Iran Prez’s visit signals India’s Mideast balance

Iranian President Hassan Rouhani’s February 15-17 visit to India came 15 years after the last visit by an Iranian head of government. From 2003, as India began its own nuclear parleys with the United States, Iran was left explaining its clandestine nuclear programme, revealed by Pakistan’s A.Q. Khan’s intercepted shipments to Libya. Thus, unlike the period 1990-2003 when strategic convergence between India and Iran grew over the Pakistani influence in Afghanistan and rise of the Taliban, from 2003 the dissonance dominated, exacerbated by the United States.

Tehran’s nuclear deal in 2015 with the P5+1 (Germany, along with the five permanent members of the UN Security Council), resulted from then US President Barack Obama’s surmise that an unshackled Iran was necessary to roll back the ISIS in West Asia. President Donald Trump came into office decrying that deal. Mr Trump’s Riyadh visit endorsing the anti-Iran Saudi-convened conclave of Sunni nations reversed the US pivot and destabilised West Asia and the Gulf. Mr Rouhani’s visit to India takes place against this background and Prime Minister Narendra Modi’s personalised outreach to Saudi Arabia, the UAE and Israel.

President Rouhani has vast experience as a long-serving national security adviser of his country. He has domestically marketed the nuclear deal, over the undoubted objections of the Islamic Revolutionary Guard Corps (IRGC) and its clerical supporters, as necessary for critical investments in Iran.

Mr Trump’s threats, followed by the widespread public protests in Iran over inflation and diversion of resources to Shia allies abroad, have left Mr Rouhani exposed. Confrontation with Washington is imminent as Tehran is unlikely to roll back its strategic alliances across the Shia world, including with Yemen. The India-Iran joint statement of February 17 reflects this reality. India needs an assured supply of oil and gas, and in times of rising oil prices and widening trade deficits it gets an advantage paying in rupees. Iran needs investments, markets for its petroleum resources and to wean India away from the Saudi-UAE corner.

The first phase of Shahid Beheshti Port — Chabahar — stands completed. India should be leasing some berths. The commentary in the Indian media about India taking over the port is baloney as revolutionary Iran doesn’t transfer strategic assets to foreign powers. But Iran has been engaging China over Chabahar, and India may find its imagined monopoly somewhat compromised. The Chabahar-Zahedan railway link, debated for long, would not help with Afghan or Central Asian connectivity as any trans-shipment from port to train and back to truck within Iran will be time-consuming and cost escalating. Iran wants infrastructure development at Indian cost.

Iran has invited India to set up fertiliser, petrochemical and metallurgical plants in the Chabahar free trade zone. In the past, India sought to lease land for its own free zone in Chabahar, to overcome Indian investors’ reservations about Iranian regulations and bureaucracy. In the early 2000s, the Tatas and Essar had planned steel plants near Bandar Abbas. The US sanctions dissuaded them, as they feared their global businesses being impacted. The same fear will resurface now.

Support for the International North-South Transport Corridor is restated. Multi-modal connectivity via Iran was attempted since the headier days of the 1990s’ Iran-India romance. But Iran saddling each trans-shipment from one mode to the other with exorbitant charges made corridors economically unviable. Additionally, lack of enough return-trade from destinations in Central Asia, Russia and Europe led to containers piling up at destinations.

In the field of oil and gas, the Rouhani government failed to get Indian oil majors control of even fields where discovery has been made by Indian companies. The Farzad B gas field demonstrates this dilemma. It is now stated that “negotiations for reaching appropriate result” would be undertaken. This may be difficult as Iran tends to mix commercial and strategic issues, dragging its feet if dissatisfied over Indian diplomatic support. China, on the other hand, scores on this count and has thus gained space at the cost of India and Japan since 2003.

India-Iran trade gets imbalanced due to Indian oil imports, which averaged about 450,000 barrels a day last year. Non-oil goods trade has remained at around $5 billion annually, and is largely evenly balanced. The Confederation of Indian Industry setting up an office in Tehran may help. Iran has always sought more of its banks to open branches in India. The interest of Pasargad Bank, Iran’s second largest, is listed. The two countries will soon finalise a Preferential Trade Agreement and Bilateral Investment Treaty. A Double Taxation Agreement was finally signed, which had been under negotiation since the late 1990s.

Iran’s cultural links with India have always exceeded those with Arabs. The Persian language and culture came with Humayun when he re-acquired the Indian throne after exile in Iran. Therefore, appropriately, a Festival of India is planned in Iran in 2018-19. Mr Rouhani favours more cultural freedom for Iranians but is stymied by radical clerics. Audiences attending cultural events at foreign embassies often get hassled when back on the street. The easing of visas is good, but travel by Indian visitors to Iran will remain a challenge as dress restrictions for women and cultural and food barriers remain.

On combating terrorism, both sides agreed to “address conditions conducive to terrorism as well as extremist ideologies”. This lingers close to the “root causes” argument, which India abhors. India extends support to the Joint Comprehensive Programme of Action (JCPOA) — the nuclear deal — which Mr Trump may scowl at. Both support a “strong, democratic and independent Afghanistan”. In reality, Iran is investing in the Taliban and a bigger American presence in Afghanistan, which India openly welcomes. Iranian support to India would only cover India’s development projects, and not any Indian security footprint.

It is good that the Iranian President’s long-overdue visit finally took place, ignoring the US unhappiness or Saudi or Emirati fears. Iranians practise “Taqiya”, or dissimulation, while Indian politicians follow Chanakya. The balancing of India’s ties with Iran, amongst a complex medley of actors in the Islamic world, will remain a major challenge for Indian diplomacy.