The signing of the 2006 civilian nuclear deal was supposed to be emblematic of a burgeoning strategic relationship between India and the United States. After some forty or so years of frosty relations, the beginning of the 21st Century saw leaders in Washington and Delhi touting a grand strategic partnership. To realize this, the George W. Bush and Manmohan Singh administrations courted great political risk in taking on the entrenched mindsets opposed to the nuclear agreement.
In Washington, opposition from the non-proliferation community nearly sank the deal during negotiations. In Delhi, the signing of the deal was so controversial it almost brought down the Congress Party’s coalition government in the 2008 vote in parliament. An upside to the tortuous negotiations was supposedly the empathy and understanding Indian and U.S. diplomats developed for the political constraints the other side operates under.
The Indian policy establishment and strategic community were therefore taken aback when Nicholas Burns, former undersecretary of state and the chief American negotiator on the nuclear deal, slammed India for its Iran policy in The Diplomat. Having reaffirmed India’s “immense strategic importance to the United States” in the Boston Globe a mere 10 days prior, Burns now argued that Delhi’s unwillingness to support U.S.-led sanctions amounted to a failure “to meet its obvious potential to lead globally,” thereby equating, in a spurious sort of way, India’s leadership ambitions with toeing the American line. Despite recognizing some of India’s votes against Iran at the U.N., Ambassador Burns went further in accusing India of “actively impeding the construction of the strategic relationship it says it wants with the United States.”Enjoying this article? Click here to subscribe for full access. Just $5 a month.
In actuality, it’s Washington’s unbending attitude towards accommodating India’s vital interests in Iran that potentially threatens the Indo-U.S. bilateral relationship. Burns and others U.S. critics of India’s Iran policy are, in effect, forcing Indo-U.S. relations back into a version of the old, inappropriate, and eminently discardable, “If you are not with us, you are against us” policy mold. By framing the issue in dichotomous terms, critics in Washington ignore the economic and domestic context in which India’s Iran policy is made.
In downplaying Delhi’s economic interests in Iran, Burns dismisses the fact that India gets 12 percent of its oil from Iran as a “weak defense” of its policy, because Delhi has had many years to find new suppliers. This ignores the fact that many of India’s government-owned refineries are geared to processing Iranian crude. If India were to switch to other sources, this would require a substantial upfront investment to retrofit its refineries to process other types of crude. Already facing a budget shortfall that is equal to 5.6 percent of GDP, the Singh administration is in no mood to incur these costs.
Moreover, it’s not at all clear that India could procure enough oil from other sources to make up for its loss of Iranian crude. Many suggest Saudi Arabia as both willing and able to make up the gap. But Riyadh’s spare capacity has come under severe strain after a decade of global supply interruptions elsewhere, and the rapid increase in demand caused by rising powers like India and China. Meanwhile, Saudi oil production is already at historically unprecedented levels, and it was unable to supplement the loss of Libya’s rather insignificant oil exports last summer, forcing Western nations to tap into their strategic reserves. Furthermore, both the International Energy Agency and the U.S. Energy Information Administration see Riyadh’s spare capacity continuing to diminish throughout 2012.