Changes in the United States’ attitude to Iran could be very serious for India; among the issues involved are India’s access to Iranian oil supplies and other resources, the progressively more cordial relations between New Delhi and Washington, and India’s deepening defence relationship with Israel.
Upping the ante
The Trump administration is openly and consistently confrontational towards Iran, where President Donald Trump’s predecessor Barack Obama was firm but constructive. On April 18, the U.S. Secretary of State Rex Tillerson wrote to Congress — in the quarterly review Congress requires of the July 2015 international nuclear deal — that Iran continues to comply with the deal, but in the same letter he called Iran “a leading state sponsor of terror”. A day later, the Secretary of Defense, James Mattis, who has long been very hostile to Iran, accused it of attempting to “destabilise yet another country”, meaning Yemen. Two months earlier, on February 4, Mr. Mattis had responded to Iran’s late-January test of a ballistic missile by calling it the world’s “single biggest state sponsor of terrorism”. On April 12, the U.S. Permanent Representative to the United Nations, Nikki Haley, said in a Security Council briefing on Syria, “Iran is [Bashar al-]Assad’s chief accomplice in the regime’s horrific acts.”
Second, Washington’s major regional allies, Israel and Saudi Arabia, have been no less hostile. Israeli Prime Minister Benjamin Netanyahu has said Iran’s “aggression must not go unanswered”. Following exchanges with Riyadh, the White House has said the U.S. and Saudi Arabia have agreed to address what the U.S. Treasury’s Office of Foreign Assets Control, in a statement imposing several sanctions on businesses and individuals for Iranian links, calls Iran’s “destabilising activities” in the region.
Third, Mr. Trump’s own statements that he could consider committing U.S. troops abroad have been accompanied by an unprecedented $54 billion increase in the defence budget, despite the President’s frequent pre-election denunciations of what he called excessively high defence spending.
India’s Iran relationship
All this is highly significant for India. In October 2016, Iran was India’s largest supplier of crude oil, with its exports to India exceeding the overall largest supplier Saudi Arabia’s exports of 697,000 barrels per day (bpd) by over 10%. As the U.S. federal body Energy Information Administration notes, India is also funnelling Iranian oil into its expanding strategic petroleum reserves (SPR), with a view to holding 90 days’ supply against contingencies. Crucially, Tehran has consistently offered New Delhi very favourable terms, including non-dollar oil sales and other commercial attractions.
Oil is of course only one commodity in a long-standing Indo-Iranian trade relationship; Iran buys basmati rice and sugar from India, as well as various agrochemicals and petroleum products. Substantial expansions in the volume of business are also likely, despite earlier tensions over delayed Indian payments for oil. The Indian government has, furthermore, taken steps to reassure Indian insurers in the public and private sectors, as well as banks, over the risks they might take in handling Iranian money while the U.S. sanctions regime remains in force.
In addition, India and Iran have reached agreement on the expansion of several industrial facilities at the port of Chabahar; the work is to be undertaken mainly by Indian entities. Another substantial deal is the one under preparation for India to have operating rights in the Farzad B gas field, which lies within Iranian waters in the Persian Gulf.
Consequences
The prospect of a more aggressive U.S. attitude on Iran, if not stronger sanctions against Tehran, will almost certainly make the Government of India very uncomfortable, with the attitudes taken by Israel and Saudi Arabia no doubt exacerbating New Delhi’s predicament. It may help India that within the U.S. and Israel, moderating factors — both commercial and military — obtain. In 2012, the then Chairman of the U.S. Joint Chiefs of Staff, General Martin Dempsey, stated that attacking Iran would only delay Iran’s development of a nuclear weapon and not stop it. At that time too, the former head of Israel’s intelligence service Mossad, Meir Dagan (now deceased), said that a pre-emptive attack on Iran was “the stupidest idea” he had ever heard.
Among the commercial agreements which have followed the Iran nuclear deal (the Joint Comprehensive Plan of Action between Iran, the five permanent members of the United Nations Security Council and the European Union), is a 10-year, $16.6-billion contract for the aerospace giant Boeing to supply Iran Air with 80 passenger aircraft. Quite apart from Boeing’s competition with the EU manufacturer Airbus, any attack on Iran could put about 1,00,000 U.S. jobs at risk.
Perhaps as a result, the Trump administration, despite its bellicose rhetoric, is showing some signs of moderation in all this. For example, the sanctions announced since the recent Iranian missile test amount to no more than the implementation of measures already prepared by the Obama White House. It is, nevertheless, virtually certain that Tel Aviv and Riyadh will maintain what pressure they can on Washington by continuing to be vituperatively anti-Iranian, at least in public. Whether or not the U.S. allows the exchange of rhetoric to escalate may well depend on whose advice is decisive, even though on the evidence Iran is not a clear and present threat.
For India, a further point is that while previous U.S. administrations exempted India from certain sanctions over India’s continuing oil deal with Iran, the Trump administration may see the matter differently. One saving grace may be that no matter what Mr. Trump’s main regional allies tell him or want him to do, they cannot predict what he will actually do.
Arvind Sivaramakrishnan is an Adjunct Professor, Department of Humanities and Social Sciences, IIT Madras
