External Affairs

As India Looks to Strengthen Ties, Iran Will Keep China, Pakistan in Play

If Indian diplomacy has to succeed, the skill needed to engage the new Iran will have to be greater and sensitivity to their concerns adequately factored in.

Union External Affairs Minister Sushma Swaraj with Iranian President Hassan Rouhani. Credit: PTI

Union External Affairs Minister Sushma Swaraj with Iranian President Hassan Rouhani. Credit: PTI

The visit of External Affairs Minister Sushma Swaraj to Iran restored interest in the India-Iran bilateral relations but a number of events cast their shadow over the visit.

Firstly, the meeting of the Organisation of Islamic Cooperation (OIC) at Istanbul manifested a pronounced Shia-Sunni divide. Despite Iranian President Hassan Rouhani urging that a divisive agenda be avoided, the final communiqué soundly condemns Iran for interference in the affairs of other Islamic nations as indeed its ally Hezbollah. The traditional berating of India on the Jammu and Kashmir issue was conspicuous despite Prime Minister Narendra Modi’s non-Haj pilgrimage to Saudi Arabia. The possibility of convergence thus emerged between India and Iran in countering OIC’s evangelism.

Secondly, the Doha meeting on April 17 of the OPEC Plus, consisting of the 13 members and five other oil producers, resulted in a stalemate as Iran and Russia skipped it. The Saudis insisted that unless all members accepted cuts they were unwilling to sacrifice their quota. Iran naturally rejects this argument as it feels the Gulf Cooperation Council (GCC) countries have been the beneficiaries of the oil price boom of the last decade when Iran was hobbled by sanctions and thus a loser.

A lower oil price helps India skate through a difficult global economic environment. In fact Iranian oil production, which had fallen from 3.7 million barrels per day in 2011 to 2.7 million barrels once sanctions kicked-in in 2012, may already be up by 500,000 barrels. This comes on top of slowing global economies and a surplus on the global market of one-and-a-half million barrels. Thus, oil prices plummeted after the Doha logjam.

Three, while Modi personally wooed two critical GCC nations, UAE and Saudi Arabia, he was sending a mere minister to revive a moribund relationship. Swaraj held delegation-level talks with her counterpart, called on the president and, equally importantly, met Ali Akbar Velayati, former foreign minister and current adviser to Supreme Leader Ali Khamenei.

According to press reports, India focused on investing in oil and gas, the Chabahar port, with its potential for providing India connectivity to Afghanistan and Central Asia, and explored benefiting from the potential of the Iranian economy, recently liberated from crushing UN and some US sanctions. India was waving around $20 billion of investment in various sectors. Apparently a tripartite agreement was reached between Iran, Afghanistan and India on developing two berths at Chabahar and giving India a ten-year lease, for which it offered a $150 million loan. India separately offered to supply rail-lines worth $400 million to create rail connectivity between Chabahar-Zahedan-Mashhad.

What went unmentioned was that a week earlier a Chinese delegation was in Chabahar to negotiate establishing an industrial city and, like India, some berths. If South Block imagined that Iran would provide India a counter to the Gwador-Xinjiang economic corridor, which starts a mere 72 kilometres to the east in Pakistan, then they misread Iran. Iran will keep China and Pakistan in play for economic and strategic reasons. Pakistan too realises that to keep China invested in the economic corridor, Iranian gas would be vital bait. Iran and Pakistan also have a shared interest in quelling Baluchi nationalism, which spills across the Iran-Pakistan border. That is why it is suspected that the retired Indian naval officer held by Pakistani on espionage charges has perhaps been picked up from within Iran. Moreover, the connectivity from Chahbahar to Afghanistan via Delaram, a southern route, will always run through Pashtun/Taleban dominant areas. Its viability is questionable in the short to medium term. The train connectivity to Mashhad makes sense as the northern route will always be more viable. But the fundamental issue remains the same, which the Vajpayee government encountered when I was ambassador in Tehran. What use are berths unless Iran gives on long term lease land in Chabahar for warehousing and manufacture?

Similarly, investments in oil and gas requires Iran to pass a new law, held up in Majlis, to be called the Iran Petroleum Contract, which would allow less fettered participation in extracting gas or oil. It must also be remembered that the US has only lifted sanctions partially, retaining many financial penalties, pleading they are linked to Iranian support to terror or human rights abuses. That is why Khamenei has been intermittently critical of US intentions. He has talked of Iran’s “resistance economy” and the need to steel plate it against external pressure, as well as keeping money away from US banks.

Geostrategically, it was a diplomatic misstep by Modi to bend backwards to first woo the UAE and then Saudi Arabia without a trip to Tehran in between. It is unlikely that great investment flows will commence overnight from the former, other than where their models are compatible with that of India. For instance, over the last decade the UPA government allowed the marrow to be sucked out of civil aviation in India by letting UAE airlines develop major aviation hubs in Abu Dhabi and Dubai, into which private Indian airlines have become feeders, without a challenge. Likewise, Iran will on the one hand play China and Pakistan against India selectively, and on the other seek from the West high technology for advanced manufacturing. The latter can make it a competitor for India in energy intensive industries, such as automobile components, steel and aluminium, as it has nursed self reliance due to sanctions.

Swaraj’s visit was a belated attempt to cover ground ceded over the last decade, when the US ensured that the Manmohan Singh government put its ties with Iran on hold. The themes she took up are old ones. However, the geopolitics has changed. In 2001 and 2003, when the Tehran and Delhi Declarations were signed, Iran was hemmed in the west by Saddam Hussein’s Iraq and in the east by the Taliban, an ally of Pakistan, UAE and Saudi Arabia. Today it has almost resumed, through Shia allies, the footprint of the great Achaemenid Empire (550-330 BC) – the first multi-faith empire of the world that stretched from India to the Mediterranean. The US has been forced to cut a nuclear deal, although by successfully capping the Iranian programme for a decade or so, realising that only Iran and their allies can counter the new menace of ISIS.

If Indian diplomacy has to succeed, the skill needed to engage this new Iran will have to be greater and sensitivity to their concerns adequately factored in when partaking the theatre of GCC sheikhs and the Indian diaspora.

K.C. Singh is a former Indian ambassador.

  • James Caan

    When will India realize that it has been check mated by Pakistan……The only opportunity India ever had to sort out Pakistan was when NATO forces were at their peak in Afghanistan. Now with NATO gone in nearly a defeat…China CPEC making Pakistan a player in Persian gulf India seems to have lost it all.All countries from U.S, China, Russia, Saudi Arabia & Iran want good relations with Pakistan because of its location on global trade map.It is in the economic interest of India now to solve issues with Pakistan and become part of CPEC.