As tensions mount in West Asia, India will need to think creatively to safeguard its economic and regional interests.

The last few days have witnessed an escalation of tensions between the US and Iran leading to a turmoil in the global oil markets and threatening the delicate balance of power in West Asia. In just a week’s time, Iran ended up testing new missiles, declaring a breakthrough in nuclear technology and vowed to close shipping in the Strait of Hormuz in retaliation for western sanctions over its nuclear programme. The Iranian armed forces commander, Gen Ataollah Salehi, even warned the US Navy ships to stay out of the Strait of Hormuz, which has been rebuffed by the US.

Iran clearly is feeling the impact of several rounds of economic sanctions that have been imposed by the west over the course of the last three years. The Iranian economy is faltering with the nation’s currency, the rial, slipping to an all time low against the dollar after the US placed the Central Bank of Iran under unilateral sanctions. After boasting for years that economic sanctions are not having any effect on Iran, the latest turn of economic events is a blow to the Iranian government’s credibility. The troubles, however, have only just started as the European Union too has agreed in principle to ban imports of Iranian oil that would include curbs on the imports of Iran’s main export commodity, petroleum. The Arab states in the Gulf have signalled that they would be filling any gap in energy supplies for countries that yield to pressure from Washington to curtail purchases of Iranian crude.

The response of the Iranian leadership to this brewing economic crisis at home has been to ratchet up military tensions by undertaking a ten day long naval drill near the strategic Strait of Hormuz and testing a domestically produced cruise missile as well as an anti-radar missile. Though Iran is known to making empty rhetorical threats and is unlikely to risk a direct confrontation with the west, it can do great damage to the already stuttering global economy just by threatening a temporary disruption in the flow of oil from the region.

The Strait of Hormuz is one of the world’s main choke points for crude oil shipments and therefore an extremely sensitive area of operation for the US Navy as well as the entire global economy. Despite Iranian threats, however, the US will soon have not one but three of its aircraft carriers in the region even as the Iranian Parliament has been reported to be preparing a bill that would bar all foreign warships from entering the Persian Gulf unless they received permission from the Iranian Navy. Iran has also blamed the US for the assassination of one of its nuclear scientists and has sentenced a US Marine, arrested in August and accused of spying for the CIA, to death.

Critical time

These tensions between the US and Iran come at a critical time when both nations have entered their election cycles. In the US, the presidential elections of November will consume the energies of the Obama administration and parliamentary elections are due in Iran in March where a coalition of hardline clerics, Revolutionary Guard Corps commanders and merchants who had brought president Mahmoud Ahmadinejad to power has now turned against him. This coalition will be challenging the supporters of the president and the rhetoric against the US is only likely to intensify. These would be the first elections in Iran since a disputed presidential vote in 2009 that prompted national protests and a severe crackdown.

Meanwhile, the US is also trying to assuage the concerns of its Arab allies. The Obama administration announced an arms deal worth nearly $30 billion with Saudi Arabia last week, sending a strong message to the regional states that the US remains committed to the stability in the Gulf. Saudi Arabia, which has a predominantly Sunni Muslim population, and Iran, mostly Shiite, have competed for regional influence for decades, and the Obama administration has sought to bolster its security relationship with Riyadh, despite their differences over the response to the Arab Spring.

A new containment policy is being structured by Washington with the installation of antimissile batteries in the Arab states and with an emerging plan to put more ships and antimissile batteries into the Persian Gulf as the concerns of Arab Gulf states have risen. The gulf between the west and Iran is widening which many fear will only empower the radical elements of the governing elite in Iran, making the resolution of the nuclear crisis even more difficult.

As tensions mount in West Asia, India will need to think creatively to safeguard its economic and regional interests. There are some in India who have suggested that New Delhi can play the role of bringing the US and Iran closer. This is not only a gross overestimation of India’s own diplomatic heft but a serious misreading of the factors that have led to the drifting apart of the US and Iran over the last more than three decades.

New Delhi would be better served by focusing on its own interests and how best to protect them in a regional milieu that is being shaken by Iran’s global isolation and military bellicosity.

The strategic reality that confronts New Delhi in West Asia today is that India has far more significant interests to preserve in the Arab Gulf, and as tensions rise between the Sunni Arab regimes and Iran, India’s larger stakes in the Arab world will continue to inhibit Indian–Iranian ties. At the same time, New Delhi’s outreach to Tehran will remain circumscribed by the internal power struggle within Iran, growing tensions between Iran and its Arab neighbours, and Iran’s continued defiance of the global nuclear order.