Iran crisis to impact India

Iran crisis to impact India

Oil prices have begun to rise with US and Iran stepping up their tit-for-tat strikes on each other.

The cascading conflict in West Asia has assumed crisis proportions with the United States carrying out drone strikes in Baghdad that killed Major-General Qasem Soleimani, the head of Iran’s elite Quds Force, and other senior Iranian military commanders. The crisis has grave implications not just for the two main protagonists, the US and Iran, but for the rest of the world too. India is among the countries that will be seriously impacted given its substantial presence and economic interests in the region.

Oil prices have begun to rise with US and Iran stepping up their tit-for-tat strikes on each other. This will impact India’s economy seriously, given the fact that over 80% of our fuel requirements are imported. While India’s import of Iranian crude has fallen over the years, it remains dependent on oil from the Persian Gulf. Should oil infrastructure in Iran, Saudi Arabia, Iraq, the UAE and other Gulf countries be hit, the Strait of Hormuz blocked or an all-out war draw in other countries in the region, India’s fuel supplies will be severely restricted. Indians working in the Persian Gulf remit an estimated $40 billion back to India. This flow of foreign exchange to our economy will fall as the conflict escalates. The Persian Gulf is home to over seven million Indians. Their safety and security will be in danger. Should the war break out, they will need to return home. The Ministry of External Affairs must begin planning for their evacuation.

US President Donald Trump has threatened to attack around 52 sites in Iran. These could include Iran’s economic assets consisting oil infrastructure and projects like the Chabahar port complex, which India is funding and developing. A strike on Chabahar port will impact India’s economic and strategic ambitions in Iran, Afghanistan and Central Asia. The corridor through Chabahar provides India with overland access to Central Asia. New Delhi should remind the Trump administration that targeting of Chabahar will come with heavy costs.

India has close ties with both the US and Iran. It has reached out to both sides. Its first statement issued in response to Gen Soleimani’s assassination is telling; Delhi avoided taking sides. While it describes Gen Soleimani as “a senior Iranian leader”, it has not condemned the US action. Indeed, it has simply “noted” the killing and called on both sides to show restraint. This balancing act may become difficult in the coming weeks. Trump has already sought to draw Delhi on to the US side by blaming Soleimani for plotting terror attacks in India. New Delhi must avoid being influenced by such unsubstantiated claims. It must base its decisions on its own foreign policy principles and interests.

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