India and Iran – narrowing the separation?

http://www.fprc.in/pdf/IRAN-Pragya.pdf

pp 274-278, "India and Iran - narrowing the separation?"

On 27 December 2010, India’s Central Bank had issued a directive, regarding the payment mechanism for trade with Iran. The Reserve Bank of India (RBI) announced that:

“In view of the difficulties being experienced by importers and exporters in payments to and receipts from Iran, the extant provisions have been reviewed and it has been decided that all eligible current account transactions including trade transactions with Iran should be settled in any permitted currency outside the Asian Clearing Union (ACU) mechanism until further notice.”

After about two and a half years’ negotiations and head-scratching, the two countries could finally evolve an acceptable solution. Iran has agreed to take payments for oil it sells to India entirely in rupees after US and western sanctions blocked all other payment routes.¹

India has been, since July 2011, paying in Euros to clear 55 per cent of its purchases of Iranian oil through Ankara- based Halkbank. The remaining 45 per cent was remitted in rupees in the accounts the Iranian oil companies opened in Kolkata-based UCO Bank.

At a time when the rupee is on a downslide vis-à-vis dollar, the rupee payment mechanism with Iran against crude oil imports has offered some path for its upliftment.

According to UCO Bank, crude oil import from Iran by state-owned Indian Oil Corporation under the rupee payment mechanism during the last 13 months has been worth $7 billion. Incidentally, UCO bank is the only Indian bank designated to receive the oil payments in rupee from oil importing companies.

Indubitably, this is soothing news for both Tehran and New Delhi. Furthermore, the move indicates that the Foreign policy establishment at South Block is pursuing an independent foreign policy paradigm – fundamentally based on the plank of national interest.

In fact, erasing all doubts, India’s relations with Iran received a straight drive from none other than India’s erudite Prime Minister Dr Manmohan Singh. On a state visit to Tehran in August 2012 to participate in the Non – Aligned Movement Summit, he bludgeoned all speculations:

“There are of course difficulties imposed by western sanctions, but subject to that I think, we will explore ways and means of developing our relations with Iran.”

Views and Narratives: Scholarly and Analytical

In this contentious and highly debated matter of India-Iran relations, it is noteworthy to delve into what analysts and scholars have commented.

In the innovative article “Why Iran Should Get the Bomb”² in the Foreign Affairs magazine, Kenneth N. Waltz writes:

“Israel has made it clear that it views a significant Iranian enrichment capacity alone as an unacceptable threat.”

Rather interestingly, he further comments:

“In fact, by reducing imbalances in military power, new nuclear states generally produce more regional and international stability, not less.”

“Israel’s regional nuclear monopoly”, comments Waltz, “has proved remarkably durable for the past four decades.”

Actually, Waltz is stressing on the age-old, yet time-tested concept of “Balance of Power”. It is worthwhile to remember Bismarck’s policy in pre-1880 Europe in this regard. By carefully engineering power blocks, he could ward off any major war. As per Waltz’s thesis, similar situation could be created in the Middle East today.

Noted Indian analyst Harsh V Pant and his co-author Julie M Super are categorical as they predict quite affirmatively:

“Indian interests will continue to shape New Delhi’s policies toward Iran. Increased pressure from the US may not be the deciding factor in India-Iran ties.”³

In fact, the authors seem to be positively skewed toward India’s foreign policy paradigm. They write:

“New Delhi’s continued emphasis on strategic autonomy undercuts efforts by Washington to influence Indo-Iranian relations.”

And the authors seem hopeful that “Washington may find value in considering New Delhi’s potential role as an interlocutor in reaching out to Tehran.”

Energy security, according to Pant and Super, is a major concern for India that has necessitated a delicate balance of relationships amid the competing interests of the US, Israel and Iran.

The authors are confident that talks of an Iran-Pakistan-India pipeline will also continue despite US criticism and a lack of progress in that direction. Probably, Pant and Super attempt to underscore the nuances of diplomacy that South Block clinically executes.

Through the paper “India and Iran relations: Sustaining the Momentum”, Meena Singh Roy laments⁴:

“Iran was India’s second largest supplier of oil but now it has slipped to 6^th position.”

Taking an obvious cue from Dr Singh’s visit, reports Singh Roy, External Affairs Minister (EAM) Salman Khurshid visited Iran in May 2013 and therein the decision to upgrade the Chabahar port project was ‘conveyed’.

Actually, India is interested in investing in the Chabahar container terminal project as well as the Chabahar-Faraj-Bam railway project. Bam is on the Afghanistan border and is connected to Zaranj-Delaram road in Afghanistan. The Delaram–Zaranj Highway, also known as Route 606, is a 135 miles long two-lane road connecting Zaranj in Nimruz Province, near the Iranian border, with Delaram in neighboring Farah Province.

It connects the Afghan–Iranian border with the Kandahar–Herat Highway in Delaram, which provides connectivity to other major Afghan cities. Route 606 reduces travel time between Delaram and Zaranj from the earlier 12-14 hours to just 2 hours. The highway was financed fully by development grants from India. It was designed and constructed by the Border Roads Organisation (BRO) of India.

During the visit of EAM, developments in Afghanistan and Syria were discussed at length. In a post-2014 Afghanistan, both India and Iran will have common stakes. A fanatic Taliban-dominated Afghanistan can be detrimental to both a Shia Iran and a Pakistan-wary India.

Insofar as Syria is concerned, India and Iran both support the Geneva Communique; which includes the 6-point Plan of Kofi Annan. However, Iran is much more deeply involved in a so-called neo-Cold War scenario in Syria since Hezbollah and Israel are at definite loggerheads. Whereas India’s stance in a civil war ridden Syria is more philosophical and ideational.

Naturally, it seems a collision between New Delhi and Tel Aviv is evident if the former goes on in its reconciliation with Tehran. However, it is germane to note what Ambassador Prakash Shah opines⁵ at FPRC Journal:

“It is well known in diplomacy that a country’s relations with another country are never at the expense of its other bilateral relations. Independent foreign policies pursued by each country should not blind either India or Iran to the benefits of closer bilateral relations.”

Interestingly, much like Pant and Super, Shah also finds credence in the hypothesis that “in fact, India can work for US-Iran rapprochement.”

On the other hand, and quite starkly, executive editor of Iranreview.org, Mahmoudreza Golshanpezhooh seems rather critical when he opines⁶:

“the Iranian public opinion was shocked by India’s positive vote for the anti-Iranian resolution at the Security Council. We presume that India is not with us anymore. However, no presumptions are permanent.”

Quoting a voice of an Indian intellectual; we find that Dr Asghar Ali Engineer disapprovingly asserts:

“It is so unfortunate that Iran had supported India on Kashmir issue and yet we supported American stand on nuke issue and alienated Iran. Since then, our relations cooled off.”⁷

Such an assertion may not hold much ground now after Dr Singh’s visit to Tehran in 2012 and India’s positive posture vis-à-vis Iran, without however, totally disbanding its position with respect to Iranian nukes. India is firm on its principles as well as on its autonomy in framing foreign policy in a multipolar world. Pragmatism coupled with national interest defines the contours of India’s foreign policy architecture.

Deductive Logic?

As a possible inference, it may be stated that India – Iran bilateral relations hinge on the following aspects:

First, US and Israel factor - that is, how both these countries view the development of Iranian nukes and Tehran’s stance towards IAEA norms. Though USA will be far more rational in its approach, Tel Aviv can be more demanding from its partners and allies. But the moot question is whether India is an ally of Israel in the Middle East? In a best possible mode, India is a strategic and defence partner with Israel. Keeping in mind what Ambassador Shah said, and in general what India pursues as a matter of policy, India’s relations with Israel and Iran may go ahead independently, one relation flourishing without hampering the growth of the other.

Second, Iran’s domestic pulls could turn out to be vital. It will depend on the theocracy and the incumbent regime as to how they react to Western sanctions. Though termed irrational by Western media, Iranian regime might not be that puerile to choose the path of self-destruction. Rather, they may skillfully tread the diplomacy of brinkmanship as was the case during the recent crisis curling around the geography of Strait of Hormuz.

Third, Iran’s stance towards nukes remains critical in how India and the rest of the globe perceive Iran and its motives. If Tehran pursues a clear and conscientious nuclear policy for peaceful civilian purposes, then it is not at all a matter of wild guesswork that India will not specifically be on the belligerent side to thwart such moves by Tehran through resolutions.

In sum, India’s dual pursuit of Energy Security and Strategic Co-operation will largely define its relations with not only Iran, but with major powers and blocks, viz, Russia, Gulf Co-operation Council, Central Asian Republics, USA and Israel. Iran would be no exception.

Notes :

 

1: “Iran agrees to take all oil payments from India in rupees”, The Economic Times, Jul 14 2013

2: “Why Iran Should Get the Bomb?”, Kenneth N. Waltz, Foreign Affairs, July/Aug 2012

3: “Balancing Rivals: India’s Tightrope between Iran and the United States”, Harsh V. Pant and Julie M. Super, Asia Policy 15, January 2013

4: “India and Iran Relations: Sustaining the Momentum”, Meena Singh Roy, IDSA Issue Brief, May 20, 2013

5: in FPRC Journal No. 6, 2011

6: ibid

7: ibid