... but Iran is a difficult customer

Speaking at a bilateral conference in the capital on 5 July 2010 Foreign Secretary Nirupama Rao was highly critical of the American sanctions against Iran.  In a hard-hitting statement she observed: ‘We are justifiably concerned that the extra-territorial nature of certain unilateral sanctions recently imposed by individual countries, with their restrictions on investments by third countries in Iran’s energy sector, can have a direct and adverse impact on Indian companies and more importantly, on our energy security and our attempts to meet the development needs of our people.’

Rao’s public distancing from the US sanctions would have been music to Iranian interlocutors present at the conference hosted by a state-funded think-tank. It would have also pleased Indian oil companies who are eyeing Iran’s rich energy market. That is, until the WikiLeaks blow the cover.

American documents released by whistleblower present a more complex picture. On 18 January Rao and two officials from the Ministry of External Affairs met the visiting US Special Representative Richard Holbrooke. The Indo-Iranian relations figure almost in the far end of their meeting. The Foreign Secretary candidly admitted that relations with Iran were ‘not as good as you may expect.’ As per the leaked confidential cable, Rao attributed this to Iran being ‘difficult to deal with.’

Any serious observer of the Middle East would admit that Iran being a difficult customer is a diplomatic understatement. Those familiar with the ‘peace-pipeline’ would vouch for the brinkmanship that Iran indulges in its external dealings. While the Indian leaders have overlooked the complexities of the energy deals, Iran has not been a friendlier customer either.

Tehran has provided a new meaning to energy security. Conventional understanding of the concept revolves around a country’s ability to secure assured supply of energy resources at affordable prices. In its eagerness to cash-in on its massive oil and gas reserves, Iran has stretched both price and assurance components of energy security. Hence, both price and supply assurances became elastic and undependable.

As a result, all of India’s major energy-related deals with Iran are in jeopardy. The LNG contract is stuck due to Iran lacking the necessary technology. The Iran-Pakistan-India (IPI) pipeline is not happening due to price wrangling. And investments opportunities in the Iranian energy sector could not materialize due to American opposition and sanctions.

With hindsight it is clear that the visit of Petroleum Minister Mani Shankar Aiyar to Iran in June 2005 created more problems and complications than the mandarins had anticipated. Those who missed the fine print but settled for photo-opportunity have a lot to explain. While electoral reverse kept Aiyar out of the government, the officials who accompanied him when the 25-year LNG deal was signed are very much active. Now none of these principal players look after the Iran file but they have left a complex and irresolvable problems for India.

Back to Rao, who flagged the usual issues with Holbrooke: civilizational ties, India’s large Shia community and petroleum trade.

Civilizational links figure prominently in all major statements concerning the Indo-Iranian ties. This   temporary amnesia is not confined to diplomats. It is hardly possible to find any discussion on the bilateral ties without this civilizational bogie. Was it relevant during the Cold War years? Did centuries old ties overcome India’s difficulties with imperial Iran when it was closer to Pakistan and the US? How does not one explain the Shah’s support to Pakistan during the wars of 1965 and 1971 within the civilizational paradigm?

Meaningful improvement in the Indo-Iranian ties happened only after the end of the Cold War. Orphaned by the Soviet demise and international isolation of post-Kuwait Iraq, India was looking for new friends in the Middle East and elsewhere. Around the same time, Iran was out of its prolonged war with Iraq and was coming out of the self-imposed isolation and rhetoric. Furthermore, the passing away of Ayatollah Khomeini and the emergence of Hashemi Rafsanjani as President marked the beginning of political pragmatism in Iranian foreign policy. Only then did high level political contacts between the two countries become the norm. But don’t look for such historical evidence from those parroting civilizational logic.

Likewise, those harping on ‘consistent’ Iranian support for India over Kashmir should also revisit their temporary memory lapse. Recent outburst of the Supreme Leader Ali Khamenei should not be seen in isolation. While the tone and tenor of his statements on Kashmir is unprecedented, of and on Iran has been critical of India’s policy over Kashmir. On most occasions, such unfriendly postures have been expressed in multilateral forums such as the Organization of Islamic Conference (OIC) where Iran joined others in expressing its support for militants and occasionally endorsed Kashmiri right to self-determination.

The third leg of Rao’s rationale, the Shia factor, is rather new to Indian foreign policy. For decades, its leaders and intelligentsia have been explaining and justifying India’s policy through secularism. Even the prolonged absence of relations with Israel was rationalized through secular jargons. Until recently the invoking of the Muslim factor in India’s foreign policy was confined to the Hindu right which harped on the vote bank politics.

Since the UPA came to power, however, India has been more vocal in justifying its Iran policy as a sign of Shia politics. In a press conference held in New York in September 2005 Prime Minister Manmohan Singh flagged Shia factor in India’s Iran policy. Since then others have openly admitted this and Rao is the latest addition.

Despite highlighting this, India has sided with the US over Iran; and hence the implications of the Shia factor are not very clear. Does being anti-Iran externally imply being anti-Shia domestically? If so, then we have a peculiar democracy.

This becomes pertinent if one examines two correlating factors. India’s Muslim community is predominantly Sunni and so are most Arab neighbors of Iran. As the recent WikiLeaks have highlighted, the Arab countries are more concerned about Iran and its ambitions than is commonly recognized. Hence, when it comes to Iran, the Sunni factor is as important as the Shia factor. The conjectural in me thinks by highlighting the Shia factor, the Indian leaders were indirectly impressing the importance of the Sunni factor.

If it were to choose between Iran and the Arab countries, India’s interests undoubtedly lie with the latter. In terms of political relations, economic interest, labor migration, trade ties and energy security, the Arab countries are far more important than Iran. If Indian leaders are reading the WikiLeaks correctly, then they should comprehend the regional apprehensions over Iran and factor in the Arabs while evolving the country’s Iran policy.

Put it bluntly, when it comes to Iran, New Delhi can ignore pressures from Washington and political noises from Israel. But it cannot afford to ignore Arab fears, concerns and anxieties. Thus Rao’s understatement of Iran being a difficult customer has more than one meaning.

Note: A slightly different version was carried by New Indian Express on 17 December 2010. 

As part of its editorial policy, the MEI@ND standardizes spelling and date formats to make the text uniformly accessible and stylistically consistent.

The views expressed here are those of the author and do not necessarily reflect the views/positions of the MEI@ND.

 Editor, MEI@ND: P R Kumaraswamy