India’s Growing Iran Dilemma - The Diplomat, 25 April 2019

In this week's column for The Diplomat, I write on India's growing Iran dilemma, and the current sanction waiver issue is just the latest manifestation of New Delhi's rising challenge in managing ties with Tehran.

The Trump administration appears to have decided not to extend waivers from sanctions on those countries that continue to buy oil from Iran. The decision not to extend another round of Significant Reduction Exceptions (SREs) will have a significant impact on big Asian oil importers including India, China, Japan, and South Korea, which had each initially secured a 180-day exemption from U.S. sanctions last year.

Among these countries, India is likely to be significantly impacted. India is the second largest importer of Iranian crude oil after China, and New Delhi is reported to be buying a considerable share of its oil from Tehran, making Iran the third largest oil supplier to India after Iraq and Saudi Arabia. This means that the Indian government will find it difficult to accept the U.S. decision.

The issue also raises broader questions about New Delhi’s relations with Washington. Among those is whether India has miscalculated its capacity to manage the United States. Given the centrality of India in the U.S. Free and Open Indo-Pacific strategy, the Modi government may have assumed that India will get another exemption from the sanctions that are to kickstart on May 1.

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Indian Petroleum Minister Dharmendra Pradhan tweeted to say that India has “a robust plan for an adequate supply of crude oil to Indian refineries. There will be additional supplies from other major oil-producing countries; Indian refineries are fully prepared to meet the national demand for petrol, diesel & other petroleum products.” But while India may have possibly been ready for additional reduction of oil imports from Iran, New Delhi is certainly not ready for a complete halt.

The U.S. decision is likely to create some negative reaction in New Delhi and raise once again the rhetoric of the United States as an unreliable partner that encroaches on Indian interests and sovereignty. Such a dynamic has been seen in the past as well whenever there have been tensions between the United States and India.

But in truth, India does have alternate options – Saudi Arabia, the UAE, and even the United States are potential suppliers that could replace Iran as an oil source. In fact, a White House statement made just this point: “The United States, Saudi Arabia, and the United Arab Emirates, three of the world’s great energy producers, along with our friends and allies, are committed to ensuring that global oil markets remain adequately supplied. We have agreed to take timely action to assure that global demand is met as all Iranian oil is removed from the market.”

Nonetheless, there are a number of strategic reasons why India wants to continue buying Iranian oil in spite of other options available. For instance, Shia Iran is seen in New Delhi as an ally against the predominantly Sunni Pakistan. Pakistan’s traditionally close relations with Saudi Arabia made Iran a possible ally. Iran’s position on Pakistan’s flank is also attractive, as is the perception of common Indian-Iranian interest in countering Pakistan’s influence in Afghanistan.

From a wider perspective, New Delhi also sees Iran as a conduit to Central Asia, a region that India considers strategically vital. India has invested in Chabahar port in Iran and highways that provide an alternative route to both Afghanistan and Central Asia, bypassing Pakistan. And despite the growing closeness with the United States, there is residual sympathy in New Delhi for some of Washington’s opponents, including Iran, that is rooted in India’s historic cultivation of multiple alignments with a diverse array of states. Finally, there is a question of timing too: In the midst of a tough national election campaign, the Modi government will not want to be seen as bowing to U.S. diktats.

But the impact of the U.S. decision on India can also belie India’s own challenges in its relationship with Iran, which are important to keep in mind as well. For one, India has invested more in its relationship with Saudi Arabia and other anti-Iranian Gulf monarchies. Such improving relationships will put pressure on India to moderate its support for Iran.

India has also grown increasingly close to Israel, a country that is the source of vital military equipment for India, but which is also engaged in severe competition with Iran. New Delhi has so far managed to insulate these relationships, but they also mean that India cannot be seen to be going out of its way to support Tehran.

Iran’s positioning on a number of issues that matter to India is no longer very reassuring to New Delhi. For instance, Iran appears to be more closely aligned to Pakistan on Afghanistan than before, as evidenced by Pakistan Prime Minister Imran Khan’s recent trip to Iran.

Last and certainly not least, all said and done, the United States itself is an increasingly vital partner for India. Joining Beijing in defying American wishes on the Iran issue may not be particularly wise given the broader interests that Washington and New Delhi and share. All of this ensures that New Delhi will find itself in a strategically difficult position in the coming weeks.

Will India’s Trump Fears Ease With the New US Asia Reassurance Initiative Act? - 5 January 2018

In this week's column, Will India’s Trump Fears Ease With the New US Asia Reassurance Initiative Act?, I wrote on the US Asia Reassurance Initiative Act and whether the Act will address some of India's concerns. New Delhi will be hoping that Congress can continue to rein in Trump’s worst instincts.

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On December 31, U.S. President Donald Trump signed the Asia Reassurance Initiative Act (ARIA), which promises to bring back fresh focus to American priorities in the Indo-Pacific. The Act assumes particular importance in the context of China’s expanding and aggressive footprint across Asia, Africa, Europe, and Oceania and the responses by the United States as well as its allies, partners, and friends in the region.

India for one has three specific areas of concern that it would want the United States to address. Within South Asia, there are two: India is worried about the prospect of American withdrawal from Afghanistan as well as about the inroads that China is making in India’s neighborhood. A third concern is more broadly the challenge that China poses to India, both militarily and politically. So, New Delhi is likely to judge this Act on how it will address these three challenges.

India will be happy to have been accorded special importance under the Act, which reiterates India’s significance in the U.S. strategy in the region. The Act notes India as a Major Defense Partner, a “unique” status for India, which would ease defense trade and sharing of technology, including “license-free access to a wide range of dual-use technologies” as well as promote greater coordination on security policies and strategies and increased military-to-military engagements. Of course, in practical terms, this doesn’t change very much. Nevertheless, the symbolic element is always important while dealing with New Delhi.

Of course, the congressional action comes immediately after Trump’s decision to withdraw U.S. troops from Afghanistan. Whether the congressional action will slow down or alter American withdrawal remains to be seen. Trump is reportedly considering changes to his approach to Syria, including slowing down a reduced presence. On the other hand, he also dismissed the Indian contribution to Afghanistan as nothing more than a library. Given India’s sensitivity to developments in Afghanistan, New Delhi will be very interested in whether the U.S. Congress can moderate Trump’s instinct to withdraw.

A second regional issue is China’s expansion in India’s neighborhood. China’s enormous wealth and its remarkable capacity for infrastructure building has made it an attractive partner for India’s neighbors, despite the threat of being sucked into a Chinese debt trap. Beyond this, the comfort of having an extraregional great power as a counter to the regional hegemon was probably an equally important factor. India’s limited capacity to provide an alternative has been an issue. The Act does talk about countering China’s coercive economic policies, but New Delhi would be interested in seeing whether this will provide any help to India’s neighbors in escaping China’s debt grasp.

A third issue is whether this Act will reassure India in its direct confrontation with China. Like other powers in Asia, India has also sought a more accommodative policy toward China over the last year. Change of leadership in the Indian foreign ministry was one factor, with Vijay Gokhale replacing S. Jaishankar in January 2018. Jaishankar was known to be an advocate of closer U.S.-India relations while Gokhale appears to be a much more traditional Indian Foreign Service officer who prefers equidistance from both the United States and China.

But more than personality factors were at play in India’s pursuit of closer ties with China. Though the Indian military stood fast in the 2017 Doklam crisis, the Indian military’s overall preparedness is rather poor. Indian military budgets are lower than they have been in decades and corruption scandals and bureaucratic incompetence have delayed necessary acquisitions. Another issue is domestic politics. India is set to hold national elections in 2019, and there are suspicions that the Modi government did not want to be diverted by a confrontation in the Himalayas.

Though these factors were important, underlying all these is a certain lack of confidence in America’s commitment to India and Asia. In that sense, this congressional action is potentially positive in providing greater reassurance, even though a lot will also depend on whether the Trump administration follows up on it or not.

India, like other American partners in Asia, has had concerns about Washington’s commitment to the region. This Act is not likely to remove those concerns. But to the extent that it endorses a consensus opinion within the U.S. Congress and also expresses the broad bipartisan consensus in Washington, it is likely to be welcomed in New Delhi.