the companies decide to do- this is because the USA is a large economy and a large market. In essence, the companies would rather go with the USA than Iran.
It is also important to note that in the past, India was able to negotiate with the United States and get some sort of a carve-out for ourselves both in terms of the import of oil from Iran is concerned as well as the access to Afghanistan is concerned. It is strongly believed that even at this time, India will attempt at doing that. But, this time, it would be much more difficult than it was earlier, as the person we have in the White House today is unpredictable and he has set his eyes on a regime change in Iran. He would not like anything to come in the way as far as his strategy on Iran is concerned.
As far as the deal itself is concerned, should we believe that Indian refineries are uniquely suited to deal with the crude oil coming out of Iran?
Unfortunately, the US has gone ahead with this step, and it hasn’t really given us an alternative. The whole problem lies with the uncertainty that we see. There is talk about regime change, there is talk about more sanctions being imposed. When we look at the larger picture, we realize that it is always better to have a stable Iran. This is because it serves one’s strategic interests in Afghanistan, it serves one’s strategic interests vis-à-vis Pakistan. Perhaps a good example to quote here is that of Iraq; a stable Iraq has led to a stable West Asia.
The Way Ahead:
The unpredictability is a mind-boggling issue as the regime change is the main agenda, and the recent step by the USA appears to be just the first step. Like the Israeli leader Netanyahu has pointed out that until a new regime is in power in Iran, all the problems in Syria, in Bahrain, in Lebanon, in Yemen, and even on their border in Gaza would continue. The mindset of a possible regime change that the US has adopted can have serious consequences.
India needs to be prepared for the worst possible scenario. Trump seems to be under the mistaken impression that Kim Jong-un has been brought to the negotiating table. Trump believes that since Kim Jong-un has been brought to the negotiating table, he will be able to bring a regime change in Iran also. India should definitely keep an independent policy and ensure that her interests are kept as paramount; her needs such as that of energy security, the security situation in the region, and how the relationship between the western powers and Iran develops, is important for India.
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