by R. Sasankan
A
cocktail of volatile scenarios have started to rock India’s already
prickly ties with Iran, threatening to undermine the relations that the
two countries assiduously built up over the years. Trade relations
between India and Iran hit a new low last year when Iran appeared to
freeze out India’s public sector oil and gas entities from participating
in the development of the Farzad B field – a prospect that the Indian
had started to expect was in the bag because of the support they had
extended to Iran during its dog days including the discovery of the
giant gas field. That development wrecked the relations between the two
countries with each side embarking on a perilous course of tit-for-tat
retaliation. India reduced its crude imports from Iran and the latter
hit back by reducing the freight discount. There was one brief stab at
restoring ties during the recent visit of Iranian president Hassan
Rouhani to India and his meeting with Prime Minister Narendra Modi. Iran
agreed to restore the freight discount on the sale of crude to India
and, in turn, India pledged to import more crude oil from Iran. Indian
PSUs were invited to submit a bid to develop a part of Iran’s Azadegan
field for which quite a few international giants are in the fray.
If
there was anyone who was optimistic about a revival of friendly ties
with Iran, he would have to reconsider his position, especially after
Iran opted last week to invite Pakistan and China to participate in the
Chabahar port project. This sudden overture to India’s bitter foes has
caught India’s external affairs ministry by surprise even though it has
tried to mask its obvious dismay over the development.
“India’s relationship with Iran is tottering,” said an expert on Iranian
affairs. India may have good reason to feel miffed by this sudden
development. The first phase of the Chabahar port was developed with
India’s help and it was inaugurated four months ago, opening a new
strategic trade
route connecting Iran, India and Afghanistan while bypassing Pakistan.
This port was perceived as a counter to Pakistan’s Gwadar port which is
being developed with Chinese investment. In November last year, India
delivered the first consignment of wheat to Afghanistan through the
Chabahar port and followed that up with four other shipments. India was
planning to rope in Japan to help develop the Chabahar Port. But Japan
shied away fearing further US sanctions on Iran. By inviting China and
Pakistan to participate in the Chabahar port, Iran is once again trying
to convey its deep-seated grievances against India over its dramatic
shift in its foreign policy. India, on the other hand, feels it has been
wronged by Iran, especially after all the help it extended to that
sanctions-hit state. Both sides are now bickering over everything and
the whole caboodle of economic ties and trade relations seems to be up
in the air.
So, what precisely went wrong? A major issue appears to be the India’s
growing proximity to Israel. The UPA government used to keep its ties
with Israel under the wraps. But the Narendra Modi government does not
seem to believe in such diplomatic niceties and refuses to play a
dissembling game. Local Iranian politics demands that a friend of Israel
be characterised as an enemy of Iran. Remember, Iran’s supreme leader
Ayatollah Khomeini issued an appeal to the people of Kashmir to revolt
against the “colonisers” the day before Prime Minister Modi visited
Israel. Iran has strong likes and dislikes about the people it trades
with. Normally, trade relations are conducted with a touch of diplomacy,
but Iran does not follow such a style. Iran’s public sector executives
in charge of petroleum trade feel uncomfortable in dealing with a couple
of heavy weights in India’s petroleum industry. They believe that
petroleum minister Dharmendra Pradhan and D.K. Sarraf, former ONGC
chairman, are biased against Iran. Of course, this could be an erroneous
perception. Both Pradhan and Sarraf are known to
aggressively protect the country’s interests. The fact that Iran’s
perception is not shared by Prime Minister Modi was clear after he
rewarded them for their performance: Pradhan was elevated to a minister
with cabinet rank and Sarraf, on superannuation, was appointed as the
downstream regulator.
Iran believes that these developments only reinforce their suspicions
about India’s intentions. However, the most substantive issue, in my
view, is India’s refusal to join the Iran-Pakistan-India (IPI) gas
pipeline that was proposed more than a decade ago. Iran has always been
keen to see India purchase its natural gas and, consequently, expected
India’s support to the IPI pipeline. Iran was also willing to transport
CNG to India through special tankers by sea. Iran has large proven
natural gas reserves of 33.5 trillion cu.m, second only to Russia’s 48.7
trillion cu. m. Eighty per cent of Iranian natural gas reserves are
located in non-associated fields. Although the proposed pipeline was
supposed to traverse Pakistan to reach India, Iran knew that Pakistan
would not pay for its gas. The viability of the pipeline was heavily
dependent on the sale of gas to India, which was expected to become a
huge market for Iranian gas. The Indian government has never been averse
to buying Iran’s gas but was prevented from doing so by the US
administration which branded Iran as one of the three evil powers, with
North Korea and Iraq being the other two. India shied away from the
pipeline citing security reasons, as the pipeline would have to pass
through terrorist –infected areas in Pakistan.
Iran was obviously annoyed when India readily joined
Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline which would
also have to traverse the same insecure areas of Pakistan.
It is an acknowledged fact that one of the hidden conditions for the US
support for India’s civil nuclear deal signed during George Bush’s
tenure was the that India would not join the IPI gas pipeline. The TAPI
pipeline has the US support though it is unlikely to become a reality in
the near future. President Donald Trump seems to have hardened his
stand against Iran from the position that George Bush had taken. He has
threatened fresh sanctions against Iran. Israel is egging him to do so.
India faces the prospect of walking a tightrope as its relations with
Iran start to crumble. Delicate diplomacy on both sides is the only way
to rescue the situation. Otherwise, an economic relationship that has
been profitable for both sides for decades will sink into a quagmire.
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