On April 22, 2019, the Trump administration announced that exemptions from sanctions, which had been provided to five countries (including India), would end. India was allowed to buy up to 300,000 barrels of oil per day from Iran until May. Interestingly, even in the midst of Iran-US tensions, there was a 5 percent year-on-year increase in oil imports in 2018/2019 (4,79,500 against 4,58,000) from Iran.
Reduction of oil imports from Iran have less to do with the issue of oil (New Delhi can find other alternatives). Many strategic analysts believe it is more about India’s strategic autonomy and Iran’s strategic relevance, especially in the context of access to Afghanistan and Central Asia.
A clear reiteration of the importance of the India-Iran relationship was the visit of the Iranian Foreign Minister Mohammad Javad Zarifto India on May 22. The visit came at an important time. As mentioned earlier, the US made an announcement on April 22 that it would be removing waivers on sanctions. On May 8, Iranian President Hassan Rouhani stated that Iran would be compelled to resume high-level enrichment of uranium, if world powers were unable to keep their commitments, which they had made under the Joint Comprehensive Plan of Action signed in 2015. Rouhani’s reference was to other signatories such as UK, France, Germany, China, Russia and Germany.
During his New Delhi Visit, Zarif stated: “India is one of our most important partners, economic, political, and regional.” Indian Foreign Minister Sushma Swaraj told him that New Delhi would only take a decision on oil imports after a new government was in place.
New Delhi views the Chabahar Port as its gateway to Afghanistan and Central Asia. Chabahar is all the more important given the fact that Pakistan has long refused to grant India access to Afghanistan and Central Asia. Afghanistan has been forceful in its demand to make India part of the APTTA (Afghanistan Pakistan Trade Transit Agreement). Currently, Afghan goods (which unload at Wagah) can be exported to India, but Indian exports are not allowed by Pakistan via land.
In 2016, during Indian Prime Minister Narendra Modi’s visit, Afghanistan, Iran and India signed a trilateral agreement to enhance multi modal connectivity. In December 2018, India and Iran signed an agreement, in which India Ports Global Limited would take charge of Shahid Beheshti port — part of phase 1 of Chabahar. Apart from financial assistance for the Chabahar Project (which includes USD 85 million for the development of the port and a credit line of USD 150 million), an MoU signed under the trilateral agreement also seek to build a rail link between Chabahar and Hajigak (Afghanistan) and to develop a Chabahar-Hajigak economic corridor estimated at USD 21 billion. Hajigak is important for India, because an iron and steel mining project has been awarded to a consortium of Indian companies in Afghanistan.
While India views the Chabahar Port project as a means of bypassing Pakistan, Iran has on more than one occasion spoken about making China and Pakistan part of the Chabahar project. During an address at The Institute of Strategic Studies in Islamabad, Zarif stated that Tehran had reached out to both Pakistan and China to come on board the project. While policy makers in New Delhi did not react, members of the strategic community were surprised.
The Iran-Pakistan relationship is quite complex. Ever since taking over as prime minister, Imran Khan have spoken, on more than one occasion, about improving ties with Iran. In his first speech, after his party’s victory in July 2018, Khan commented about a better relationship with Iran, and alluded to a possible role of Pakistan as an intermediary between Iran and the Gulf Cooperation Council (GCC) countries. He said, “Our aim will be that whatever we can do for conciliation in the Middle East, we want to play that role.” Due to economic constraints, Khan have so far focused more on relations with GCC countries.
If Khan’s dream of regional connectivity is to be achieved, Pakistan needs to change its approach towards India. A first step could be Pakistan opening its land route for trade with Afghanistan.
One of the major bones of contention between Iran and Pakistan is the issue of terrorism. Iran has been accusing Pakistan of lending support to groups responsible for terror attacks. In 2017, 10 Iranian border guards were killed in a clash on the Iran-Pakistan border. Iran warned of striking terror camps in Pakistan, if it did not take action against Jaish-Al-Adl, whom Iran said was responsible for the attack. On February 13, 2019, 27 members of the Revolutionary Guards were killed in a terror attack in Sistan-Baluchestan. The Jaish al-Adl claimed responsibility for the attack. General Qassem Soleimani, the powerful commander of the Islamic Revolutionary Guard, in a tirade against Pakistan said that Islamabad was responsible for fomenting terrorism in the neighborhood and as a consequence had strained ties with all its neighbors.
US’ hardline approach towards Iran has resulted in Tehran looking at various economic options, and also rethinking its overall geo-political orientation. This was evident during Khan’s visit to Iran. The thrust of the discussions was on terrorism, with the Pakistan Prime Minister stating that terrorism could be a primary impediment to an improved relationship with Iran. Khan went to the degree of confessing that groups operating in Pakistan were involved in the terror attacks. He said, “I know Iran has suffered from terrorism (perpetrated) by groups operating from Pakistan. We (need to) have trust in each other that both countries will not allow any terrorist activity from their soil. We hope this will build confidence between us.”
During Khan’s visit, there was also emphasis on the need for closer economic ties and greater connectivity. The two countries’ trade is estimated at USD 1500 million (way below the estimated potential). Rouhani spoke about the possibility of greater cooperation between Chabahar and Gwadar ports. This is important because India has looked at Chabahar port as a counter to Gwadar port.
There was also talk of reviving the stalled Iran-Pakistan pipeline (the agreement of this project was signed a decade ago in 2009). While Pakistan shelved the project as a consequence of US sanctions, and while it might seem unlikely in the short run, there were those who believed that Pakistan should look at its own interests.
While all eyes are on Tehran’s ties with Washington, its South Asia policy will be interesting to watch, especially given the strained ties between India and Pakistan. During his Iran visit, Khan alluded to closer trade and connectivity ties, not just between Iran and Pakistan but also India as well. Tehran, while prioritizing its national interests, will have to deftly balance its relationship with New Delhi and Islamabad. India, on its part, needs to bear in mind the point that Iran’s strategic and economic interests will not be identical to those of its own. Iran for instance has close ties with China, and will also not be averse to strengthening economic ties and connectivity with Pakistan as was clearly reiterated by Khan’s Iran visit.
India needs to look at Iran from a holistic perspective (not just from the lens of its strategic interests in South Asia). While the Chabahar Port is naturally crucial from a strategic standpoint, the Iran issue also provides India an opportunity to act as an intermediary between the US and Iran by joining hands with EU countries, as well as countries like Japan and South Korea.
If Khan’s dream of regional connectivity is to be achieved, Pakistan needs to change its approach towards India. A first step could be Pakistan opening its land route for trade with Afghanistan (this may seem a pipe dream in the near future, but cannot be ruled out in the long run). While the head of the Pakistan military’s media wing did make reference to regional connectivity, it remains to be seen if the Pakistan army is serious about granting India access. Pakistan has expressed willingness to discuss the issue, but due to the deterioration of ties between India and Pakistan in recent months, and the lack of engagement, there has been no opportunity for any forward movement. After the Indian elections, there could be some progress.
In conclusion, Tehran’s strategic importance has been growing in the South Asian context in recent years. A lot has been spoken and written about its role in the global context, as well as in the Middle East, but its significance in South Asia’s geo-politics and as a potential bridge between South Asia and Central Asia are often overlooked. The complexities of the Tehran-New Delhi-Islamabad triangle also do not receive much attention. Over the next few months, a lot will depend upon the Iran-US relationship and the role played by countries like China and Japan.