As the world assesses the cost of US walking out of the Iran nuclear deal, policy-makers in New Delhi will be more anxious than anticipated. The re-imposition of sanctions against Iran will force India to re-work both its energy strategy and strategic calculations to cope up with unfolding situation. The blow has come to the Modi government at a time when it is entering into an election year – general elections are due next year – and rising prices of petrol and diesel have already breached the threshold point of public sufferance.
Iran is India’s third biggest source of oil after Iraq and Saudi Arabia. India has expanded its oil basket but Iran continues to be a significant contributor. Oil prices last week crossed the $70/bbl (barrel) mark and disruption in supplies will lead to a further upswing. Apart from sourcing oil, India had developed close ties with Tehran over the years and it was one of the high points of prime minister Narendra Modi’s diplomatic efforts that New Delhi managed to carefully balance its West Asia policy by entering into friendly ties with all the major players from Saudi Arabia to Israel. However, India’s proximity with the US, Israel and Saudi Arabia had made Iran suspicious which led to its foreign minister Javad Zarif extending an invitation to Pakistan to join Chabahar port.
India has stakes in strategically positioned Chabahar port in Iran where it has promised to pump in $500 million primarily to counter China’s involvement in Gwadar port in Pakistan located nearby. The Chabahar port is crucial to India’s
access to Afghanistan and Central Asia bypassing Pakistan. With the imposition of sanctions against Iran, the development of Chabahar project, whose first phase was kicked off in December 2017 with New Delhi getting the operational control, will become a challenge.
The move by Donald Trump has completely turned around the geo-political situation. India does not want to be seen as an active member of the US camp as it seeks to establish its independent identity. As of now, India can do little but wait and watch the next move by the Trump administration and its reaction from the rest of the world, including the European Union and Russia. The oil prices are at a four-year high and all the oil importing countries like India, US, EU and China have to bear the brunt. The EU has not appreciated unilateral scrapping of the Iran deal by the US.
French ambassador to India Alexandre Ziegler was forthcoming in his response to the development as he expressed regret at the US decision. “We will continue implementing this agreement together with our European partners,” he said. More than the imports of oil, New Delhi will be impacted by the soaring prices of crude oil. There is intense criticism of Trump within the US even though all he did was to go ahead with his poll promise of scrapping the deal signed by his predecessor Barack Obama.