India is stuck in the crossfire — its dependence on Iranian oil on one hand and its growing American interests on the other
When the United States pulled out of the Iran deal, economies across the world braced themselves for the consequences. India, too, is stuck in the crossfire — its dependence on Iranian oil on one hand and its growing American interests on the other.
What the Trump administration expects
In a two-day visit to India, US ambassador to the UN Nikki Haley categorically stated that India should look for alternate sources of oil and cut its dependence on Iran for the same. Since the US is no longer a part of the Iran oil deal, it was going to reinstate economic sanctions on Iran, which would affect all countries in business with the oil-rich state.
“I also think for the future of India, and the future of being able to get resources and who they’re dependent on, I would encourage them to rethink their relationship with Iran. India should decide if Iran is a country they want to continue doing business with,” Haley told a news channel.
The cut-off from Iran had to be gradual since it is the third-largest supplier to the country. The government had, in May, asked oil refiners to prepare for drastic reductions in Iranian imports. Fearing sanctions from the US, Indian imports from Iran were found to be 16 percent less in June.
India, Iran’s second-largest client after China, is not the only country the US is looking to distance from the oil exporting nation.
Earlier today, Iran criticised India for not fulfilling its promised investment in expansion of its strategically located Chabahar port. It also went on to say that New Delhi stands to lose ‘special privileges’ if it cuts import from Iran.
Iran also warned against offsetting cuts from Iran by importing from other countries like Saudi Arabia, Russia and Iraq.
Chabahar port is strategically very important for India and New Delhi has already invested almost half a billion dollars in creating its infrastructure. Defence expert Uday Shankar told ANI, “Chabahar is supposed to enable India access to Afghanistan, bypassing Pakistan. When the American sanctions are in place, however, importing equipment to Iran for a joint project will be a problem.”
How will India prioritise between the two?
India’s ties with Iran have been friendly for a long time. At the same time, it has also sided with the US in raising concerns about Tehran’s nuclear programme. US now considers India a key ally in the “Indo-Pacific” region. It is, therefore, of utmost importance for India to prioritise its bilateral ties.
Some believe that India must put its foot down and not let US dictate issues of national interest. Investment in Iran’s projects like the Chabahar port will help India in fraternising with Pakistan’s western neighbours and deepen trade ties with Afghanistan.
One may take the example of the US funding Pakistan’s war on terror, despite the latter’s inability to crack down on terrorism. Despite India’s tough stand against its hostile neighbour, US continues to maintain friendly relations with Pakistan. Therefore, for its selfish trade and national interest, India must continue its friendly relations with Iran, according to some.
It can also be argued that continuing imports from Iran will hit India badly since oil prices will skyrocket. India has also entered into many strategic defence and infrastructural projects with the US. Going against the superpower may land India in a fix.
When impositions were lifted from Iran in 2016, External Affairs Minister Sushma Swaraj and Prime Minister Narendra Modi had called it a triumph of diplomacy. Two years later, when the US withdrew from the deal, India advised “all parties to engage constructively”.With a cut in imports from Iran and defaulting on its promise regarding the Chabahar port, India seems to be inclining towards supporting the US in this tug-of-war. However, New Delhi has not come out in outright support of any one party and is yet to issue a formal statement on the situation.