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India-Iran Ties: More Challenges Than Opportunities

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The Pulse

India-Iran Ties: More Challenges Than Opportunities

The visit by Iran’s president to New Delhi has come at a tricky time in the bilateral relationship.

India-Iran Ties: More Challenges Than Opportunities
Credit: Narendra Modi

Iran’s President Hassan Rouhani has this week been repaying the trip Prime Minister Narendra Modi took to Tehran in 2016 with a visit to India. Rouhani’s arrival in New Delhi represented a continuation of India’s robust outreach to West Asia, and interestingly comes on the heels of the Modi government’s much-celebrated engagement with one of Iran’s biggest enemies in the region, Israel.

In fact, Rouhani’s trip comes at a time when Israel has marked the presence and advances of Tehran-backed Shiite militias on its borders with Syria and commenced a military campaign against them. Last week, Syrian SAM systems shot down an Israeli F-16 conducting a strike against these Shiite militias. Analysts have highlighted this front as one of the region’s most dangerous fault lines. Yet India’s relations with Iran have remained generally stable in recent years, notwithstanding hiccups during the period of peak sanctions against Tehran by the U.S. administration of Barack Obama and the current narrative created by President Donald Trump’s ad-hoc foreign policy.

The Iranian president’s visit comes at a precarious time in its domestic politics. The recent protests against a flailing economy that was promised rejuvenation as part of the nuclear deal with the P5+1 group of countries has drawn global attention. These protests also represented a stand against the Iranian government’s conservatism, as women took on laws requiring them to wear a veil. Rouhani, an elected moderate, has his own domestic battles to fight against the conservatives, while dealing with the economic downturn, saving the nuclear deal from the Trump administration, and facing a renewed risk of international isolation via sanctions, all the while having little control over his country’s involvement in the Syrian civil war. These challenges also put India’s relations with Tehran on the spot, with planned investments, specifically the Chabahar port, potentially immobilized if the Trump administration orchestrates extra sanctions and pulls out of the nuclear agreement, or worse. After all, recent reports in the Indian media have suggested that Washington asked for Toyota Motors in the U.S. to issue an apology merely for selling one car to the Iranian embassy in New Delhi.

India has been caught up in the U.S.-Iran nuclear imbroglio before. During the Obama administration, New Delhi struggled to purchase oil from Iran, with the latter dropping out of its position among the top three oil providers to eighth, as New Delhi’s payment system to Tehran via a bank in Turkey was shut down by Washington. A brief relief was organized for a few weeks during which India was able to transfer funds to Iran, but immense pressure from the U.S. forced India to ward off Iranian requests to allow bank branches to open in New Delhi to facilitate transactions. India has also followed the U.S. line at the UN, voting against Iran at the IAEA and cutting energy trade significantly in recent years. While things seemed to have taken a turn towards the better with Iran after the nuclear deal, reservations about the future course of the Trump administration could stall Indian plans.

During the P5+1 negotiations, many Western nations had camped out in Tehran to grab first mover advantage once sanctions eased and the market became accessible. India lacked this foresight (no Indian energy company was present in Tehran) and floundered over its investment in the Farzad B field, exclusively assigned to India by Iran. Committing money at various stages without delivering, in its financial squeeze, Iran threatened to remove the exclusivity of the field and open it up to international bidding.

India and Iran relations are transactional, notwithstanding the Chabahar deal and the narrative of the two regions having civilizational ties. In fact, the “civilizational” argument may be all that remains, absent corrective measures. While India has used its presence in Iran well to operate trade into Afghanistan, giving Kabul a much needed alternative to Pakistan and bolstering India’s position in that war-torn country, today there are more problems between Iran and India than just troubled agreements. For example, the issue of alleged Indian spy Kulbhushan Jadhav currently on death row in Pakistan being kidnapped from Iran is not just an India-Pakistan matter. Beyond this, revelations of Iranian access to Al Qaeda and giving home to Osama Bin Laden’s family after he was killed in the Abbottabad raid in Pakistan raises some uncomfortable questions for Iran in the global narrative on terrorism. For India, it is imperative that it does not constantly approach Iran in the context of its own issues with Pakistan. While the Afghanistan angle has worked for India, Iran is a geographical neighbor of Pakistan, and will have a completely different approach to its relations with Islamabad.

Diplomacy with Iran itself is an art of its own. Much of Tehran’s approach to international diplomacy is based on survivability. Sanctions, economic blockades, covert wars, and a race for regional supremacy more often makes Iran a difficult partner, civilizational ties or not. The challenges for India and Iran are not just economic, but political as well. In June last year, Iran’s Supreme Leader Ayatollah Khamenei brought up the issue of Kashmir for the first time in seven years in an address on the occasion of Eid-ul-Fitr, including Kashmiris along with Muslims in Yemen and Bahrain as among those being oppressed by tyranny. The reasons behind the timing of this event could be many, from India’s growing closeness with both Israel and Saudi Arabia to the Ayatollah offering a narrative for a domestic audience.

Still, it is in India’s interest to support Rouhani’s governance in Iran. His moderate credentials and democratic approach to the limits of what is possible within Iranian political systems is important to both regional and global stability. The P5+1 nuclear agreement would have not been fathomable under the government of conservatives such as former President Mahmoud Ahmadinejad, whose confrontational approach on the slightest of disagreements often saw New Delhi avoid Iran on many issues of bilateral interest, particularly after a few uncalled for incidents over pending topics such as Farzad B, including the unannounced arrival of teams from Tehran to deliver ultimatums.

Rouhani’s New Delhi visit, despite all the baggage, is a good opportunity for both countries to iron out their differences, make significant strides on long-pending economic topics, and discuss the regional dynamics of a destabilized West Asia. This visit should focus on deliverables, an aspect of India-Iran ties that has lost momentum amid much small talk masquerading as deepening relations between the two states.

Kabir Taneja is an Associate Fellow at the Observer Research Foundation, New Delhi.