India & Iran: Post Nuclear Deal

31 Jan, 2014    ·   4280

Ruhee Neog looks at how India could capitalise on the easing of tensions between Iran and the West

Ruhee Neog
Ruhee Neog

In speeches centred on India’s bilateral relations with Iran, India leaders have been known to untiringly emphasisethe convergence of interests, starting with civilisational links to current strategic implications. However, the history of these relations is rather chequered. One of the maxims in the conduct of foreign policy is that it cannot be constructed in isolation, and this is especially true for India-Iran relations - the US has always been the elephant in the room. However, with Iran’s cautious welcome into the international fold post Ahmedinejad’s replacement by Rouhani and the December 2013 interim nuclear deal signed in Geneva, can India now rest relatively easy? In what way will the tug of war that asks for compromises in return for favours, noticeably the cooling off of India’s ties with Iran, have a changed effect on India’s Iran policy?

Recalibrating Bilateral Ties
India has historically had some difficulty in negotiating a balance between closer ties with the US and ties with Iran. In the years preceding the India-US nuclear deal in 2006, the US re-doubled efforts to induce India’s isolationof Iran, leading to India’s votes against the Iranian nuclear programme at the IAEA. This of course in turn led to UN Security Council sanctions on Iran. There was also pressure on India to take the Peace Pipeline between Iran, Pakistan and India off the table, resulting in India walking away from the talks. It is not hard to deduce then how India’s behaviour in this period may have soured its relations with Iran.

However, post the 2008 recession and US’ diminishing sway in international politics, India has sought, yet again, to re-calibrate its foreign policy towards Iran. It has very clearly stated that unilateral sanctions against Iran’s nuclear programme would not find support from the Indian leadership, and Iran is well within its right under the NPT to pursue uranium enrichment for its civilian nuclear programme. Despite these overtures, Indian trade with Iran, significantly that of oil imports, suffered rather heavily because of sanctions and Iran’s subsequent isolation from global financial transactions  – payments for the imports became an issue – and this was sought to be resolved by the Rupee Payment Mechanism (For more on this, see Vijay Parshad, ‘India’s Iran Policy: Between US Primacy and Regionalism’, International Affairs, Working Paper Series 19, November 2013). Post the developments that have only recently unfolded, which signal both American and Iranian interests in re-establishing the kind of high-level contact that has been absent since the 1979 Islamic Revolution, India may have more breathing room to develop its regional strategy with Iran’s help.

Iran and P5+1 Nuclear Deal: Significance for India
The deal between Iran and the P5+1 could not have come at a better time for India, and several future developments relevant to India’s strategic calculations can be made to capitalise on the easing of tensions.Post the 2014 drawdown of international troops from Afghanistan, Iran’s strategic location for India will come into even more prominence. Iran’s Chabahar port which India has also invested in, once fully operational, will allow greater Indian access to Afghanistan and Central Asia without having to bypass Pakistan. It will also serve India’s strategic interest as its answer to Chinese investments in Gwadar Port in Pakistan, thought by many as a strategy to encircle India through the development of bases in the Indian Ocean. In the past, the US has opposed India’s involvement in Chabahar. China has also offered to invest heavily in Chabahar’s upgradation, leading an alarmed India to seek hastened negotiations with Iran and offset the Chinese bid. A foothold in Chabahar would allow China to consolidate its regional role, which would be at odds with Indian interests. In light of evolving international circumstances, India will undoubtedly be able to follow through on this more freely.

The Peace Pipeline is likely to re-gain traction given the more genial conditions for diplomacy. India’s oil imports from Iran, which had previously been reduced despite proclamations about maintaining the status quo to feed India’s energy needs, will also be revised. Previously, sanctions on insurance and Iran’s financial isolation had hampered India’s acquisition of Iranian oil.

The current international climate does India many favours in its dealings with Iran and vice versa. It is hoped that India will be able to navigate its diplomatic ties with both the US and Iran wisely, and capitalise on the easing of tensions between Iran and the West to further strengthen its role as a strong regional player.