Myopic leadership

India-iran ties in doldrums

Two reports on Monday underscored how Iran would look on the energy map in a near future. They also expose the mediocrity of India’s leadership. India’s petroleum minister Jaipal Reddy enjoys rare reputation as a cerebral member of the Indian cabinet who has the intellectual wherewithal to figure out the huge significance of energy ties with Iran. But he seems helpless on a front where the ‘big league’ on the Raisina Hill expects masterly inactivity.

On Monday, the oil ministers of Iran, Iraq and Syria formally signed the preliminary agreement for a $10 billion natural-gas-pipeline deal on a project to be completed in 3 years’ time. According to the Wall Street Journal, the pipeline length exceeds 1,500 km and will run from Assalouyeh in Iran to Damascus via Iraq with a transfer capacity of 110 million cubic meters of natural gas per day.

The gas will be produced from Iran’s South Pars gas field in the Persian Gulf, which Iran shares with Kuwait and holds estimated reserves of 16 trillion cubic meters of recoverable gas. There are plans to extend the pipeline from Syria to Lebanon and the Mediterranean to supply the gas to Europe.

To be sure, Iran has taken a major step on what western experts hail as the ‘Islamic pipeline’ project to supply European customers. Iraq, Syria and Lebanon would incidentally tap into it. Iraq’s daily needs are upto 530 million cubic feet, Syria’s estimated at 706 million cubic feet and Lebanon’s 247 million cubic feet. Which leaves 2.4 billion cubic feet of Iranian gas available for export to Europe.

The first and second phases of this new pipeline, which connect Asalouyeh to Ahvaz, have been completed while contracts for the remaining two sections, valued at $1.3 billion have reportedly been signed. The pipeline’s third portion – 600 km stretch from Ahvaz to Dehkalan – is expected to be completed within 24 months.

Curiously, 2014 also happens to be the date by when the Iran-Pakistan gas pipeline is expected to be operational. Iran will be completing its part of the pipeline by end-2012 and the work on the Pakistani side is expected to begin by the end of the year. The Indian leaders should hang their heads in shame seeing how small countries unpretentiously go about pursuing an independent foreign policy towards Iran, ignoring American threats. A vast trans-regional pipeline system is literally taking shape on the western borders of India stretching all the way to the Levant – and all of it connected with the very same Iranian gas fields that would have fed the Indian hinterland too. Why do our leaders go so wobbly in their knees when it comes to Iran?

Peace pipeline
The Iran-Pakistan-India gas pipeline project—dubbed aptly as ‘peace pipeline’ would have been a unique confidence-building measure that provided underpinning to regional stability and imparted some degree of predictability to the India-Pakistan relationship. The proposed ‘Islamic pipeline’ runs through one of the most turbulent regions on the planet. Yet, the countries involved are keen to be ‘stakeholders’ in regional peace and stability. This is the sort of statesmanship that one would expect from India’s prime minister. What we are saddled with instead is a timid, myopic worldview, harking back nostalgically to the Washington consensus.

Again, on Monday, Financial Times broke a story that should come as an eye-opener for Jaipal Reddy. The London daily reported that China and Iran are in talks “about using a barter system to exchange oil for Chinese goods and services, as US financial sanctions have blocked China from paying at least $20 bn for oil imports.”

In essence, Beijing also has the easy option to duck, as Delhi seems to adopt, by terminating oil trade with Iran to please Uncle Sam. But, instead, Beijing takes a far-sighted view of Iran as an energy superpower with which China must somehow find a way to trade. China stepped up its oil imports from Iran by 49 per cent this year despite the very same difficulties in the payment mechanism created by Washington, which India faces.

As the FT puts it, “Unlike India, which exports almost nothing to Iran, China is dominant in Iranian business and could use a barter system to balance trade… Beijing is involved in everything from building tunnels to exporting toys and has been expanding into Iran’s oil sector...The two countries this month signed several infrastructure and trade collaboration agreements that would see Chinese companies invest in big infrastructure projects in Iran, while Iran would export large quantities of chrome ore to China.” The bilateral trade is expected to reach $40 billion this year.

We sit on the ground and incessantly wail like widows that China is ‘encircling’ us, while we are actually assisting China to become a default buyer of Iranian oil. It is all far too bizarre for words. South Block naively fancies that by holding joint-secretary level discussions with American officials over West Asia or Central Asia, India will surge as a first-rate regional power.

The pathetic ground reality, on the contrary, is that India doesn’t figure as a player in Central Asia. The stoppage of oil imports from Iran means terminating trade ties with that country. What is the role that India can aspire to play if it has no relationship with the single most influential regional power in the Persian Gulf?

(The writer is a former diplomat)