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India should monitor ties between China and Iran, but must guard against hasty conclusions

The pursuit of a closer security partnership with the US does not mean that India should follow the US lead on its other important relationships.

Written by Shyam Saran | Updated: July 23, 2020 8:52:12 am
PM Narendra Modi, Iran's Rouhani discuss Chabahar operationalisation, regional situation Prime Minister Narendra Modi shakes hands with President of the Islamic Republic of Iran Hassan Rouhani during a meeting in New York (PTI)

Reports that Iran and China are close to concluding a 25-year strategic partnership — which may involve a trade and investment partnership totalling a massive $400 billion — have generated considerable angst in India. This is being linked to reports that Iran has decided to undertake the construction of the Chabahar-Zahedan railway line to the border with Afghanistan on its own because India continues to delay its implementation of the project. The project has not been handed over to China — at least not yet — so the “India loses, China wins” narrative is premature.

It is not only India but other countries, including China, which have found it difficult to undertake projects in Iran because of US sanctions, particularly the denial of dollar financing. Chinese purchases of Iranian oil have decreased substantially in the past two years and the overall bilateral trade fell to $23 billion in 2019 compared to a peak of $35 billion. During Chinese President Xi Jinping’s visit to Iran in January 2016, an ambitious target of $600-billion trade in 10 years was announced. It has turned out to be mostly hype. The 25-year strategic partnership plan of $400 billion should also be taken with a generous pinch of salt. Though made much of by Iran, it has not been confirmed by China.

Even Iran has now described it as a “draft” submitted for Chinese consideration and which will need the approval of Iran’s parliament. Incidentally, the contents of the draft have been in the public domain since September last year, when they were carried in an international petroleum publication but did not trigger similar expressions of concern. These reports are being encouraged by Iran to suggest that it has powerful friends and that the US has been unable to isolate it. That is how it projected the trilateral Iran-China-Russia naval exercise that was held in the Gulf of Oman in June this year, calling it a “new triangle of power.”

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China attaches importance to its relations with Iran, which is a key source of energy supplies, a significant component of its ambitious Belt and Road Initiative, and a potentially lucrative market for its project exports and manufactures. However, like India, it has also in parallel cultivated closer relations with Saudi Arabia and the UAE, which are currently bigger suppliers of oil and gas to China than Iran is.

Just weeks after the trilateral naval exercise, the bi-annual China-Arab States Cooperation Forum met in Jordan earlier this month with ringing declarations of China-Arab friendship. China has also emerged as a major arms supplier to the Arab states and has conducted naval exercises with Saudi Arabia and the UAE. It continues to have a strong relationship with Israel. There is no doubt that as China’s economic, military and technological capabilities have increased, its profile in this strategically important region has also expanded. With the US becoming self-sufficient in oil and gas and its reliability as an ally being increasingly in doubt, the Gulf countries have welcomed China as the world’s largest oil importer, a source of military supplies and as an emerging security partner.

While acknowledging this changed regional geopolitical landscape, India should pursue its largely successful policy of maintaining positive relations with Iran, the Arab states and Israel, just as China has done and not use a Chinese prism through which to shape its policy. There have been calls by some analysts to downgrade relations with Iran in order to align more closely with the US and to put greater emphasis on relations with Arab states. This would be a mistake. India will have more room for manoeuvring in the region by continuing to maintain a strong and friendly relationship with Iran. One should also not exclude the possibility of a Democratic US President reviving the Joint Comprehensive Programme of Action (JCPOA), or the Iran nuclear deal, concluded in 2015, which President Donald Trump walked out of in 2018. The revival of the deal will open the door for US and European companies to resume business with Iran. In the 2015-2018 period when sanctions had been partially lifted on Iran, it preferred to turn to the West rather than China for its economic revival. The 25-year strategic plan dates back to January 2016, but the Chinese complained that the Iranians were dragging their feet on follow up action. It is the reinstatement of severe economic sanctions that has led Iran to turn to China, but the latter has remained cautious.

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India should not arrive at hasty conclusions and damage its relations with Iran, which remains strategically important. The pursuit of a closer security partnership with the US does not mean that India should follow the US lead on its other important relationships. It has quite rightly remained engaged with Russia even though Russia-China relations are the closest they have been historically and Russia’s confrontation with the US has sharpened further in recent years. The same logic applies to our relations with Iran, which have served as a restraint on Pakistan.

This does not mean that India should not monitor closely the development of relations between China and Iran, which could complicate our security interests on our western flank. Of particular concern is a reported reference in the 25-year strategic plan of China constructing a new port at Jask at the mouth of the Hormuz strait. This may be linked to oil and gas fields inland through pipelines and allowing shipments even if the narrow Hormuz Strait was closed. If the port were operated by China just as Gwadar on the Pakistani coast nearby is, then Chinese naval presence in the western reaches of the Indian Ocean would become significant. India’s maritime security would be at further risk. It would also be of deep concern to the Arab states who will suffer from any closing of the Hormuz Strait while Iran remains less affected. Here is an issue on which the Arab states may well react adversely to China running with the hares and hunting with the hounds. India, too, should press its concerns on Iran while working on a counter-strategy.

This article first appeared in the print edition on July 23, 2020 under the title ‘Through its own prism’. The writer, a former Foreign Secretary, is a Senior Fellow at CPR

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