Diktat diplomacy

BY JOHN CHERIAN

The United States is piling the pressure on India to whittle down its oil imports from Iran and retreat from the Chabahar port project.

THE United States has been piling the pressure on India in its ongoing efforts to isolate Iran after the Trump administration unceremoniously reneged on the historic nuclear deal that the Barack Obama administration had signed with the country. All the other signatories to the Joint Comprehensive Plan of Action (JCPOA), including close allies of the U.S. like the United Kingdom, France and Germany, have said that they will honour the deal and will not reimpose sanctions on Iran. President Donald Trump, however, seems to have made the reimposition of sanctions a priority issue for his administration. He had raised the issue with his Russian counterpart, Vladimir Putin, during their recent meeting in Helsinki.

The Russian side has been openly critical of the American decision to unilaterally scrap the nuclear deal. China, which imports a lot of Iranian oil and gas, is unfazed by threats from the White House to blacklist companies and countries buying oil from Iran. In fact, Chinese companies placed new orders for Iranian oil after the U.S. government issued the warning. The Chinese Foreign Ministry spokesperson said in the first week of August that Beijing stood firmly against unilateral American sanctions and emphasised that “China and Iran unwaveringly maintain normal trade and economic ties”. The Iranian economy continues to be dependent on oil.

In Asia, only the governments of India, Japan and South Korea seem to be buckling under the threats. Tokyo and Seoul are military alliance partners of Washington. Japanese Prime Minister Shinzo Abe, following arm-twisting by the U.S., has given up plans to undertake a state visit to Iran in July. It would have been the first by a Japanese Prime Minister in more than 40 years. South Korea, the world’s fifth biggest oil importer, buys most of its light crude from Iran. Its government has denied reports that it will stop buying from Iran, but its oil imports from Iran have declined sharply from May. India also seems to following suit after the U.S.’ sharp warning to its “allies” to completely stop importing from Iran by November. The Trump administration has declined “special waivers” to countries like India, which have been traditional importers of Iranian oil.

A U.S. State Department spokesman said sanctions would be imposed on India and China if they did business with Iran. “And yes, we will certainly be requesting that their oil imports go to zero,” the official told the media in June. The Trump administration has been sending senior officials to New Delhi to demand that India act promptly on its recommendations. Among the high-profile American visitors to Delhi in the last two months was Nikki Haley, the U.S. Ambassador to the United Nations, who is counted among the Trump administration’s top Iran-baiters. She told the media in Delhi that she had asked the Indian government to cut its oil imports from Iran and downgrade its relationship with the country. Two other top officials have called for regime change in Iran—Secretary of State Mike Pompeo and National Security Adviser John Bolton. Both of them are supporters of the terrorist grouping Mujahedin-e-Khalq.

Going by past experience, the Indian government is likely to substantially reduce oil imports from Iran. The previous United Progressive Alliance (UPA) government had cooperated to a large extent with the sanctions regime that was in force from 2011 to 2016. However, most of the sanctions against Iran during that period were mandated by the U.N. After the U.N.-mandated sanctions were lifted in 2015, Iran once again became a top supplier of crude to India, just behind Saudi Arabia and Iraq. Iranian heavy crude is cheaper than Saudi and Iraqi oil. The Indian government also committed in 2016 to transfer $6.5 billion it owed to Iran as payment for oil supplies. The payment was held up owing to the sanctions. During the earlier sanctions period, India and Iran had agreed to conduct half of the oil trade between the two countries in Indian rupees. A rupee-rial arrangement was then in place. After the sanctions were lifted three years ago, India started paying Iran in euros for 55 per cent of its oil imports.

The new unilateral sanctions imposed by the U.S. are deemed to be illegal under international law. The Iranian government has been conveying to the Indian side that it understands the constraints India faces as it tries to balance relations between the U.S. and Iran. Interestingly, the Indian government, in the second week of July, gave permission to an Iranian bank to open a branch in Mumbai. The U.S. has not officially reacted to this development. Bank Pasargad will have the distinction of being the first Iranian bank to have an office in India. The presence of the Iranian bank will ensure a smooth flow of funds between the two countries. Then there is the question of the Chabahar port, located adjacent to the Gwadar port in Pakistan, which India is committed to developing. New Delhi has committed to invest $500 million in the port and has pledged to make it operational by 2019. There is, however, a question mark on whether India has the will to go ahead with the project in the face of open hostility from the U.S. Off the record, Iranian officials have been complaining about the slow pace of progress in the project. Japanese companies, which were supposed to invest in it, are now unlikely to do so.

The Iranian side has indicated that there are many other countries willing to develop Chabahar. Chabahar can be India’s gateway to the markets in Afghanistan and Central Asia, and the government should ensure that the project is expedited notwithstanding the U.S. threats. The Iranian government wants the Indian government to start work on infrastructure projects that will connect the port to the Iranian rail network and the city of Zabedan located close to the border with Pakistan and Afghanistan. Minister of State for External Affairs V.K. Singh reassured Parliament in July that India was “engaged in long-term partnership” in the energy sector with Iran and also gave assurances on the operation of the Chabahar port. He stressed that India’s ties with Iran were not dependant on relations with a “third country”. He said that the high-level exchange of state visits highlighted the strong relationship between the two countries.

Prime Minister Narendra Modi visited Tehran in 2016. Iranian President Hassan Rouhani was in India in February this year. The declaration of “long-term friendship” between India and Iran came a day after the Trump administration despatched Assistant Secretary of State for Terrorist Financing Marshall Billingslea to New Delhi as part of the U.S.’ ongoing efforts to pressure India into drastically curtailing economic ties with Iran. Iran’s Deputy Foreign Minister, Seyyed Abbas Araghchi, was also in New Delhi at around the same time to hold talks with Indian officials on the sanctions issue.

The Indian government has on previous occasions insisted that it will comply with the sanctions regime only if it is internationally mandated. External Affairs Minister Sushma Swaraj reiterated this position during the visit of her Iranian counterpart, Mohammed Javad Zarif, to New Delhi in May. She said India would adhere only to U.N.-mandated sanctions and not to those imposed by individual countries. But with the Trump administration fixated on the goal of regime change in Iran, it wants to ensure that most avenues for the export of Iranian oil are blocked, by hook or by crook. Iran has threatened to retaliate if its oil exports are blocked by closing down the Straits of Hormuz and disrupting the supply of oil from the Persian Gulf region. “You may begin the war, but it is us who will end it,” warned Major General Qassem Soleimani, the commander of the Islamic Revolutionary Guards, in response to one of Trump’s belligerent tweets threatening to annihilate Iran.

The U.S. has shown its displeasure at the Indian government’s reluctance to immediately comply with its demands by rescheduling, at the eleventh hour, the first ever 2+2 meeting from June to the first week of September. Under the 2+2 format, the Ministers for External Affairs and Defence will hold talks with their U.S. counterparts, the Secretaries of State and Defence.

All of a sudden the Trump administration, which had made an issue out of India’s decision to purchase the potent S-400 missile systems from Russia, has indicated that it will not impose sanctions on India for arms purchases from Russia. But then the Trump administration is not known to speak in one voice on foreign policy issues. The U.S. Congress has passed a “Countering America’s Adversaries Through Sanctions Act” Bill. It went out of its way to provide special “waivers” for India in relation to the purchase of Russian weaponry. Justifying the decision, Secretary of Defence James Mattis said: “The fundamental question we must ask ourselves is, do we wish to strengthen our partners in key regions or leave them with no other option but to turn to Russia, thereby undermining a once in a generation opportunity to more closely align with nations with the U.S. vision of global security and stability?”

In an obvious quid pro quo, the Indian government has agreed to buy even more military equipment from the U.S. There are reports that the Modi government wants to install an American missile shield for the country costing billions of dollars. The Indian government has also also let it be known that it would like President Trump to be the chief guest at next year’s Republic Day celebrations.

Concurrently, the Indian government seems to be on the verge of signing the Communications Compatibility and Security Agreement (COMCASA) with the U.S. India has been under pressure to do so after the signing of the logistics exchange agreement in 2016. If the Indian government initials the COMCASA, the Indian military will be further drawn into the American military alliance. The logistics exchange agreement allows the U.S. military to use Indian Army bases and ports. COMCASA will give the U.S. access to the Indian military’s communications systems. It will also compromise the sophisticated Russian equipment which is in the service of the Indian armed forces, besides sending a message to China that India is now a key part of the U.S.’ grand strategy of isolating it militarily in the Asia-Pacific region.

Modi in recent months has started talking about the need for strategic autonomy and ambiguity in India’s foreign policy. In a speech in Singapore he said that India’s friendship with the U.S. should not be viewed as an alliance that seeks to contain any other country in the region. Modi had emphasised in his speech at the Shangri La Dialogue in Singapore that New Delhi gave equal importance to its ties with Washington and Moscow. India is a member of both the BRICS and the SCO. These two groupings have made it clear that they will call the Trump administration’s bluff on Iran. Russia is participating in Iran’s aerospace and nuclear industries. The two countries have played an important role as allies in quelling the jehadist threat in West Asia. China plays an important role in Iran’s economy.

Many of the key Belt and Road projects are located in Iran. Iran is also part of the International North South Transportation Corridor that is essential for enhancing connectivity between Asia countries and the European market.