x Abu Dhabi, UAE Friday 21 July 2017

Pressure on India over Iran upsets an Asian arc of stability

The US is unwise to press India so forcefully to sever its trade ties with Iran.

In the winter of 2008, as then-US president George W Bush prevailed over opponents at home to amend a domestic law and sign an unprecedented nuclear deal with India, it seemed as if the world's strongest democracy as well as its largest one were entering a new dawn.

India had just voted against Iran - not once, but twice - at the International Atomic Energy Agency, along with most of the western world, in an effort to prevent Iran from going nuclear. The anti-Iran vote had caused serious heartburn across the political class in New Delhi, including within the ruling Congress party, a large section of which remained sceptical about American intentions in South Asia as well as in the Gulf.

To improve relations with the US, Prime Minister Manmohan Singh wagered the credibility of his government after he was faced with a party revolt. Mr Singh got his way, and the historical India-Iran relationship was sacrificed at the altar of India's dramatically improving relationship with the US.

Certainly, times have changed. Over the last month or so, India and the US have begun to publicly argue over India's determination to continue to import crude oil from Iran, despite the strengthened US sanctions enacted last year. Both sides are trying to contain the quarrel, but with presidential elections looming in the US and an increasingly unstable government in New Delhi, both countries are finding it easier to talk to their domestic audiences than deal pragmatically with the situation.

The Indian argument is a simple one. Iran is the country's second-largest supplier of crude (after Saudi Arabia), valued at $12 billion (Dh44 billion) annually, and several of India's refineries were built just to process Iranian oil.

Energy-hungry India has repeatedly told the Americans that it needs time to reduce its dependence on Iran, even as it ramps up supplies from Saudi Arabia and looks at alternatives from other energy-rich Gulf states. A series of Gulf diplomats are expected in New Delhi over the next few months.

Clearly, the US is hoping that the unfolding politics and its diplomatic pressure will force India to take sides. Top US diplomats are already painting India as an unreliable ally. But this could easily have the opposite effect in New Delhi. Annoyance over Washington's black-and-white understanding of India's energy needs, as well as the unfolding mess in Afghanistan (where Iran remains a key player and where India is a big donor), mean that New Delhi is tamping down the ardour with which it has pursued Washington in recent years.

It needn't be this way, of course. A key reason that Mr Bush gave the green light to the Indo-US nuclear deal in 2008 was to enhance India's stature in the region relative to China. With Beijing snapping at Washington's heels in its determination to become the world's foremost economic power, Mr Obama needs little encouragement to support India's democratic credentials. During his visit to India in 2010, he even made a case for India to become a permanent member, alongside Japan, of the UN Security Council.

Nothing has changed on these fronts. China remains a rising power and India seems to be the only country in the region that can play an effective balancing role.

India's slowing economic growth has not affected its ability to influence its neighbourhood, especially Afghanistan, with which it signed a security pact in October. When the Americans withdraw in 2014, and perhaps even before, Washington will be aware that a democratic India can best assume several responsibilities that are being eyed by both China and Iran.

Meanwhile, it was India that held the hand of the military regime in Myanmar these past several years, allowing it to save face and contemplate the transition to a quasi-democracy.

Why, then, upset a status quo-ist power like India? The US has to understand the role energy plays in national development. After all, Washington's strategy in the Gulf, including the 2003 invasion of Iraq, has largely been steered by its own energy-security policy.

US diplomats have warned that India might face sanctions at the end of June if it continues to trade with Iran. That eventuality seems unlikely, but Washington should do more than threaten New Delhi. Mr Obama must stand up to his domestic constituency, in particular the influential pro-Israel lobby, and explain that if the arc from South Asia to the Gulf via Central Asia is to stabilise, then often-unwieldy democracies must exercise their own policies.

The US should learn to ignore India's dalliance with Iran, although it is unlikely that it will. By doing so, it would not only show respect for diversity, but allow New Delhi to save face as it voluntarily cuts its dealings with Tehran.

In fact, the US could use India's large Muslim population to build bridges. Buying oil - and selling back food as well as drugs, which are exempt from US sanctions - could be one way of doing this.

 

Jyoti Malhotra is a political and foreign affairs analyst based in Delhi