India-Iran ties at a crossroad of history after nuclear deal

Notwithstanding the ‘sacrifices’, the lifting of the sanction against Iran has virtually opened a Pandora box of opportunities and lost-opportunities for India

India-Iran ties at a crossroad of history after nuclear deal

Monavvar Alam - India

After the historical US-Iran nuclear deal, the ties between two traditional friends, India and Iran, are all set to be re-written in the modern context of demand-supply relationship. Undoubtedly it is an important crossroad of the history for the ties between the two countries.

Meanwhile, the United State’s acknowledgment of India’s “substantial sacrifice to implement sanctions against Iran” came as a surprise. While clarifying its context, the White House Press Secretary, Josh Earnest, said that in case the deal was scuttled by the Congress, “no longer would countries like India, who have been making a substantial sacrifice over the years, have any interest or incentive to continue to enforce those sanction against Iran.” However, it is really difficult to read between the lines of such statements in order to understand their true import.

Notwithstanding the ‘sacrifices’, the lifting of the sanction against Iran has virtually opened a Pandora box of opportunities and lost-opportunities for India.

Anticipating an end to sanctions against Iran, India, which had reduced its oil imports from Tehran under western pressure, had already increased its oil imports from the Gulf nation from April this year, upping it by over 50 percent from the same period last year.

From early this year, India has also stepped up its high level engagement with Tehran. First it was Ajit Doval, National Security Advisor, who visited Tehran, followed by union minister Nitin Gadkari and then foreign secretary S Jaishankar. Even Indian Prime Minister Narendra Modi didn’t lose the opportunity and held his first meeting with Iran's President Hassan Rouhani in Ufa, on the sidelines of the Shanghai Cooperation Organization (SCO) summit. India’s Foreign minister Sushma Swaraj has also announced her plan to travel to Iran soon. Through these regular interactions, engagements and visits, India has been giving clear signal to Iran that it means business in right earnest and is planning to enter Tehran in a big way. India’s foreign ministry, in its statement to welcome the historical deal, said, "India has always maintained the issue should be resolved peacefully through dialogue by respecting Iran's right to peaceful uses of nuclear energy and the international community's interest in the exclusively peaceful nature of Iran's nuclear programme."

India has its main focus on the port of Chabahar in southeast Iran because it will help it circumvent the arch-rival Pakistan and open up a route to landlocked Afghanistan where it has great security and economic interests.

As such, the Chabahar port is India's strategic connectivity project in Iran. Both the countries had signed an agreement long back in 2003 to develop Chabahar on the Gulf of Oman, near Iran's border with Pakistan, but there was very slow progress in the venture because of the sanctions over Iran's atomic programme. The two countries, however, maintained a close relationship despite the US-led trade restrictions that halved their oil trade to 220,000 barrels per day last year.

This port project even formed a significant part of Modi's conversation with Rouhani during their chanced meeting. Iranian President Hassan Rouhani has asked India to invest in infrastructure projects worth $8 billion, including an expanded role in developing this strategic port. In May, India's shipping minister Nitin Gadkari and his Iranian counterpart, Abbas Ahmad Akhoundi, signed an $85 million deal for India to lease two existing berths at the port and use them as multi-purpose cargo terminals.

In spite of these positive signs, it won't be really easy for India to make inroads into Iran. First, over the years India’s closeness with two arch rivals of Iran, Saudi Arabia and Israel, has created a lot of bad blood between the two old friends. It would require some kind of magical handling or Herculean efforts to simultaneously balance two complex triangles with New Delhi and Tehran at two ends and Tel Aviv and Riyadh at other two ends.

Second and even more important is China factor. Undoubtedly, China is much a bigger player than India. It has already pushed a high-speed rail project from Tehran to Isfahan and also undertook some part of the development of the Chabahar port on a scale and speed that India will find very difficult to match.

Third, India has way fewer citizens working in Iran than it does in the Gulf emirates and Saudi Arabia.

Iran and a group of six nations led by the US announced a historic agreement on Tuesday aimed at curbing Tehran's nuclear program in return for a phased lifting of sanctions. Effectively, it will end Iran's international isolation while putting a crimp on its nuclear weapons program for at least a decade.

Iran would get access to more than $100 billion in frozen assets when the landmark nuclear agreement, promoted by US President Barack Obama, is implemented. It will open the path for a dramatic realignment in the Middle-East and Gulf region. A US re-engagement with Tehran, if it sticks, has the potential to change the course of history.

Of course, India can accrue great benefits from this deal but for that it will have to be more nimble to be a genuine player. Whatever the Arab neighbours may say, Iran is likely to emerge as the region's leading power now. Indian Trade ministry officials say that the economic boost to Iran from the lifting of sanctions could offer opportunities for Indian pharmaceutical, IT and commodity firms.

"We may lose some engineering exports, but new opportunities could come up for products currently covered under sanctions," said an official. Some officials also think there should be more lobbying for infrastructure deals and soft loans should be extended to exporters.

Besides the major Chabahar project, India has also planned to ask Tehran for rights to develop Farzad-B gas field in the Persian Gulf, discovered by the Indian company, Oil and Natural Gas Corporation Limited (ONGC). Indian firms have so far shied away from investing in Iran for the fear of being sanctioned by the US and Europe. The same was deterring New Delhi from claiming rights to invest nearly USD 7 billion in the biggest gas discovery ever made by an Indian firm abroad.

Besides these advantages, the lifting of the sanctions on Iran would also have an adverse impact, particularly on non-agricultural commodities. Iran is a big buyer of basmati rice, soy meal, sugar, barley and meat. Now millions of Indian farmers will be hit by substantial decrease in their earning after the easing of sanctions. Under sanctions, Iran had been paying a premium of up to 20 percent over global prices to buy from India.

"Iran is shifting to other suppliers from Europe and South American countries. Many Indian businessmen feel that Europe is likely to make huge gain at India's cost. Indian exporters say that firms from Germany, Italy and France that once dominated in Iran will be back selling consumer products ranging from clothing to cars, and pitching for big-ticket contracts like the delayed Tehran metro.

It remains to be seen how the ties between the two countries take a new shape. In any case, India will have to work very hard to take full advantage of this historical opportunity.

Güncelleme Tarihi: 26 Ağustos 2015, 13:11