Explained: Why Iran minister’s visit matters

Zarif’s visit to India took place at “his own initiative” to brief the Indian side on the Iranian approach to recent developments in the region, including on JCPOA, and to review bilateral cooperation. This is his second visit to India this year; after early 2019 when he spoke at an External Affairs Ministry-funded conference, the Raisina dialogue. This visit, apart from seeking to shore up support in favour of his country, is also key to Iran’s effort to secure its economic interests.

Where does India stand with regard to the sharply escalated tensions between Iran and the US?

India has conveyed to Iran that it would like all parties to the JCPOA agreement to continue to fulfil their commitments and that all parties should engage “constructively” and resolve all issues “peacefully and through dialogue”.

Explained: Life without Iranian oil

As tensions between the US and Iran escalated – with the US deploying the USS Abraham Lincoln Carrier Strike Group and a bomber task force to the US Central Command region – New Delhi is keeping a wary eye on these developments. US President Donald Trump’s move to target Iran, and side with Saudi Arabia and Israel, can potentially have an adverse impact on the peace and stability in the region. Over 8 million Indian migrant workers live and work in the West Asian region.

Aircraft carrier USS Abraham Lincoln in the Persian Gulf on May 10. A plan that envisions sending 120,000 US troops to the Middle East should Iran attack US forces or accelerate work on nuclear weapons, has been presented to President Donald Trump, The New York Times reported. (US Navy via The NYT)

Any tension due to regional rivalry is going to impact the lives of these Indians and might even put them at risk. In previous tense situations, India has had to evacuate Indian nationals from the region. But its capacity to evacuate is limited – not more than in thousands – and getting Indians out of danger in a conflict-like situation would be a tough ask. At a time the Indian government – which often proclaims its ability to protect Indians overseas in distress – wraps up its term, it would not want a volatile situation on its doorstep in this election season.

How important is Iran to India as a supplier of crude oil, and in the broader diplomatic and strategic sense?

Iran is India’s third-largest oil supplier behind Iraq and Saudi Arabia. It used to be the second largest after Saudi Arabia until 2010-11, when sanctions moved it to seventh spot in subsequent years. In 2013-14 and 2014-15, India bought 11 million tonnes and 10.95 million tonnes respectively from Iran. This increased to 12.7 million tonnes in 2015-16, before supplies of 27.2 million tonnes catapulted Iran to the third spot in 2016-17.

In the 10-month period between April 2018 and January 2019, India imported $97 billion worth of petroleum oil and oil obtained from bituminous minerals crude. About 11.2% of imported petroleum oil, worth $10.9 billion, came from Iran. The US decision to end waivers for countries importing crude from Iran beginning May 2 may hurt India’s interests, as it will have to look for alternative sources. With the US now asking India to bring down oil imports to zero, it has also told Iran that a decision on importing oil will be taken “after the elections”, after weighing the factors including “commercial consideration, energy security and economic interests”.
Unlike during the previous set of sanctions that had kicked in 2010, this time the world is divided. Except for the US, other partners – especially the EU and the three major European countries UK, Germany and France — have expressed their commitments to go ahead with the agreement. There are also practical hurdles; the European Union’s alternative payment mechanism – to pay through Euros instead of dollars – has turned out to be “theoretical”.

What has however been a sole reprieve is that the US has not put sanctions on Chabahar port development, since both Delhi and Washington’s objectives on accessing Afghanistan remain the same. Chabahar is India’s strategic investment in the region and is being developed as an access point to Afghanistan, since the strife-torn country is landlocked. It is also seen as a gateway to Central Asia, which is inaccessible to India directly. The port is strategic as the only way to circumvent Pakistan and get to Afghanistan.

In the last three years, momentum has picked up as India and Iran have worked to develop this crucial port. Prime Minister Narendra Modi travelled to Iran in May 2016, and Zarif and Swaraj on Tuesday expressed satisfaction at the operationalisation of the interim contract on the Chabahar Port between India Ports Global Limited (IPGL) and Ports and Maritime Organization (PMO).

In what ways has India’s recent outreach towards Saudi Arabia and the UAE, Iran’s regional rivals, impacted the relationship between New Delhi and Tehran?

This has been one of the diplomatic challenges for New Delhi, which it has navigated carefully. In the first two months of 2018, India hosted Israel PM Binyamin Netanyahu and Iran President Rouhani. Saudi Crown Prince Mohammed bin Salman then visited India in February 2019, and the UAE for the first time invited India to the Organisation of Islamic Cooperation meet early February this year. While Delhi has played the chessboard in the region tactically so far, hardening of the battle lines will make it increasingly difficult for India, especially because of the strong presence of the Indian community in the region.

How did India manage earlier flashpoints in its delicate relationship vis-a-vis Tehran and Washington? What are India’s options now?

India had earlier maintained that it follows the UN sanctions, and not unilateral sanctions. But with the US investing in its relationship with India by doing the heavy-lifting on Jaish-e-Mohammad chief Masood Azhar’s listing, New Delhi has had limited diplomatic space to manoeuvre. Following the listing of Azhar, the US expects reciprocity in dismantling Iran’s terror network, leaving India with few choices. India has so far not contracted any oil import from Iran, which according to diplomats was as smooth as Amazon’s doorstep delivery service – with transport, high credit period and insurance guaranteed.

With the next regime two weeks away, New Delhi will be worried about the inflationary impact on its economy if fuel prices soar and poses a challenge. It has to be nimble in making up the shortfall of 11% that would have otherwise come from Iran. The two largest exporters, Iraq and Saudi Arabia, account for 38% of India’s total petroleum imports, while the UAE and Nigeria together account for 16.7%. However, the biggest change has been the entry of the US as a major player. Although it did not figure in the list of top 10 petroleum exporters for India in 2017-18, in the 10 months of FY’19 the US stood at number 9, with an over 3% share of India’s petroleum imports.

New Delhi’s mantra of “commercial consideration, energy security and economic interests” will guide its options in oil imports. It cannot afford to foresake Iran, with which it has had close civilisational and historical links; it has had a close relationship with Shia Iran while the Saudi-Pakistan bonhomie took strategic shape.
Mindful of Iran’s influence in Kashmir and in the region, the next Indian government would not want to push Iran towards China and Pakistan.