G7 Summit and Iran: Why India Would be Watching Closely
All eyes were on Modi's meeting with Trump on the sidelines of the G7 Summit. (Photo: Reuters)
By Tridivesh Singh Maini

G7 Summit and Iran: Why India Would be Watching Closely

Sep. 10, 2019  |     |  0 comments

Two issues dominated the G7 Summit held at Biarritz, France in August 2019. First was the US-China trade war and the second was tensions between Iran and US.

A number of members of the G7, including UK, reiterated the need for harmonious resolution of trade disputes. British Prime Minister Boris Johnson who is often compared with US President Donald Trump, commented on global trade disputes, “I want to see an opening up of global trade, I want to see a dialing down of tensions, and I want to see tariffs come off.”

Japan and the US announced that they would finalize a bilateral trade deal in September. The deal will benefit American farmers and US farm products such as beef, pork and dairy products. US farmers have lost out as a result of both US-China trade war but also the US exit from the Trans Pacific Partnership (TPP). Signatories to the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP), especially Canada, have benefited at the cost of the US. Canada’s beef exports to Japan have witnessed a significant rise ever since the CPTPP came into force.

The Iran issue drew attention because the Foreign Minister of Iran, Javed Zarif, arrived in France unexpectedly and met with French President Emmanuel Macron on the sidelines of the G7 meeting. Along with German Chancellor Angela Merkel, Macron has been seeking to adopt a more nuanced approach towards Iran, in favor of keeping the P5+1 nuclear agreement, also known as Joint Comprehensive Plan of Action (JCPOA), intact, and has been opposing US President Donald Trump’s rigid approach towards Tehran.

Even when sanctions were announced, France along with Germany and UK had set up a Special Purpose vehicle (dubbed as Instrument in Support of Trade Exchanges, INSTEX) which would enable it to circumvent US sanctions on Iran. US criticized this move, even going to the extent of saying that Europe needed to choose between doing business with the US or Iran.

Initially, it was believed that all G7 leaders would bring out a joint statement pertaining to Iran, but this was not to be. The US President also categorically ruled out any immediate deal with Iran. By the end of the summit, Trump did show willingness towards engaging Iran. He stated that he had a “good feeling” about a nuclear deal with Iran, and that while he recognized Iran’s potential, he was against Iran acquiring nuclear weapons.

Iranian President Hassan Rouhani hinted that he was not averse to a meeting which would help in pushing forward Iran’s interests. Rouhani said, “If I am sure that attending a session or having a meeting with someone will help develop my country and resolve the people’s problems, I will not hesitate to do so.” Days later, Rouhani remarked that a meeting with Trump was only possible if the US removed sanctions. It is premature to comment on whether Trump and Rouhani will actually meet given Trump’s unpredictability as well as Rouhani’s domestic constraints, statements from both sides need to be viewed positively.

It is also time for India to work jointly with other countries like France and Japan to reduce tensions between Washington and Tehran. So far, India has not been pro-active enough in finding common ground with other countries on the Iran issue.

One of the special invitees to the G7, India (Prime Minister Narendra Modi was invited as a special guest by the French President) has immense interest in the reduction of tensions between Washington and Tehran. The removal of tensions is important for India, in the context of its oil needs as well as the Chabahar Port project which is India’s gateway to Afghanistan. The port is important in the context of India-Afghanistan economic ties and is also important in the context of overall trilateral connectivity between India, Afghanistan and Iran. India has stopped  importing oil from Iran since May 2019, after the US refused to extend the waiver it had provided to India for buying oil from Iran. Iran has been understanding of the fact that India has its constraints. The Iranian envoy in India Ali Chegeni stated that ties between Iran and India would not be impacted by “sanctions”. He described this as a “passing phase”.

After US ended the waiver to India for Iranian oil imports, New Delhi increased its imports from Saudi Arabia. For the month of May, imports from Saudi Arabia reached 3.55 million tons as opposed to 2.68 in the previous year; imports from Iran fell from 3.13 million tons to 0.5 tons.

Meanwhile, India’s relationships with Gulf Cooperation Council (GCC) countries, which have strained ties with Iran, have strengthened. A strong reiteration of India’s growing closeness to GCC countries is that none of the member states spoke up in favor of Pakistan after the revocation of Article 370 which withdrew special status to Jammu and Kashmir. The UAE said that this was an internal issue of India and Saudi Arabia stated that it was keeping a close watch on events. The Supreme Leader of Iran Ayatollah Seyyed Ali Khamenei expressing his concerns with regard to the events in Kashmir. He tweeted, “We have good relations with India, but we expect the Indian government to adopt a just policy towards the noble people of Kashmir and prevent the oppression & bullying of Muslims in this region.”

Only a few days after the revocation of Article 370, India’s Reliance Industries Limited (RIL) announced a deal whereby Saudi Aramco would buy a 20 percent stake in RIL’s oils to chemical business. Another strong illustration of India’s growing ties with GCC members is the fact that Saudi Aramco and UAE’s Abu Dhabi National Oil Company will have a 50 percent stake in the USD 44 billion Ratnagiri Refinery and Petrochemicals Ltd project in Maharashtra. Modi also undertook a visit of GCC countries between August 23-25. In UAE, he received the highest civilian order — the order of Zayed, bestowed by the crown prince of UAE.

New Delhi needs to bear in mind that while its relationship with the GCC countries have strengthened, it cannot ignore Iran.

It would be important to take note of the fact that there has been disappointment within certain quarters in India who believed that New Delhi should have taken an independent stance vis-à-vis Iran and not be influenced by the US. During the G7 Summit, while all eyes were on Modi’s meeting with Trump on the sidelines regarding India-Pakistan ties and trade issues between both countries, Modi was supposed to have raised the issue of reducing tensions with Iran. Even Macron was supposed to have told Trump to remove the embargo on Iranian oil sales to India.

In conclusion, New Delhi would be hoping that Trump and Rouhani soften their positions as this would create space for greater economic linkages between New Delhi and Tehran. Given the changing geo-political situation in South Asia and the significance of the Chabahar Port, this is all the more important. It is also time for India to work jointly with other countries like France and Japan to reduce tensions between Washington and Tehran. So far, India has not been pro-active enough in finding common ground with other countries on the Iran issue.

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