India-U.S.-Iran: A tightrope walk

The recent visit of Wendy Sherman, U.S. under secretary of State for political affairs, to Delhi has helped ease some of the tension between India and the United States on the difficult question of sanctions against Iran, an issue that has divided Washington and New Delhi lately. The Obama Administration says India stands out for the wrong reasons on an issue on which most of the world, including the Arabs, is united: that Iran must be punished for its nuclear ambitions. While the political discourse in Washington is binary and stark, the reality of Indian actions and decisions is complex. Although India is being portrayed as defiant on the sanctions issue, it is in fact reducing its oil imports from Iran, diversifying to other regions despite the fact that many Indian refineries are geared for handling Iranian crude. India is also quietly telling its private sector to make the hard choice between doing business with Iran vs. business with the US.

But this is not sufficient for American politicians who want countries to line up behind them, produce statistics, and prove their loyalty. In an election year, the fervour can spill over. The wise words of former U.S. ambassador Robert Blackwill, who warned against forcing India into a corner on the question of Iran, are being ignored. Blackwill, without whom there would be no strategic partnership between the U.S. and India, was perceptive about India’s compulsions. He warned in 2005, “It would be a serious U.S. mistake to attempt to force New Delhi to choose between its burgeoning strategic relationship with the United States and its cordial ties with Iran. India will not do so.” But forcing New Delhi is exactly what Washington appears to be doing for the past six months.

The political noise in the U.S. and the resulting pressure has created a degree of unnecessary friction in bilateral relations with India. It came into sharp focus last month after the U.S. announced a list of ten countries – Japan and European countries – which were exempt from U.S. sanctions because they had “significantly” reduced their oil imports from Iran. What is considered “significant” has never been defined but U.S. officials have hinted it would be in the range of a 15% to 18% reduction in oil imports. Stung by the certificate given to the Europeans, Indian officials stressed they are not about to “apply” for an exemption. It is up to U.S. officials to look at the scenario, read the statistics – and the tea leaves – and decide where India stands on the question. After all, they say, India didn’t support the U.S. decision on imposing the crippling sanctions on Iran. India was also criticised by unnamed U.S. officials who accused India of skirting the sanctions.

There were some sharp public comments too, especially by Nicholas Burns, Sherman’s predecessor in the Bush Administration, who wondered whether India was fit for a global leadership role. Burns, a friend of India, was instrumental in the negotiation of the 2008 India-U.S. Civil Nuclear Agreement and in moving a reluctant U.S. bureaucracy toward its successful conclusion. His words are taken seriously in New Delhi. In an article in The Diplomat, which received wide publicity – and acidic responses – he said he found India’s decision to continue buying Iranian oil as “bitterly disappointing” news when the U.S. was trying to isolate Iran. When he added that India was impeding the Indo-U.S. strategic partnership because of its stance on Iran, the accusation hurt deeply, prompting many analysts to respond that he was indulging in “if-you-are-not-with-us-you-are-against-us” kind of black-and-white reasoning. A letter from the American Jewish Committee to Indian Ambassador Nirupama Rao did not help. It accused India of capitalizing on opportunities “created by the European withdrawal from the Iranian market.” It said India was taking “advantage of sanctions” and elevating “commercial interests over vital security concerns.”

For the record, Iran is India’s second largest oil supplier after Saudi Arabia. India imported 370,000 barrels per day (bpd) from Iran in 2010-11 but the figure was expected to come down to 320,000 bpd in the fiscal year that ended last month. Imports from Iran are declining as avenues for payment shrink, but it is not happening fast enough for Washington. From supplying nearly 14% of India’s oil needs a few years ago, Iran supplied a little more than 10% of the total oil imported by New Delhi in 2010-11. What caused outrage in Washington was the spike in January 2012, which showed India as the largest importer of Iranian crude. The hike in one month’s bill does not negate the overall trend. Meanwhile, Indian officials have said that Saudi Arabia’s oil exports to India are expected to increase to plug the gap. Some recent moves bear repeating. Threatened by U.S. sanctions, India stopped payments for Iranian oil through the Asian Clearing Union on Nov. 27, 2010, making it clear to the international community that the Reserve Bank of India would not facilitate payments for Iranian oil imports. Indian private companies have already walked out of Iran at considerable financial loss to themselves because they don’t want to be on the wrong side of the U.S. financial system.

India, where 400 million people have no access to commercial energy, is not in the same league as European countries or Japan. It is still a developing country where hard choices are even harder. It has told the Obama Administration it needs time but voluble and valuable members of the U.S. Congress counter that India has had many years to get smart to the game. After all, U.S. policy toward Iran is nothing new. It has been in the making or unmaking for more than 30 years. Sherman, the third highest officer in the State Department, came to India against this background of hard feelings and raised hackles. Only after a series of candid discussions with senior Indian officials who explained that public commentary on issues of divergence only makes the management of differences more difficult, did she seek to assuage her counterparts and publicly said the U.S. did not want to undermine India’s energy security. Even though there is an understanding of India’s dilemma within the State Department, feelings on Capitol Hill are in freefall. But here are some counter arguments to the spate of criticism coming from Washington.

For India, Iran is a possible ally with an open avenue to the region if things fall apart and the centre does not hold in Afghanistan. India has to keep the Iran option open in case Pakistan is handed the keys when U.S. and NATO troops depart in 2014. It is for this reason that India developed the Chabahar port in Iran once China was ensconced in Gwadar in Pakistan with an eye and ear on Indian naval movements. The Chabahar port was used recently to send Indian wheat to a food-strapped Karzai government. Iran also provides a possible future entry into Central Asia, where China already is making major inroads. India’s attempt to link Chabahar by road to Afghanistan (the Zaranj-Dilaram highway) and by rail through Central Asia to Russia – the North-South corridor as it is called – is designed with an eye on China and Pakistan. If one of the main planks of the Indo-U.S. strategic partnership is to send China a signal that it can’t run or rule Asia, then surely India’s futuristic moves must be supported. Iran is one of the best options in the medium term to protect Indian security interests in Afghanistan and potential strategic openings in Central Asia. The passage to and through Pakistan is expected to remain blocked for some years given the Pakistan Army’s trenchant opposition to Indian influence in the region.

It might be worthy to once again quote Blackwill, who fought for the nuclear deal with India against the non-proliferation hardliners who put forth every argument against it and wanted more curbs on Indian defense capabilities. In 2005, he asked, “Why should the United States want to check India’s missile capability in ways that could lead to China’s permanent nuclear dominance over democratic India?”

The geopolitical situation in Asia hasn’t changed much except that the fear of Chinese dominance has increased among Asian countries. Washington needs to give India space and India in turn needs to articulate its needs better. If India wants to be a valuable pole in a multi-polar world, it might have to defend its choices and compulsions with the same ardour that it once used to berate western imperialism. But for now, India is executing an excruciating tightrope walk.

Seema Sirohi, an international journalist and analyst, is a frequent contributor to Gateway House: Indian Council on Global Relations.

This article was exclusively written for Gateway House: Indian Council on Global Relations. You can read more exclusive content here.

For interview requests with the author, or for permission to republish, please contact outreach@gatewayhouse.in.