India Dumps Iran, Squeezes Obama

The cloud cover of sophistry that has been characteristic of India’s Iran policy in recent years lifted on May 15 when the government admitted in Parliament that it had taken a policy decision to reduce oil imports from Iran. 

The frank admission came on a day when an emissary from Washington, Carlos Pascual, the special envoy on energy matters in the United States State Department, arrived with the proclaimed intention of weaning New Delhi away from Tehran’s fuel. 

The Barack Obama Administration will be delighted that the sustained diplomatic and political pressure on India is finally bearing fruit. Tehran, on the other hand, will view this as the unkindest cut of all the blows that New Delhi has inflicted on it over the past five years. Meanwhile, a protagonist lurking in the shade is all excited—Saudi Arabia. 

A mystery lingers. What did the Obama Administration promise the Manmohan Singh Government as quid pro quo? Manmohan most certainly sensitised US Secretary of State Hillary Clinton of India’s “wish list” during her recent hurried visit to hold consultations personally with him just ahead of the US-India Strategic Dialogue, co-chaired by her, which is scheduled to convene in Washington. 

Not as Routine as it May Seem 

Delhi has been under immense pressure from Washington to fall in line with the letter and spirit of the US’ sanctions on Iran over its nuclear programme and curtail the sourcing of crude oil from Iran. The Indian Government’s official stance so far has been—and continues to be—that it is only bound by the United Nations-backed sanctions. 

Beneath the veneer of a principled position, however, India has been quietly and steadily backtracking. The frank admission on May 15 came from Junior Minister for Petroleum R.P.N. Singh, who disclosed: “The total crude oil imported from Iran by Indian companies during 2010-11 and 2011-12 is 18.50 million tonnes and 17.44 million tonnes, respectively. The target fixed for import of crude oil from Iran for 2012-13 is about 15.5 million tonnes.” 

He made it look routine, but the cold statistics reveal that in the current fiscal year, India will be cutting its oil imports from Iran by 11 per cent. The Indian bureaucracy is never at a loss for words and Singh added: “To reduce its dependence on any particular region of the world, India has been consciously trying to diversify its sources of crude oil imports to strengthen the country’s energy security.” 

This is a considered policy decision backed by a detailed strategy paper—based on a political directive to harmonise the policy on India’s petroleum imports with Washington’s Iran sanctions. No doubt, it is a major political decision, considering that India currently imports 80 per cent of its crude oil from over 30 countries and relies on Iran for 12 per cent of these imports. 

Curiously, a huge “collateral” beneficiary is going to be the influential Indian corporate house, Reliance. Pascual brought a proposal offering that Shale Gas in liquefied form could be supplied from the US to replace Iranian oil. Reliance holds a monopoly on Shale Gas technology in India and has invested heavily in the US Shale Gas industry. 

The US proposal is based on a perfect matching of Obama’s political need to isolate Iran with India’s energy security and Reliance’s potentially massive business opportunity. The ingenuity of the American proposal is such that the Manmohan Government cannot easily ignore it. 

Meanwhile, a short-term beneficiary is also going to be Saudi Arabia, from where India hopes to make up the current shortfall in oil imports from Iran. 

Riyadh derives satisfaction that India’s traditional ties with Iran are in the doldrums and that India’s recent “gravitation” toward the Gulf Cooperation Council (GCC) pole in the geopolitics of the Persian Gulf gets reinforced. There are fallouts in India’s domestic politics, too, where Saudi Arabia and the other Muslim Gulf monarchies exert a larger-than-life influence by lavishly patronising the Sunni Muslim lobbies that have a nexus with various political parties. 

But Saudi influence in India today exceeds the Sunni Muslim constituency. The Saudis have successfully emulated the pattern of US and Israeli diplomacy in New Delhi by casting their net wide in the strategic community. Indian pundits have begun arguing for the GCC side of the story in the geopolitics of the Persian Gulf. There has been a steady stream of the “Gulf Arab” leaderships visiting New Delhi—the latest being the colorful emir of Qatar. India attended the first session of the “Friends of Syria” grouping in Tunis. 

Tehran will be unhappy that Manmohan has once again caved in to US pressure to roll back ties with Iran. Simply put, India has become adept at using the “Iran card” to leverage advantages out of the US. New Delhi has entrapped Tehran in a ring of pragmatic engagement, which falls far short of Indian promises or Iranian expectations, but Iran is left with the predicament to settle for the kind of relationship India chooses. 

Superb Timing 

India is shrewdly exploiting Iran’s current vulnerabilities. Thus, by taking advantage of the obstacles being put by the US on the Asian Clearing Union payment mechanism of India-Iran trade, New Delhi persuaded Tehran to accept a system of barter trade for up to 45 per cent of its oil exports, which would effectively work as an export promotion drive for Indian companies in the Iranian market. 

Iran accepted the deal grudgingly since it is keen to continue somehow or other with its longstanding relationship on oil with India through the present difficult corridor of time. The heart of the matter is: remove oil from the Iran-India relationship and it will atrophy to virtually nothing. Evidently, New Delhi has assessed that the relationship means more to Iran than to India at the moment. 
Iranian President Mahmud Ahmadinejad telephoned Manmohan on May 14 in an attempt to shore up the relationship. He stressed that Tehran sets no limits to the broadening of ties with India and that the traditional, historical relationship has been of a “brotherly” character and is assured of a “promising future”. Manmohan responded with a caveat that India attaches importance to ties with Iran and welcomes a broadening of relations with Iran “on the basis of national interests”. 
There is some evidence that Tehran is also settling for a low-key relationship. Tehran parried repeated Indian attempts to schedule a visit by the Secretary-General of Iran’s Supreme National Security Council, Saeed Jalili, to New Delhi. Tehran estimates that the consultations are best scheduled when New Delhi is genuinely open to strategic engagement with Iran. 

Having said that, the big question still remains: What is it that India hopes to extract from the Obama Administration in return for its momentous decision to comply with the US’ Iran sanctions? 

Indian diplomacy is hard at work. Starting from 2006, when India began voting against Iran in the International Atomic Energy Agency, Iran has become a factor in the US-India strategic partnership and New Delhi has been able to leverage it because Washington is extremely sensitive to Iran’s regional standing. 

Manmohan’s timing is superb. Although Obama needs to take a decision on giving a “waiver” to India under the Iran sanctions regime only in July, Manmohan took the decision now to cut India’s oil imports from Iran. 

Clearly, New Delhi has set its sights on the forthcoming US-India Strategic Dialogue in early June. After having discussed with Clinton during her recent visit the future directions of the US-India strategic partnership, New Delhi expects a tradeoff. 
Obama’s political prestige is at stake over the Iran nuclear issue, especially in a tricky presidential election year for him. Manmohan is handing over to him a major foreign policy “achievement” in making Tehran look somewhat more isolated in its region just when the talks over the Iran nuclear issue are moving into a crucial phase. 

If Indian diplomats are worth their salt, they are tiptoeing toward the US-India Strategic Dialogue with a killer instinct; they won’t settle for some two-penny worth gains.

(Courtesy: Asia Times)

Ambassador M.K. Bhadrakumar was a career diplomat in the Indian Foreign Service. His assignments included the Soviet Union, South Korea, Sri Lanka, Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait and Turkey.