U.S. Wrong on India’s Iran Policy

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U.S. Wrong on India’s Iran Policy

India has been criticized for not doing enough to pressure Iran. But Delhi has sound economic and domestic reasons for what it’s doing.

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.”

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.  

In addition, if India stopped buying Iranian oil, there’s little reason to believe China would follow suit. Beijing is yet to pay a price for being, as Bruce Loudon pointed out in The Australian early this month, “the constant contrarian on the global scene.” Washington has demonstrated time and time again that it has no leverage worth the name vis-a-vis Beijing. Although China has recently been cutting back on its purchase of Iranian oil, it continues to be a major customer. Beijing would possibly increase the amount of Iranian crude it uses were Iran to further reduce prices after India announced its exit from the market. Thus, Tehran will only be slightly discomforted by the sanctions. India, meanwhile, would have surrendered much.

Oil isn’t India’s only economic interest in Iran. In the wake of an official Indian delegation’s visit to Tehran, the Associated Chambers of Commerce announced that two-way trade reached $13.7 billion in 2010-2011 and will likely increase to $30 billion by 2015. In response to China’s infrastructure projects in Central Asia  progressing at breakneck speed, India has fast-forwarded its plans for a “north-south corridor”linking the Iranian port of Chabahar on the North Arabian Sea with a railway line to Turkmenistan, Kazakhstan and Russia via Hajigak, a mineral-rich area in Afghanistan where an Indian consortium has secured mining concessions. In parallel, India is helping build a highway connecting Chabahar to Milak and Zaranj, which has a road link to Dilaram in Afghanistan, a 213 kilometer stretch constructed by the Indian Border Roads Organization. The Chabahar port has been enlarged with Indian assistance and is now capable of annually handling 6 million tons of cargo and will serve as the entrepôt for Indian business. This route has a strategic element too; namely, India uses it as a conduit to sustain ties with the Northern Alliance in Afghanistan and to firm up goodwill with the Afghan people generally and the Hamid Karzai regime in particular. In the past year, for instance, India has shipped over 100,000 metric tons of food grain to Kabul from Chabahar. More significantly, Chabahar allows India to outflank the Chinese presence in the Pakistani port of Gwadar, 72 kilometers to the east.

There’s an important domestic political rationale to India’s Iran policy, which the self-consciously “secular” Indian government is loath to admit. India’s Shi’a population is the second largest in the world after only Iran itself. In contrast to Sunni Islam in the subcontinent, which has evolved around local seminaries with distinct schools of thought, India’s Shi’a community maintains strong links with their Iranian counterparts.  This is especially true among the clergy who closely monitor theological developments and pronouncements emanating from the Iranian religious center in Qom. The Iranian government has carefully cultivated these cultural ties with the Indian Shi’a religious institutions, politicians, and intelligentsia, and translates them into political clout to deter any Indian government from prosecuting unfavorable policies towards it. This is democracy at work, something Washington can surely appreciate.

The Obama administration’s foreign policy pivot to the Asia-Pacific and India is meant to contain China, a goal that is served by India’s strong and growing relations with Iran. As India and the United States discovered in Burma, leaving a vacuum for China to fill is an act of high strategic folly. India is unwilling to repeat that mistake in Iran.

Israel and Iran will thrash out their problems in their own way and it makes no sense to hold the Indo-U.S. partnership hostage to that situation, even less, to Iran’s proliferation status. By creating friction over Indo-Iranian ties, America is in danger of achieving the smaller, regional, objective at the expense of the larger, overarching, strategic goal.    

Bharat Karnad is a Professor in National Security Studies at the Centre for Policy Research, New Delhi, and a former member of the Indian government’s National Security Advisory Board, National Security Council. His books include ‘India’s Nuclear Policy’ and the forthcoming ‘India’s Rise: Why India is Not a Great Power.’ He blogs at www.bharatkarnad.com.