India in Catch-22 over Iran

It will be interesting to see India’s reaction when second round of sanctions kick in November

By Author Martand Jha   |   Published: 10th Aug 2018   12:17 am Updated: 9th Aug 2018   10:53 pm

When Donald Trump announced the withdrawal of United States from the landmark JCPOA (Joint Comprehensive Plan of Action), commonly known as the Iran nuclear deal, on May 8, not only did it lead to the worsening of US-Iran ties but post the announcement, Indo-Iran relations also suffered a setback.

India did not condemn the decision of Trump’s administration to pull out from the deal and chose to remain silent. However, the MEA in its brief statement stated, “We are closely monitoring the developments. We are assessing the implications this might have on our interests. The government will take all necessary measures to safeguard our interests”.


Balancing Act
India taking a medium path and doing a balancing act between the US and Iran did not go down well with either of the two states. Both these states perceived India’s stand to be soft with respect to the other side. This became evident when US ambassador to the UN Nikki Haley came to India and called Iran as the next North Korea and, therefore, a threat to global security. She advised India to rethink its ties with Iran and decide whether it wants to continue doing business with it.

This strong statement came after India made it clear that Iranian nuclear issue should be resolved peacefully through dialogue and diplomacy by respecting Iran’s right to peaceful uses of nuclear energy as also the international community’s strong interest in the exclusively peaceful nature of Iran’s nuclear programme.

Guided by Self-Interest
India’s position on the fallout of the Iran nuclear deal was very sensitive as India did not want to harm its own self-interests by siding completely with either of the two sides. India though is being perceived as a US ally by many states, including Iran at present.

Iran is important to India primarily for two reasons. The first being, India’s energy interests in Iran as it is the third largest supplier of crude oil after Saudi Arabia and Iraq. Secondly, Iran provides India with a much-needed connectivity to the central Asian region and beyond.

Therefore, India has both geopolitical as well as geo-economic interests in Iran. Projects like Chabahar and INSTC (International North-South Trade Corridor) where India has invested heavily reveal how important Iran is to India.

The Trump administration knows about India’s interests in Iran pretty well and, therefore, it is unlikely that the US will severe its relations with India even if it chooses to strengthen its bilateral ties with Iran in the near future. Both Iran and the US would be committing a grave mistake if they try to see their relations with India through the prism of the fallout of the Iran nuclear deal and India’s reaction to it.

Calculated Move
As a responsible state in the international system and as a third party vis-à-vis the Iran n-deal, India’s position on the matter was very calculated. India doesn’t want to be in a situation where it has to choose between any of the two sides. Historically, India has used the formula of the medium path (Madhyam Marg) to its advantage.

What the medium path signifies is that India has never taken an extreme position on any international issue, especially when it is playing the role of a third party. India knows its limitations — the position it can afford to take against Iran after the pressure that has come from the US to take such a stand. The global community is now taking India seriously as a major power in the region and, therefore, the stand India takes today on any issue is observed keenly by other players in the international system.

The kind of regime which the United States has today, which is developing a habit of making abrupt remarks, sudden decisions, taking U-turns on sensitive matters, has made it even more difficult for other nations to rally behind or support the US as it can’t be trusted to remain fixed on a particular stand. Therefore, a third party becomes unsure if it can afford to change its stance or policies towards a nation, which the US pressures its allies and partners to take action against.

This is exactly what is happening in the case of India and Iran. Today, India is finding itself in an uncomfortable position to take an open stand on Iran as India is not sure how things would pan out in the near future vis-à-vis Trump administration’s stand on Iran.

Rupee-Rial Arrangement
India and Iran have been holding talks and deliberations to deal with the present situation as both the countries are looking at the possibility of falling back on the rupee-rial arrangement for importing oil from Iran in the wake of US sanctions. Under the rupee-rial arrangement, which was lifted three years ago, India used to pay in euros to clear 55% of its dues through Ankara-based Halkbank. The remaining 45% was remitted in rupees in accounts Iranian oil companies had with UCO Bank.

As the United States re-imposed the first set of economic sanctions against Iran on August 6, it is casting shadows on Indian exports to Iran, which include food items and medicine. While India is still hopeful of finding a way out, it would be interesting to see how it would deal with the situation when the second set of economic sanctions are kicked in against Iran in November.

(The author is a Research Fellow at School of International Studies, Jawaharlal Nehru University)