India is stuck in the proverbial ‘rock and a hard place’ syndrome in relation to the US embargo on energy trade with Iran.  The choice is limited; continue pursuing the strategic relationship with the US as one of the more important swing states with mutuality of future interests or resist the US coercion and follow the principle of strategic autonomy by remaining engaged with Iran for the many strategic advantages that the option provides. Both options have their extreme negatives too. An analysis of this needs context and brief explanation.

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India imports almost 80 per cent of its energy need. Of this, almost 11 per cent comes from the Islamic Republic of Iran, third in the quantified list of imports after Iraq and Saudi Arabia. Under the Joint Comprehensive Plan of Action of July 15, 2015, Iran was given a reprieve from sanctions which allowed it to pursue trade, especially of oil; it worked to India’s interests even as the arrangement was essentially aimed at bringing Iran into the international trade and monetary system. This period also saw a surge in Indo-Iran relations with the agreement on development and usage of the Iranian port of Chabahar which promised the long elusive surface access for India to Afghanistan and Central Asia.

However, on May 8, 2018, quoting alleged Iranian reneging on the nuclear deal, the Trump Administration pulled out of the deal struck by its predecessor. In November 2018, India got another reprieve with leeway granted to it and seven other nations on importing Iranian oil for a further six months. The others were China, Greece, Italy, Japan, South Korea, Taiwan, and Turkey. China and India remain the two largest importers of Iranian oil. Six months later, the US, as part of renewed vigour in its Middle East strategy, has revoked the leeway given to the eight nations. Iran’s oil, shipping, and banking industries could take a significant hit and its weakened currency could plunge further under these sanctions, which President Trump has said are intended to stop what he considers Iran’s unacceptable actions in the Middle East. These include Iran’s support to Bashir Assad in Syria and to the Hezbollah, actions which have demonstratively enhanced Iran’s influence in the Levant. It was evident for some time that the six month reprieve given would not be extended. The last step which confirmed that this was going to happen was the recent US declaration of Iran’s Islamic Revolutionary Guard Corps (IRGC) as a terrorist entity. Iran’s continued support to the Houthi rebels in Yemen irks Saudi Arabia even as Iran’s overall military power in the region is perceived as growing Shia power in the sectarian struggle against the Sunnis. The strong Iranian presence in the Levant, even by proxy, hurts US interests. The Iranian missile development programme and support to Hezbollah does likewise to Israeli interests. The current US strategy in the Middle East is focussed upon the emasculation of Iran aiming at internal instability with a segment of the people rebelling and this leading to a change in regime.

Internationally, the Iranian threat, as perceived by the US and its Middle East allies, is not considered sufficiently potent to exercise such measures to punish it. However, for the US it’s a legacy threat and quite psychological, going back to the black days of 1979-80 when as a superpower it was held hostage by a ragtag group of Iranian youth.

How does it all affect India? The potential withdrawal of Iran’s oil resources from the market has raised the price of oil to 75 US$. Besides that, the continuation of import against the US embargo will invite secondary sanctions from the US which essentially means some form of exclusion from the international banking system that is controlled by the US due to the dollar trade. The US, however, said the sanctions, will not hurt global oil supply as other nations will step up production. For India, it is not so simple; the economic effect means higher import bills and purchase deals which will not carry the Iranian provisions of being freight-free and with a line of credit.

If India acquiesces completely to the US diktat, it stands to lose much of the strategic advantage it has built through its relationship with Iran. The strategically located port of Chabahar on which India had struck a tripartite deal with Iran and Afghanistan in 2015 gave it for the first time a capability to approach Afghanistan by other than an aerial route; overland access having been denied by Pakistan all these years, even after the emergence of the independent Central Asian Republics (CARs) in 1992. However, with the US now sold out on greater Pakistani involvement in striking a deal with the Afghan Taliban even the argument of an enhanced Indian role in stabilizing Afghanistan may not work in obtaining special favours from the US. Diplomatically having Iran in a favourable disposition towards India would always cut advantage for us in the context of Pakistan and any contemplated role in Afghanistan. It’s also been reported that the US is demanding its pound of flesh for the support it is extending to India over the UN designation of Masood Azhar as an international terrorist.

In the dilemma that it finds itself the Indian government has limited choice. Resisting the US under the belief that the Trump Administration has only a 20 months balance period in its term and that things will eventually change will be a folly. The US presidential scenario for 2020 is completely uncertain and 20 months is a long period for a peeved President Trump to coerce India even further than it already has. The question is the extent to which the US needs India’s support; is it more than the support India needs from the US. The US has largely sidelined India on Afghanistan knowing that its presence at the high table will always irk Pakistan. However, in the Indo Pacific and more specifically the Indian Ocean India’s cooperation is crucial for the US, as a balancing force against China. 

The author commanded the 15 Corps in Jammu and Kashmir