India can live without Iranian energy, but Iran will remain an important part of India’s foreign policy. As the US under President Donald Trump obfuscates and takes an extreme view of Iran sanctions, it promises to constrain India’s maneuvering space significantly if India is not careful.
A sizeable number of Indian refineries are configured to working on Iranian crude. But with the US openly calling for a “zero” import of Iranian oil by November 4, things begin to look difficult, Indrani Bagchi wrote for Times of India on Saturday.
A bigger issue will be connectivity. Energy dominated the discourse in the last round of sanctions, but this time the focus is multi-modal connectivity.
India needs Iran for keeping it connected to Central Asia and Russia. The joint statement issued after President Hassan Rouhani’s visit to India in February 2018 focused mainly on connectivity, with energy taking second place.
India wants to use the Chahbahar port not only as an access point for Afghanistan but also as a way to be linked to the International North-South Corridor (INSTC).
Countering China
According to bne IntelliNews, China has also expressed some interest in using Chabahar for some of its export flows but part of the rationale for India developing the port is to develop a rival to the Pakistani transit port of Gwadar, which China is developing to further its own trade ambitions for Pakistan, Afghanistan and Central Asia. Gwadar, on the shore of the Arabian Sea, is located just 90 km from Chabahar.
Chahbahar and INSTC are key to India’s geopolitical ambitions of providing an alternative to China’s OBOR with a very different collaborative philosophy, Bagchi writes.
Israel and Saudi Arabia would lead the cheering squad if India has to scale back ties with Iran, as would the UAE. All of them and the US blame Iran for the troubles in the Middle East. India’s views are much more cautious because in the sectarian war that has engulfed the Middle East there are no good guys, so far as India is concerned.
US Sanctions
The question is no longer whether India can survive US sanctions. It can. But with its economy becoming more integrated with the world, does India want to subject itself to secondary sanctions from the US, especially with a vast private sector that would take the rap? The EU revived an older law that promises its companies compensation if they come under US sanctions—despite this, energy biggies like Total and Shell have already pulled out from Iran.
The Indian government is working on ways to circumvent the coming sanctions while trying to preserve its ties with Iran. A lot of creativity has to come out of the South Block in the coming months.
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