Heartburn in Washington: India Calls Iran “Critical” to their Energy Future

It is no secret that the South and East Asian economies have chafed under the multi-layered sanctions adopted by the United States, European Union and United Nations Security council against Iran for its civilian nuclear activities.

Many in the West see Iran's nuclear efforts as masking a covert weapons program, which Tehran has stoutly denied.

For the moment India, Korea, Malaysia, South Africa, Sri Lanka, Turkey and Taiwan have dodged the penalties accruing from violating U.S. sanctions, as in June 2012, the Obama administration granted exemptions based on reductions of oil purchases from Iran of about 20 percent.

The waivers were renewed on 7 December 2012 for another 180 days, while seventeen EU countries have not been granted exemptions.

Which brings us up to now.

One of the 'waivered" countries, India, has stated that Iran is "critical" to India's energy security, a development certain to cause major heartburn in Washington.

Adding to the Obama administration's concern is undoubtedly the fact that the observation was made not by a low-level functionary but rather, External Affairs Minister Salman Khurshid, who told reporters, "We are looking at re-energizing the national North-South Corridor to connect India with Central Asia and Russia through Iran, we are looking at trans-Afghan routes using Iranian port of Chahabar particularly to get access to Afghanistan, Uzbekistan and Tajikistan. We are looking at a rail link from Kazakhstan to Turkmenistan into Iran. Of course, it does make Iran very critical. On the other hand, it makes Afghanistan very critical. Therefore, we hope that within our philosophical approach of being friends, we get Afghanistan back to a stable situation. Afghanistan will then become a bridge for us to Central Asia and Iran as well."

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Lest no-one be in any doubt about the import of Khursid's remarks the minister added, "(When) Iran will be able to find a resolution with the European Union + 1 on the issue of nuclear energy so that Iran also becomes an important link between us and Central Asia. It will give us far greater access to Central Asia than we have now."

Interestingly, Khursid's remarks at a three-day conference on Central Asia held at the Kashmir University come a mere five days after he met with U.S. Secretary of State John Kerry in New Delhi on 24 June. Amid the diplomatic praise Kerry said, "…both of us are particularly eager and committed to taking this relationship to new heights. India and the United States, two of the most powerful economies in the world, two democracies, two countries that share so much in terms of our values and our aspirations, we believe have an opportunity to be able to set a new standard for cooperation on a number of challenges that we all face."

Shaun Tandon of Agence France Presse asked Kerry, "I wanted to follow up particularly to the Foreign Minister on the issue of Iran. India has kept open dialogue with Iran, has a much better relationship with Iran than the United States does. What was the nature of your discussion, if any, on Iran, and your hopes or your considerations about President-elect Rohani? Thanks."

Kerry did not mention Iran in his reply.

All of which leads to the following observations.

While the Indian government is extremely interested in an approved relationship with Washington, it will not abandon its own national interests, which include energy security, of which imports from Iran constitute a significant element.

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Secondly, New Delhi is looking at the "bigger picture," beyond 2014, when the U.S. and International Security Assistance Force drawdown of forces from Afghanistan is due to be complete. India wants a pacified post-occupation of Afghanistan as much as do the post-Soviet states of Central Asia, seeing a quiescent Afghanistan as a major potential economic transit route.

Accordingly, the diplomatic minuet between Washington and New Delhi will continue for the foreseeable future, with the unspoken but overriding question being, who needs the other more?

At the end of the day, Washington cannot make up India's energy shortfall if it completely abandons Iranian energy imports, and, as India will be a major political player in post-occupation Afghanistan, one can reasonably expect to see a "diplomatic" solution in the probable form of extended "waivers" if the Obama administration wishes to retain a major regional ally.
The "Great Game" continues.

By. John C.K. Daly of Oilprice.com