India-Iran

Challenges & opportunities

Print edition : March 07, 2014

At Chabahar in Iran, preparations are on to lay the gas pipeline to Pakistan, in 2013. An Iran-India undersea gas pipeline bypassing Pakistan may be considered. Photo: Vahid Salemi/AP

Iranian President Mohammad Khatami greets Prime Minister A.B. Vajpayee in Tehran in 2001. Photo: HASAN SARBAKHSHIAN/AP

President Mahmoud Ahmadinejad receives Prime Minister Manmohan Singh at the NAM summit in Tehran in 2012.

Hashemi Rafsanjani, who preceded Ahmadinejad as President. Except during Ayatollah Khomeini’s time, Iran and Saudi Arabia had reasonably good relations. Photo: Ebrahim Noroozi/AP

Hassan Rouhani succeeded Ahmadenijad as Iran's President. Photo: Jason Alden/Bloomberg

Given its interests in the Gulf, India has opted not to get embroiled in GCC-Iran differences. With the thawing of U.S.-Iran relations, it is time India engaged itself with the promotion of Gulf security.

EXCEPT for the years of hostility during Ayatollah Khomeini’s rule, for much of the period after the Islamic Revolution Saudi Arabia and Iran had reasonably good bilateral relations. The end of the Iran-Iraq war in 1988, the death of the hardliner Imam Khomeini in 1989 and, most importantly, the Iraqi occupation of Kuwait in 1990 changed the regional situation and opened up opportunities for Iran to build bridges with the Gulf Cooperation Council (GCC) countries.

During the presidencies of Ali Akbar Hashemi Rafsanjani and Mohammad Khatami, there was political dialogue, cooperation in regard to energy policies, heightened economic ties, and, above all, a strong bilateral effort to play down the sectarian divide and promote interaction between the ulema (clergy) of Shias and Sunnis, the two sects of Islam. There was a downturn in relations during the presidency of Mahmoud Ahmadinejad, mainly owing to his provocative remarks. Even so, he was warmly welcomed to the 2007 GCC summit in Doha, the first occasion Iran was invited thanks to a personal initiative of the Emir of Qatar, and later to the Organisation of Islamic Cooperation (OIC) summit in Mecca in August 2012. A high-level delegation from Iran attended the OIC summit, and there were no hysterics or walkouts even when close ally Syria’s membership was suspended over Iran’s objections. Later, there was cordial interaction between the Iranian leadership and GCC representatives at the Non-Aligned Movement summit in Tehran in August 2012.

The roots of the present Saudi-Iran divide lie in the regime change in Iraq after the United States’ military intervention in 2003, when “Sunni” rule, however authoritarian and irreligious it might have been, was replaced by Shia governments. From the Saudi perspective, this situation, which suggested the emergence of an incrementally strengthening Iraq-Iran partnership, placed the Kingdom of Saudi Arabia at a serious strategic disadvantage vis-a-vis Iran.

Against this background, what alarmed Saudi Arabia was the impact of the Arab Spring in Bahrain, when thousands of agitators gathered at the Pearl Square to demand the implementation of a political reform programme that had been promised by the ruler Sheikh Hamad bin Isa Al Khalifa when he ascended the throne in 2002. Although there was no evidence of an Iranian role in the Bahrain agitations, this was immediately and strongly denounced by Bahrain, Saudi Arabia and the United Arab Emirates (UAE) as unwarranted and unacceptable Iranian “interference” in Bahrain’s internal affairs.

Saudi concerns about reform in Bahrain were deep-seated, even existential. The Kingdom feared the reverberations that Shia empowerment in Bahrain would have on its own two-million-strong Shia population, which lives mostly in the contiguous eastern province and has been subjected to serious discrimination in the state founded on Wahhabi ideology. Furthermore, it was feared that reform in Bahrain could have a powerful domino effect across the GCC and lead to insistent demands for reform across the region. These concerns led to the dispatch of Saudi and UAE troops to Bahrain as a psychological reassurance to the Bahraini regime. Confrontation was thus set up against Iran, with Saudi Arabia accusing it of seeking regional hegemony on a sectarian and ethnic (Persian) basis. Iran-Saudi competition soon acquired a region-wide sectarian character, as Saudi Arabia challenged Iranian influence across different theatres in West Asia—Iraq, Lebanon, Palestine and, above all, Syria.



The Arab Spring led to some public demonstrations in Syria in March 2011 seeking reform in the political order. The demands were not only rejected by President Bashar al-Assad, but he mobilised opposition to the agitators on a sectarian basis by asserting that the demands for reform were an attempt to challenge the Alawite monopoly on power in the country. Saudi Arabia stigmatised the Syrian regime as Shia and seized the opportunity to seek regime change in Syria, being convinced that an alternative Sunni political authority would snap Syria’s strategic ties with Iran, deny the latter its outreach to the Mediterranean, and end Iran’s links to the Hizbollah, thus diluting Iranian influence in Lebanon. These strategic setbacks for Iran would, in Saudi perception, compensate it for the disadvantages it suffered with the regime change in Iraq and the setting up of an Iran-Iraq nexus.

The Syrian scenario is thus no longer about freedom, democracy and dignity. External players such as Qatar, Saudi Arabia and Turkey have come out in open support of the “rebels” by providing funds, arms, training and full logistical support to the militias. Over time, Islamist groups, made up of Muslim Brotherhood, Salafi and Al Qaeda elements, have come to dominate the uprising, warring with each other with the same ferocity that they exhibit against government forces. This has contributed in great measure to converting a limited but evolving internal revolt into a protracted and escalating civil war that has lasted now for over two and a half years in which almost 130,000 people have died, more than five million have been displaced internally, and more than three million have become refugees in neighbouring countries. A large number of historic cities and shrines have been destroyed.

U.S.-Iran thaw

Amidst the growing carnage in Syria, there was a dramatic and unexpected thaw between the U.S. and Iran in November 2013 on the nuclear question, which ended mutual hostility of over 30 years and held out prospects for fundamental changes in the Gulf, West Asian, South Asian and even global scenarios. This thaw emerged from the election of President Hassan Rouhani, who, in contrast to his predecessor, immediately spoke the language of “prudence and hope”. International politics could not be a zero-sum game, he said, and could not function on the basis of blood feuds; he asserted, instead, the central importance of “constructive engagement”. The interim nuclear agreement is to be the first step in a long-drawn attempt to address all issues that have bedevilled ties between Iran and the West, including the harsh sanctions that have crippled Iran’s economy and imposed on it a near-outcast status.

Already a number of positives in the regional scenario, unthinkable even a few months ago, have emerged. Even while the nuclear agreement with P5+1 (the U.S., the United Kingdom, France, Russia, China and Germany) was under discussion, Iranian Foreign Minister Mohammad Javad Zarif stressed the importance of Iran’s ties with the Arab Gulf countries. He assured the latter that the nuclear agreement “cannot be at the expense of any country in the region”, and stressed the importance of good Iran-Saudi ties for the benefit of the Gulf.

Since then, he has visited four of the six GCC countries—Kuwait, Qatar, the UAE and Oman—repeating the message of goodwill and camaraderie. He has more than once publicly expressed his wish to visit Saudi Arabia. This improved atmosphere encouraged the GCC summit to issue a statement welcoming the U.S.-Iran breakthrough. Significantly, the UAE Foreign Minister also visited Iran and a positively worded UAE statement was issued.

Again, the use of chemical weapons in a Damascus suburb on August 21 has ironically set off a chain of events that have resulted in a positive outcome: it has led to the U.S. and Russia finally intervening in Syria to stem the bloodletting and focus regional and global attention on a political resolution of this conflict that has ground to a stalemate and has enabled Al Qaeda to consolidate itself in various parts of Syrian territory.

This provides opportunities to envision new scenarios based on accommodation rather than competition and conflict. In this regard, the issue that needs to be addressed most urgently is that of sectarianism. Sectarian bloodletting in Pakistan, Iraq, Lebanon and Syria has shown its immense destructiveness and its capacity to engulf the entire Muslim community in fratricidal violence for several generations. Both Iran and Saudi Arabia have to accept the futility of the sectarian conflict. Once sectarianism is taken out of the equation, Saudi Arabia and Iran will discover numerous areas where they have shared interests —extremism, energy and regional security. Here is where India can play a constructive role.

India’s interests

India has a deep and abiding interest in regional stability. The GCC countries provide 53 per cent of Indian oil imports; they are India’s number one trade partners in terms of economic grouping, and are home to over seven million Indians who send home over $35 billion every year. Taking energy, trade and remittances into account, the financial value of India’s two-way ties with the GCC countries is about $200 billion annually.

If oil supplies from Iran and Iraq are taken into account, India receives 80 per cent of its annual oil imports from the Gulf. In the coming years, as India’s energy demand increases, oil and gas from the Gulf will be central to India’s growth rates and economic development. Besides energy and commerce, Iran is crucial for India’s strategic interests—in terms of its concern with the Afghan political scenario and logistical connectivity to Afghanistan, Central Asia and Russia.

Given the crucial importance of its interests in the Gulf, India had so far rightly opted not to get embroiled in GCC-Iran differences but to separately build strategic, energy and economic ties with all the countries of the region. However, the time has come for India to shed this passive approach and actively engage itself with the promotion of Gulf security. This will emerge for the essential fact that, in spite of the violence and destruction, there has been no winner in the Saudi-Iran strategic and sectarian competition over the last three years. The stage is now set for countries close to both sides to promote engagement and, in time, rapprochement, focussing on the issues that bring them together.

The most important matter in this regard will be regional security—giving assurances to all regional entities that their domestic politics will not be subject to external interference. This will in time pave the way for joint GCC-Iran efforts to address conflicts in Syria, Lebanon and Palestine. The recent arrest of the Saudi national Majid bin Mohammed al-Majid, the head of the Abdullah Azzam Brigades in Lebanon, said to be responsible for the attack on the Iranian embassy in Beirut in November last year, has brought home to both Iran and Saudi Arabia the grave threat the region as a whole faces from the proliferation of jehadi elements in Syria, Iraq and other parts of West Asia. This, if nothing else, should concentrate the minds of the two Islamic giants to seek an end to their feud and pursue dialogue and rapprochement.

They should also be able to cooperate on energy-related matters, given the long-term implications of the U.S.’ shale “revolution”. Decreasing U.S. dependence on Gulf energy supplies and the U.S. “pivot” to Asia open up the space for new role players with a deep and abiding interest in Gulf security. India’s crucial dependence on Gulf energy supplies makes it imperative for it to be deeply engaged with the region. India is already deeply engaged politically and economically with the GCC countries, and has agreements in place for security and defence cooperation and, in the case of Saudi Arabia, for a “strategic partnership” as set out in the Riyadh Declaration of February 2010.

In order to be able to play an effective role in bridging the Iran-Saudi divide, India has to impart greater dynamism and substance to its ties with Iran. These relations had peaked in 2003, with the visit of President Khatami, when the “New Delhi Declaration” bound the two countries in a strategic partnership. This was preceded by the “Tehran Declaration”, signed during the visit of Prime Minister Atal Bihari Vajpayee in 2001, in which the two countries affirmed their commitment to “an equitable, pluralistic and cooperative international order” and upheld Iran’s right to pursue a peaceful nuclear programme.

The latter point was echoed in the New Delhi Declaration as well, which included a strong, albeit veiled, criticism of Pakistan for its support for international terrorism, and an attack on the “double standards” of the West in regard to the global fight against terrorism. The two countries had also agreed to expand their strategic role in third countries (namely, Afghanistan) and to collaborate in the areas of sea-lane security, naval exercises, and upgradation of defence systems. At the same time, the two countries recognised that their strategic convergence had to be founded on a “strong economic relationship”.

There can be little doubt that the U.S.-led global concerns relating to Iran’s nuclear weapons programme and the simultaneous upswing in India-U.S. ties, catalysed by the bilateral civil nuclear agreement, steadily diluted the resonance of India-Iran ties so that the two countries drifted apart, with little to show for the promises generated during the Khatami visit.

Now that the U.S. itself is engaged with Iran, there should be little reason for India to show any hesitation in imparting to its ties with Iran the priority and substance they deserve. The first step should be to bolster energy ties—purchasing Iranian oil in increasing quantities and providing Iran with the oil products it urgently requires. Iran used to be the number two oil supplier to India, while India was Iran’s number two market. However, since 2011, Iran has steadily lost this position: in January 2014, Indian imports of Iranian oil were 35 per cent less than in the corresponding period last year. China, on the other hand, though Iran’s largest importer, has made the least cuts: in January-November 2013, its imports were just 1.7 per cent less than in the same period last year. Similarly, from 2000-01, India had become a major supplier of oil products to Iran, which constituted over 40 per cent of the total Indian exports in 2008-09; in response to sanctions, oil products became 1 per cent of India’s exports to Iran.

In anticipation of the gradual easing of sanctions, Iran has announced plans to increase oil production and upgrade its hydrocarbons sector: exports in 2014 are likely to be 1.4 million barrels a day (mbd) as against 1.15 mbd in 2013. Iran is also expected to embark on the development of its major oilfields at Azadegan and Yadavaran and further develop its offshore gas reserves, besides enhancing production at its mature fields and exploring new fields. In this effort, it will require significant investments as also technical expertise and qualified personnel, all of which India is well placed to provide.

In 2005, there were several agreements on India-Iran hydrocarbon cooperation, including upgradation of refineries, purchase of LNG, swap arrangements for the purchase of oil in return for oilfield developments, etc. None of these proposals were actually implemented, and both sides are to blame for this. Given that Iran is at present already in dialogue with Western oil majors and is negotiating an agreement with Russia to swap equipment and goods valued at $18 billion for the purchase of 0.5 mbd of Iranian oil, India, as a neighbour with long-term mutually beneficial economic and strategic interests, should not be found wanting in enthusiasm and imagination.

The visit of External Affairs Minister Salman Khurshid to Iran in May 2013 affirmed India’s strategic interests in cooperating with Iran in Afghanistan and the development of the transport corridors from the Gulf to Afghanistan and Central Asia. In this context, it is important to note that both Iran and India have excellent relations with Oman. It is well known that Oman, and Sultan Qaboos bin Said personally, played a crucial role throughout the past year in building the foundations which ultimately led to the breakthrough between the U.S. and Iran. An agreement has been signed between Oman and Iran for the supply of Iranian gas to Oman through an undersea pipeline. The presumption is that technology for this purpose is now available and that the pipeline is economically feasible. If this is the case, then a direct India and Iran undersea gas pipeline could also be considered. Alternatively, the original 1993 proposal of an undersea Oman-India gas pipeline could be revived, through which Iranian gas can come to India via Oman, bypassing Pakistan. An agreement has also been signed between Oman, Iran, Afghanistan and Tajikistan to develop a transport and economic corridor from Chabahar port northwards and eastwards. India would be a very valuable partner in this project.

The early commencement of dialogue between India and Iran on the regional situation will enable both sides also to focus attention on strategic issues of interest to both sides and define the basis on which India can play a catalytic role in bringing Iran and Saudi Arabia together once again.

Ranjit Gupta and Talmiz Ahmad are former Indian Ambassadors in the West Asian region.

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