India and Iran: Recalibrating Engagement with Region
On May 22, Indian Prime Minister Narendra Modi embarked on a much awaited official visit to Iran. The visit, coming after similar visits made by prime minister to the UAE and Kingdom of Saudi Arabia testifies to the renewed vigor with which India is engaging with countries of its extended neighbourhood. That all these visits have been standalone visit demonstrates the importance India attaches to its relations with the different power centres in West Asia – the Gulf Cooperation Council (GCC) countries, Iran, and – to be followed later visits to Qatar and Israel.
Modi’s visit will be the first prime ministerial visit to Tehran in 15 years, after that of Prime Minister Atal Bihari Vajpayee in 2003. Dr. Manmohan Singh did visit Iran during his tenure as Prime Minister; it was not a bilateral visit, but one within the framework of the non-aligned movement.
The visit comes at a very crucial time for the region. The Joint Comprehensive Plan of Action (JCPOA) signed last year by Iran and the P5+1 helped check Iran’s nuclear ambitions, ending its international isolation and heralding its reintegration in the world economy. Delegations from across the globe have been flocking to Iran since the announcement of the end of sanctions’ regime to make use of its enormous energy resources and scouting for new markets.
West Asia recently marked the hundredth anniversary of the Sykes-Picot agreement and the map of the region is slowly but surely being redrawn. Saudi-Iran rivalry have torn the region apart, the U.S. footprint in the region is receding, prompting a renewed Russian role in the region along with an expanding Chinese footprint. The old order is changing and new alliances are being sought. India will thus have to carefully calibrate its renewed engagement with the region, including with Tehran.
India depends on West Asia for its energy security and sources 80 per cent of its energy needs from the region. India’s energy requirements are slated to only increase at least till year 2040 and it is keen to diversify its sources. Iran naturally becomes an important partner. It had been a major oil supplier to India but the sanctions regime imposed on Iran put a cloud on bilateral relations. India’s vote against Iran’s nuclear program the IAEA had not gone down well with the Iranians either. Before the sanctions Iran had been India’s second largest oil supplier but plummeted to the seventh place by 2014. Now India seeks to increase it supplies but has to address the repayment of 6.5 billion US dollars that it currently owes Iran. India will also be seeking to finalise investments in the Farzad B gas fields that ONGC Videsh Ltd. had discovered but stalled because of the sanctions regime.
In seeking to reinvigorate the relationship, a number of high profile delegations had already started visiting Iran while waiting for the lifting of sanctions, beginning with the visit of Minister for Road Transport and Shipping Nitin Gadkari. More recently Oil and Petroleum Minister Dharmednra Pradhan and External Affairs Minister Sushma Swaraj visited Tehran. The prime minister had also met with Iranian president Hassan Rouhani in UFA on the sidelines of the Shanghai Cooperation Organisation meeting last year, while post sanctions Iranian foreign minister Javad Zarif visited New Delhi.
Trade and investment is a major area of cooperation where Iran is looking for investments while India offers a huge market for Iranian goods. Minister Pradhan has announced that India is committed to investing almost 20 billion US dollars.
“Our friends during sanctions will be our important trade partners in post-JCPOA era; I believe our trade volume with such countries will be multiplied; with India, we have plans to raise trade volume and to do so, we will work to make revenue from our natural resources to meet USD 120bn of annual budget,” Mohsen Jalalpour, the head of Iran’s Chamber of Commerce Mohsen said recently.
While India-Iran civilizational ties are stressed on often, Iranians remain tough negotiators. India will also have smoothen out the strain caused by sanctions, seen as it was to be too close to the US and sharing traditionally stronger ties with the Arab gulf countries. India has also conceded space here to China. The Iranians are under no illusion that the Chinese hugely benefited from the sanctions regime in Iran, filling in where West European countries receded, building infrastructure and supplying goods. Engaging with Iran also enabled the Chinese to distract the US from its pivot to Asia-Pacific.
Nevertheless, one of the first countries that Iranian Petroleum Minister Bijan Namdar Zangeneh visited seeking investments days after the Lausanne framework nuclear deal was announced was China. China is developing Iran’s giant Yadavaran oil field and soon after the sanctions were lifted Chinese President Xi Jinping visited Tehran, pledging investments amounting to almost USD 600 billion over a decade long period. – much before Indian petroleum minister visited Tehran.
Even the development of the crucial Chahbahar port in Iran by India, first mooted in 2003, had been stalled because of the sanctions regime.
Not only does Chabahar port offset Chinese-controlled Gwadar port in Pakistan, but once completed, would open up the north-south corridor, allowing India access to energy resources and markets in Central Asia and beyond while bypassing Pakistan. An India-Iran-Russia strategic partnership envisages a Mumbai-St Petersburg transport link.
Chabahar gives landlocked Afghanistan sea-access, again bypassing Pakistan, reducing Afghanistan’s dependence on it. While a memorandum of understanding was signed between the Indian and Iranian ministers for transport in 2015, negotiations have dragged on, which some analysts believe show India in a disadvantageous light. During the Prime Minister’s visit an agreement will finally be signed where India will develop first phase of Chabahar port which involves development of two terminals and five berths at an investment of 200 million US dollars.
Thereafter a trilateral agreement between Afghanistan, Iran and India on trade and transport is expected to be signed, which will use the Chahbahar-Zahedan-Zaranj as a corridor, allowing Afghanistan a ‘reliable alternative access to India via sea’. In an interview to this author Afghan Ambassador to India Dr. Shaida Abdali said that the development of Chabahar port and the trilateral agreement is a ‘game changer for Afghanistan and the region’.
But, in connectivity too, China has overtaken India as the first train from China arrived in Tehran already in February this year, crossing Kazakhstan and Turkmenistan and the Iranians are eagerly looking forward to their pie of China’s One Belt One Road initiative. Countries like South Korea, Russia, and Germany have all rushed in to court the Persian Gulf nation for its resources and markets.
Factoring in all this competition, India then will have to speed up on its commitments and prove its ability to deliver, making use of the levers available to it, like low-cost technology and huge market: its energy imports are only set to increase. The Farzad B gas field for instance has been kept outside the tender system and the Iranians are waiting for a favorable pricing from the Indian side. The Iranian Ambassador in New Delhi Dr. Gholamreza Ansari recently ruled out any prospects for the Iran Pakistan India pipeline but there are other gas pipelines like the Oman Iran India pipeline that can be negotiated.
An important aspect of the prime minister’s visit is his meeting with Iran’s Supreme Leader the Grand Ayatollah Khamenei, whose approval is mandatory for any major project or initiative that Iran undertakes. It is also to the Modi government’s advantage that the earlier NDA government also had a record of robust engagement with Iran.
Another major area of convergence between India and Iran is stabilizing Afghanistan and battling Sunni radicalism in the region. Afghanistan thus becomes a major hub of cooperation between the two sides, and together with Russia they can form a bulwark against the Islamic State and other Sunni radical organizations in the region. The assassination of Shias in Pakistan, with which Iran is developing ties, lends urgency to the issue. India and Iran can also cooperate maritime security in the Persian Gulf.
Therefore while challenges remain, political changes have ushered in opportunities for mutual cooperation and reinvigorated ties. India and Iran must seize the moment, building the relationship based on mutual benefit and trust. For India, its engagement with Tehran should be independent of its engagement with Riyadh or Tel Aviv.