Iran And India: A Tangled Web Of Oil And Geopolitics


on April 21 2012 11:17 AM
Iranian President Ahmadinejad greets India&#039;s Minister for New and Renewable Energy Abdullah in Tehran
Iranian President Ahmadinejad greets India's Minister for New and Renewable Energy Abdullah in Tehran Reuters

India and Iran have had a long relationship stretching back to ancient times. Iranian (or Persian) influence has produced a deep imprint upon Indian art, poetry, architecture and literature. With periodic invasions, military adventures and constant cross-migrations between the two empires, the people of Iran and northern India share many cultural and ethnic characteristics.

In the 21st century, the relations between these two great nations must be framed along the lines of geo-politics and oil, rather than art and culture.

Although India was greatly worried by the 1979 revolution in Iran that toppled the Shah and established an Islamic state, New Delhi and Teheran have generally enjoyed good relations. That tie became stronger with India's insatiable appetite for energy in tandem with western sanctions that have pressured Iran to find customers for its crucial oil exports.

Indeed, India -which criticized the sanctions by the U.S., United Nations and European Union - recently became Iran's top oil buyer.

However, there are complications - among other things, India is likely concerned about Iran's nuclear ambitions, despite New Delhi's rejection of western sanctions. The last thing India wants is a nuclear-armed Muslim state in its neighborhood (Pakistan in quite enough).

International Business Times spoke to an expert on Mideast and South Asian affairs to discuss the tangled web of Iran-India relations.

Dilshod Achilov is a professor of political science at East Tennessee State University at Johnson City, Tenn.

IB TIMES: Due to western sanctions, Iran is desperate to sell its oil to the two big Asian customers, India and China --- and at a significant discount. Generally speaking, how have Iran and India gotten along since the 1979 Islamic Revolution?

ACHILOV: The bilateral relations between India and Iran go back for centuries. However, after the Iranian revolution, the dynamics of cooperation changed to a certain degree. Even thought the 1979 revolution and the Soviet invasion of Afghanistan complicated the relations between Tehran and New Delhi, strategic and regional cooperation between two states continued to exist, but in a more wary and cautious fashion.

The newly formed theocratic Iranian regime was not warmly received by India at first. In particular, India's main concern was a potential strong alliance that could emerge between Iran and Pakistan. However, given the strong anti-American sentiments in the post-1979 Iran, Pakistan's close relations with the U.S. was a complicating aspect (i.e., a major roadblock) for future Iran-Pakistani cooperation.

On the other hand, the new Iranian regime was concerned about India's regional aspirations with regards to Central Asia and India's growing cooperation with the U.S./West.

After the Cold War, nonetheless, the bilateral relations entered a new phase. With its booming economy, India realized that it needed Iran's rich energy resources. For Iran, India was a huge market and a potential regional partner (as Iran had become isolated or disconnected from the world after the Khomeini revolution). It is fair to say that trade and economic relations embedded in energy politics are key defining features of Iran-India relations.

IB TIMES: Obviously, India desperately needs oil from Iran - but has India made any comments on Iran's nascent nuclear program? Surely, New Delhi does not want another nuclear-armed Muslim country in its proximity?

ACHILOV: India realizes that it needs to walk the fine line between keeping Iran as a major oil supplier while maintaining its security interests in the region. India does not want a nuclear-capable Iran. Yet, siding with the Western sanctions would hurt discounted oil imports flowing from Iran.

Energy-hungry India needs Iranian crude. In addition, Iran is a sizable market for Indian goods and services. With this in mind, criticizing the Iranian nuclear program would sever the bilateral relations between Tehran and New Delhi.

Last month, the BRIC countries (Brazil, Russia, India and China) met in New Delhi and issued a joint declaration that recognized Iran's right to pursue nuclear technology for peaceful purposes. As a solution, BRIC suggested resolving the current Iranian nuclear stand-off through dialogue and diplomacy. Moreover, during the summit, Indian authorities made explicit comments that Iran remains a key energy source of energy for India.

IB TIMES: As more nations (EU, Japan, Taiwan, and South Korea) reduce their oil imports from Iran, India and China will likely become even bigger purchasers of Iranian oil. Can the west/EU put any kind of pressure on India to reduce its dependence on Tehran for energy?

ACHILOV: There are limited tools that the EU/US can utilize in order to pressure India and China to reduce their oil imports from Iran. For instance, the U.S. and France have active nuclear cooperation programs, which could be used to pressure Indian authorities. With its growing economy and booming demands for energy, India is planning to build multiple nuclear power plants with U.S. assistance. Next, the monetary and military assistance cards can be played to compensate (offset) the profit that India is enjoying from Iranian oil imports. Some other cheap oil sources, as a substitute for Iran, could be solicited as well by the West.

But I doubt that India will abolish its cooperation with Iran. Siding with the West can yield short-time payoffs/gains for India. However, India will arguably consider a long-term relationship with Iran more heavily rather than opting for short-term, temporary gains. Depending on the complexity of pressures and financial incentives offered by the West, India may choose to curb its imports, but it is less likely that India will halt its oil imports from Iran.

At the end of the day, India and Iran are there to stay as neighbors and find ways to co-exist in the future.

IB TIMES: Does Iran have to avoid becoming too close to India for fear of alienating Pakistan? Or is Pakistan (a Sunni Muslim land) not a high a priority for Shia Iran?

ACHILOV: Iran has to keep a delicate strategic balance between India and Pakistan. Iran views both states as critically important regional actors. But comparatively, India's importance is higher given that India has a high demand for Iranian crude and cash at hand that Iran desperately needs.

Pakistan is a much smaller and poorer state with relatively fewer benefits for Iran. Nonetheless, Iran is determined to have good relations with both of its neighbors.

It is also important to note that the bilateral relations between India and Pakistan have cooled off to a significant extent recently (after recent trade opening between the two rival states). The spirit of economic cooperation between two historically-arch-rival countries appears to show an upward/positive trend. This is potentially a plus for Iran as well, which can ease Iran's stance in maintaining this delicate balance with respect to India and Pakistan.

IB TIMES: India also has close relations with Israel - does this in any way complicate and potentially jeopardize India's ties with Iran?

ACHILOV: Not necessarily. Iran does not necessarily view India's cooperation with the West or Israel as a roadblock. This is a reality of international relations. Iran-India relations are nested in pragmatic (mainly economic) cooperation and it is not likely jeopardized by each country's other diplomatic ties.

But Israel may understandably choose to apply diplomatic pressure on India to curb its relations with Tehran. From this perspective, depending on how New Delhi would respond to such demands, if any, Israeli pressure can potentially influence Iranian-Indian relations, though it is less likely.

IB TIMES: Aside from their oil trade relationship, it would appear that India and Iran have absolutely nothing in common in terms of geo-political goals and strategies. In this event, if India were able to buy oil cheaply from another source would they then sever their ties with Iran?

ACHILOV: Even though economic cooperation (i.e. energy interests) stands at the core of Iran-India relations, there are other aspects to this bilateral collaboration. For instance, competition to influence the Central Asian states, including Afghanistan, has long been a leading issue for both states to consider. Even if India were to get cheap oil from other sources, I don't think India would sever its ties with Iran. Again, India will have to plan a long-term strategy with Iran.

Short-term, temporary, and non-guaranteed cheap oil supply from a distant vendor (e.g., Saudi Arabia) may not be worth jeopardizing the potentially long-term relations with an oil-rich neighbor -- Iran. In other words, India may find it wise to consider long-term returns from Iran-India relations as opposed to short-term, temporary gains.

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