Needless angst

In successive weeks India has been compelled to take a stance on the situation triggered by the sanctions against Iran’s oil trade by the United States and the European Union.

What becomes apparent is the continued strategic ambiguity in the Indian stance. In essence, such dilemma ensues when the policies are not rooted in principles. The Indian foreign policy establishment faces a predicament, as it will be called upon to respond repeatedly to the evolving regional security scenario around Iran and the surrounding upheaval in West Asia – and these are early days. The Indian officials argue that New Delhi will be guided by ‘self-interests’ but then, who defines these ‘interests’, how and at what point in time? Transparency over the principles safeguarding long-term national interests will help India withstand the extraneous pressures in the coming period. 

Prima facie, New Delhi rejects the US and EU sanctions against Iran. Foreign secretary Ranjan Mathai set the record straight by insisting that India would only abide by any restrictions with regard to Iran mandated by the United Nations. No doubt, it was a principled stance. However, within days, faced with sniper fire from American politicians, India’s ambassador to the US Nirupama Rao diluted the principle by claiming India has begun cutting back on its oil imports from Iran. A few days later, finance minister Pranab Mukherjee waded into the debate by assertively restating the importance attached by India to oil trade with Iran. That Mukherjee spoke while visiting the US added to the resonance of his statement.

However, Mathai soon revisited the subject, while speaking at the CSIS in Washington last Monday, to implicitly admit that Rao was, after all, right – India has reduced its oil imports from Iran already by 2-3 per cent. Mathai backtracked in front of an American audience even as US officials piled pressure on him during his consultations in Washington last week. The state department spokesperson candidly said that the talks with Mathai included “how India might find alternative sources...This is a two-track policy, both to encourage countries to wean themselves from Iranian oil but also to work with suppliers around the world to help countries find alternative sources of supply.”

But an improbable source, the reputed daily Wall Street Journal, just reported that in January India probably stepped up its oil imports from Iran by 37.5 per cent, which even helped Tehran offset a 50 per cent cut in Chinese purchases resulting from a dispute in oil pricing. India apparently catapulted itself as Iran’s number one oil buyer in January with imports of 550,000 barrels per day.

Economic opportunities

Meanwhile, on a separate track commerce ministry is mounting a ‘huge’ business delegation to Iran by end-February to cash in on the new vistas of economic opportunities that maybe vacated by the western companies in deference to the US-EU sanctions. Again, the finance and petroleum ministries also negotiated with Tehran a new payment mechanism providing for 45 per cent of Iranian oil to be settled for in Indian rupees, which opens up interesting possibilities for expanding India’s overall economic cooperation with Iran.

Without doubt, New Delhi is signalling its genuine commitment to a long-term economic partnership with Iran. The fact that Iran agreed to the new payment mechanism – oil exports constitute Iran’s main source of foreign exchange – shows that the commitment to the long-term partnership is mutual.

So, where is the catch? What seems to be happening is that whereas the mandarins practicing diplomacy agonise over the tactic and strategy in navigating the trajectory of the US-India relationship, their counterparts in the economic ministries with rolled-up sleeves have a practical job to do at a time of distress in India’s overall economic outlook, which hardly allows scope for intellectual dilettantism (or emotions) but entails single-mindedly exploring all avenues that help boost India’s exports and facilitate the lubrication of the growth engine at affordable cost. Iran’s ‘sweet’ oil is hard to replace and a long-term agreement takes time to negotiate with another supplier. Besides, spot market purchases are expensive and risky when oil price is showing great volatility and could add to the government’s subsidy for fertilisers, which the farmer uses in ‘real’ India.

The basic flaw in South Block’s Iran policy is that somewhere along the line in the mid-2000s the then mandarins in command allowed it to become a mere appendage of the US-India strategic partnership. This should never have happened. Iran cannot be reduced to a zero-sum game, since it is a hugely important regional power in India’s ‘extended neighbourhood’, while the US may have its own geopolitical axe to grind (in its ‘self-interest’, of course) in West Asia.

Happily, though, Indian and American diplomats today claim that US-India relationship has attained a level of maturity to allow differences of opinion. The American diplomats practice their craft accordingly – they sup with the Haqqani clan (which twice attacked the Indian embassy in Kabul) and are impervious to India’s visceral dislike of the Taliban. India too needs to learn the importance of equity in a ‘mature’ US-India relationship. Suffice to say, Mathai probably took a baby step in this direction by gently – almost apologetically – underscoring to his American audience in Washington that “while the choices that each (India and US) makes may have a bearing on the other, they are not directed against each other.”

(The writer is a former diplomat)