Tags: Iran | chabahar | delhi | france | modi

India May Offer Concessions on Oil to Iran

iranian foreign minister mohammad javad zarif talks with his Iindian counterpart sushma swaraj

Iranian Foreign Minister Mohammad Javad Zarif, left, talks with his Indian counterpart Sushma Swaraj pose for the media before their meeting in New Delhi, India, Tuesday, May 14, 2019. Zarif's visit to New Delhi comes within days of the United States ending its waiver to India that allowed it to buy Iranian oil without facing American sanctions. (Manish Swarup/AP)

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Wednesday, 22 May 2019 03:58 PM Current | Bio | Archive

At a time when Donald Trump’s rather unorthodox foreign policy comes under scrutiny as he intensifies trade war with China, the president seems to have scored a victory on another front with relative ease.

India, after having caved in to U.S. demands, has decided not to purchase oil from Iran. India’s compliance with the new sanction regime is crucial in that Washington seeks to rachet up pressure on Iran by cutting off its oil revenue.

Until a year ago, Iran was the energy-hungry India’s third largest supplier of crude oil. However, Washington should not see it an unqualified victory, for India leaves open the possibility to reverse its decision in the near future.

Last November, Washington granted a six-month waiver to eight major importers of Iranian crude oil and petroleum products after it scrapped the nuclear deal with Iran hammered out by the Obama administration.

There are reports suggesting that the Indians reached out to their American counterparts, seeking an extension of the waiver program. Because it fell on deaf ears in Washington, Delhi decided to pull the plugs on Iranian imports.

It would be prudent for observers not to mistake India’s time-sensitive decision for rallying behind Trump. Prime Minister Narendra Modi, who is seeking reelection, is facing a tougher battle than what he expected.

The outcomes of some of his bungled policies, such as the so-called demonetization, purchasing fighter jets from France, or doctoring economic data to inflate his accomplishments, are chipping away at his popular support. A risk-averse Modi, therefore, wanted to avoid an untimely face-off with Washington over Iran.

After all, one or two scathing tweets sent out by Trump would be enough for India’s raucous opposition parties in launching newer attacks against Modi. Understandably, the embattled prime minister would not want to let that happen.

That said, it would be folly to think a second-term Modi government would not meet this issue head-on. India’s foreign minister has reassured the Iranian foreign minister Javad Zarif to review this matter after the elections wrap up. Should the opposition Congress party comes to power, although such a prospect is dim, it will probably do the same.

The point is, Indian policymakers will revisit this thorny issue soon. If the new government sticks to the status quo, it would further deteriorate relations between India and Iran. And an otherwise decision would force Washington to sanction Indian entities, mostly state-run corporations, which is sure to raise the temperature.

Although they were off to a promising start, Trump soon grew increasingly critical of Modi, mocking India’s contribution to the rebuilding efforts of Afghanistan.

Moreover, Trump called India a "tariff king," canceled a special trade preference, and imposed tariffs on steel and aluminum. Furthermore, the Indians perceived the Trump administration’s restrictions on the H-1B visas for highly skilled workers as a way to curb the flow of Indians entering the U.S. workforce.

In this backdrop, it would not be entirely unexpected of India if it responds to Trump’s muscular foreign policy by resuming a limited oil import from Iran. After all, what Trump fails to grasp sometimes that concessions are a two-way street.

The United States is not likely to gain everything it demands by coercion.

Like Trump, Modi brands himself as the best option that India has had in recent decades. Therefore, he might feel compelled to stand up to American pressure to bolster his image.

Furthermore, there are two potent reasons why the next government in Delhi would want to resume importing oil from Iran. First, India enjoys an excellent relationship with Iran that has taken a new dimension with India investing in a port on the Gulf of Oman.

The Chabahar port is the lynchpin of an Indian grand strategy to connect India with Iran and Afghanistan bypassing Pakistan and eventually turn the port into a hub of regional trade.

India took control of a part of the port earlier this year marking the first such operation outside Indian territory. If anything, it shows New Delhi’s willingness to counter the influence of China that is using Pakistan’s land and waterways to develop its much-touted Belt and Road initiatives.

Whether or not India will be successful in this complex geopolitical game would largely depend on Iran’s unconditional support. Stopping the petroleum import completely would not do India any good.

An upset Tehran can retaliate by restricting India’s access to the port, which will undo Indian foothold in the region.

Second, the Indian foreign policy establishment jealously guards its strategic autonomy. It is not to suggest that Indian policymakers will turn a blind eye to American interests. But by unilaterally dismantling India-Iran oil trade, the United States is likely to alienate a powerful bloc in Delhi that balks at foreign pressure.

Therefore, a response might be in the making that might not please the Trump administration.

What is telling in this regard is India’s response that came after Zarif’s visit to Delhi. That is, the Indians will make a decision "keeping in mind our commercial considerations, energy security and economic interests."

In sum, the Trump administration should not rule out a response from India offering some concessions to Iran. If such a scenario happens to unfold, it would be hard to blame the Indians only.

Arafat Kabir is a graduate student of political science at the University of Utah. He writes about South Asian politics, defense, and business with a special focus on Bangladesh. He is a contributor to Forbes Asia. His articles have also published in media outlets, including The Washington Post, The Wall Street Journal, The Diplomat, and The National Interest. He can be reached on Twitter at @ArafatKabirUpol. To read more of his reports — Click Here Now.

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ArafatKabir
Whether or not India will be successful in this complex geopolitical game would largely depend on Iran’s unconditional support. Stopping the petroleum import completely would not do India any good. An upset Tehran can retaliate.
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Wednesday, 22 May 2019 03:58 PM
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