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New Delhi's Iran headache
Thinking outside the box needed to develop economic ties
25 May 2017
By: Tridivesh Singh Maini and Sandeep Sachdeva

India has numerous foreign policy priorities, with ties with the United States, China, Russia and Pakistan understandably receiving more attention. However, at this point of time, one of the greatest challenges New Delhi faces is its relations with Iran.

Post the signing of the P5+1 (China, France, Russia, the United Kingdom, the US and Germany) Joint Comprehensive Plan of Action (JCPOA), commonly known as the Iran nuclear deal, New Delhi has sought to strengthen its economic and strategic ties with Tehran. The key conditions of the agreement were that Iran would roll back its nuclear program, and also bring about a significant reduction in its stockpile of enriched uranium. In return, the US and the European Union removed all related economic sanctions on Iran in January 2016, after the UN nuclear agency confirmed that Tehran had fulfilled its obligations.

During the visit to Iran of Indian Prime Minister, Narendra Modi, in May 2016, the two nations signed a number of memorandums of understanding (MoU), although the big-ticket issue was the development of the Chabahar Port. According to the bilateral agreement signed by both sides, India would develop the port and infrastructure. India committed US$500 million for the same.

“This very strategic port can very well turn into a very big symbol of cooperation between the two great countries,” said Iranian President Hassan Rouhani.

It would be pertinent to point out that Iran has recently proposed to New Delhi to manage phase one of the port, while the two sides are still holding deliberations with regard to India’s role in expanding phase two of the port, with the Modi government keen to invest US$ 235 million.

During Modi’s visit, a trilateral transit agreement was signed by India, Iran and Afghanistan, allowing Indian goods to reach Afghanistan through Iran. India will build a 500-kilometer rail line from the Chabahar port to the southern coast of Iran to Zahedan, close to the Afghan border, at a cost of $1.6 billion, as part of the transit corridor to Afghanistan.

“It [the trilateral agreement] will open new routes for India, Iran and Afghanistan to connect among themselves. India and Iran also share a crucial stake in peace, stability and prosperity of the region,” said Modi.

The port is especially important because Pakistan is not willing to include India in the Afghanistan Pakistan Transit Trade Agreement (APTTA). Afghan goods can go into India, but trucks stop at Wagah on the Pakistan side of the border. New Delhi has repeatedly stated that it is willing to allow Afghan trucks into the Indian side. Due to Pakistan’s rigidity, India has also been deprived of land access to Afghanistan and Central Asia.

Many have also dubbed Chabahar as a counter to the Gwadar Port being developed by China. It would be pertinent to point out, however, that Iran has sought Chinese participation in the Chabahar project, and categorically stated that this is not a counter to Gwadar.

US policy toward Iran

While India’s outreach toward Iran makes sense, it needs to watch out for US president Donald Trump’s attitude toward Tehran. Trump, during his campaign speeches, openly spoken about scrapping the nuclear agreement.  Both his Secretary of State, Rex Tillerson, and Defense Secretary, James Mattis, categorically stated that this was not possible. While the International Atomic Energy Agency’s latest assessment unequivocally says that Iran has stuck to the commitment it made, Tillerson has also agreed that Tehran has not violated the agreement. Yet, the US has been extremely critical of the agreement, and equated Iran with North Korea. It has been accused of playing a negative role in the Middle East, which is harming Washington’s strategic interests in the region.

 “The Trump administration is currently conducting across the entire government a review of our Iran policy ... an unchecked Iran has the potential to follow the same path as North Korea and take the world along with it,” said Tillerson. “The United States is keen to avoid a second piece of evidence that strategic patience is a failed approach.”

Alliance of GCC and Israel

It is not just US policy which India has to contend with, it is also the alliance between Gulf Cooperation Council (GCC) countries and Israel. Although Saudi Arabia has always shared strained ties with Israel, recently both have joined hands on the issue of Iran. Israel, Turkey, and Saudi Arabia, along with its GCC partner countries, demanded at the Munich Security Conference that Tehran be punished for propping up the Syrian government, developing ballistic missiles and funding separatists in Yemen.

Saudi Foreign Minister Adel al-Jubeir lambasted Iran, saying that “Iran remains the single main sponsor of terrorism in the world.”

He further accused Iran in front of delegates at the conference. “It’s determined to upend the order in the Middle East ... [and] until and unless Iran changes its behavior it would be very difficult to deal with a country like this.”

While Israel has spoken about strengthening ties with India, it has not denied that there is a major diversion between both countries over the issue of Iran.

“Nowadays, things have changed in the Middle East and Israel has good relations with a few Arab countries,” Israeli Ambassador to India, Daniel Carmon, said recently. “We [Israel and some Arab states] have joint interests with many others. We see eye to eye on danger coming out of Iran.”

While India can take up the issue of Iran with the US, it remains to be seen whether it has the leverage. In such a situation, New Delhi needs to pitch for a more pragmatic Iran policy and work closely with other countries that have been advocating the same.

New Delhi has also been astute in seeking to further Indo-Russia ties, which many suspected had soured due to improved ties between Russia and Pakistan - last year both countries conducted the first ever joint military exercise in Pakistan.

2017 marks seven decades of the bilateral relationship, which remains robust. India recently participated in a conference on Afghanistan, which was also attended by representatives from Pakistan, China and Central Asian countries. The conference was held a day after the US dropped the massive ordinance air blast (MOAB) on ISIS caves in Afghanistan. Moscow and New Delhi also have common interests in Iran.

Modi will be visiting Russia in the first week of June as guest of honor at the St Petersburg Economic Forum. While Trump’s rigid stance over Iran is a serious challenge, New Delhi needs to think outside the box and find common ground with countries that have deep economic and strategic interests in Iran.

Tridivesh Singh Maini is a New Delhi based Policy Analyst with The Jindal School of International Affairs, OP Jindal Global University, Sonipat.

Sandeep Sachdeva is an Independent Policy Analyst and a graduate of The Jindal School of International Affairs.

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