India and the Middle East: Walking a Diplomatic Tightrope

Indian Minister for Road Transport & Highways and Shipping Nitin Gadkari visited Tehran in August 2017 to attend the swearing in ceremony of re-elected President Hassan Rouhani. Gadkari’s visit reflected the importance that the Indian government attaches to relations with Tehran.

What was remarkable was that this high-profile attendance came after Iranian Supreme Leader Ayatollah Khamenei mentioned Kashmir and expressed concern for the Muslims living there in his Eid address in June 2017. It was also after Iran inked a deal with Russia’s Gazprom for the development of the Farzad B gasfields. India’s ONGC Videsh Ltd. had discovered the gasfields and was interested in developing it, but India and Iran had differences over the pricing of the development. A former Iranian presidential advisor had also used unusually strong language regarding India.

These were ignored by New Delhi, which is normally prickly to any allusions to Kashmir. The pronouncements by Khamenei came soon after Indian Prime Minister Narendra Modi’s highly publicized and successful visit to Israel — the first ever by any Indian prime minister to the Jewish state —Tehran’s sworn enemy. This testifies to the diplomatic tightrope that India is having to walk in the region.

India has so far dexterously balanced its relations with the different power centers in the Middle East. The region has figured prominently in the Narendra Modi government’s ‘Look West’ policy and its importance for the country cannot be overemphasized. The countries of the Gulf Cooperation Council (GCC), led by the United Arab Emirates (UAE) and Saudi Arabia, together host around seven million Indian expatriate workers who remit back hefty foreign exchange. Indians constitute the largest expatriate community in the GCC. According to some estimates, their remittances account for almost 52 percent of all overseas Indian remittances.

The GCC is also important for India’s energy security, supplying as it did in 2016 almost 50 percent of the country’s energy needs. In 2016, India and the UAE signed an agreement to establish a strategic petroleum reserve in India, where UAE can store crude oil. This was important for India given that its energy requirements are expected to quadruple over the next 15 to 17 years.

More recently, ties between India and the GCC states have been boosted in defence and counter-terrorism, with joint air and naval exercises, intelligence sharing, and with the arrests and extradition by some of the GCC states to India of those wanted by India on terrorism-related charges. In 2015, for instance, India and the UAE entered into an agreement whereby their national security advisers would meet every six months and host regular counter-terrorism meetings.

Reflecting the importance that ties with the GCC have acquired for India, Prime Minister Modi made highly successful visits to the UAE — the first in 34 years by an Indian Prime Minister — Saudi Arabia, and Qatar. Reciprocating the upsurge in relations with India, a host of dignitaries from the GCC had also visited Delhi. Amongst them were the Crown Prince of Abu Dhabi and the deputy supreme commander of the UAE Armed Forces, Sheikh Mohammed bin Zayed bin Sultan Al Nahyan, who had visited India twice — in 2016 and earlier this year as the Chief Guest at India’s Republic Day celebrations; as had also the Emir of Qatar, the foreign ministers of Oman, Bahrain, Saudi Arabia, and most recently of the UAE. Modi is also scheduled to travel to Kuwait shortly.

Simultaneously, India has been boosting ties with Iran. India had welcomed the lifting of the sanctions regime against Iran in 2015. Iran was India’s second largest supplier of crude oil, but under US pressure India had to significantly decrease its oil imports from Iran since 2006. Iran is also becoming increasingly important to India for its connectivity to landlocked Afghanistan and the resource rich Central Asian republics. India is developing Iran’s Chabahar port on the Gulf of Oman through which a multi-modal international north-south corridor is envisaged to link Mumbai to Russia’s Astrakan — considered by some to be India’s “Silk Route.”

India’s relations with Israel have also burgeoned, coming “out of the closet” with Modi’s recent trip to Tel Aviv — the first ever by an Indian prime minister.

To that end, Modi paid a visit to Tehran in 2016, during which India, Iran and Afghanistan signed the tripartite Chabahar agreement for Establishment of International Transport and Transit Corridor, which Modi termed as “history being created.” The Chabahar port gives India sea-land access to Afghanistan, bypassing Pakistan, and is also important as an offset to Pakistan’s Gwadar port which is being developed by China, and also for stabilizing Afghanistan. In Delhi last year, Iranian foreign minister Javad Zarif said that Chabahar port would allow Afghanistan access to a global market, and “help create a formal economy in the country.”

Iran has also been a valuable counter-foil to Sunni radicalism in the region — till recently the Taliban — and the Islamic State in Iraq and Syria (ISIS). Iran and India have also been on the same page regarding the Syrian conflict, with India continuing to recognize the Bashar Al Assad government as the legitimate representative of the Syrian people.

Nevertheless, bilateral ties have recently come under a cloud with the inability of the two sides to hammer out a deal regarding the Farzad B gas fields. While, in what is being seen as a retaliatory move, India, which is Iran’s second largest crude purchaser, decreased its purchase of crude, Iran responded by cutting by one-third the time it gives to Indian refiners to pay for oil they buy from it, and also raised ship freight rates.

Against this backdrop, Gadkari’s visit can be viewed as a bid to smooth ruffled feathers. In Tehran, he promised to speed up the port’s development, calling Chabahar a “gateway to golden opportunities to boost trade and business.”

Meanwhile, India’s relations with Israel have also burgeoned, coming “out of the closet” with Modi’s recent trip to Tel Aviv — the first ever by an Indian prime minister. Bilateral ties have been strong especially in defense — Israel currently is the fourth-largest arms supplier to India after the US, Russia, and France. More recently, other areas of cooperation have emerged, namely counter-terrorism, cyber security, agriculture and irrigation.

Modi, who is a personal friend of Israeli premier Benyamin Netanyahu, had visited Israel earlier during his tenure as Chief Minister of the Indian state of Gujarat. Bilateral ties, cultivated for decades, have acquired greater visibility under him with numerous high profile visits which included the Indian president travelling to Israel in 2015 and the Israeli president visiting India in 2016, and culminating with Modi’s visit to the Jewish state. In April this year, India and Israel signed defense deals worth $2 billion — the largest defense contract in Israel defense industries’ history — for the supply of medium-range surface-to-air missiles (MRSAM) and missile defence systems to the Indian Army. Israel is actively participating in the Indian government’s ambitious ‘Make in India’ scheme through collaboration and joint production of defence products, with the inauguration of India’s first private sector missile sub-systems manufacturing facility—a joint venture between India’s Kalyani Group and Israel’s Ra
fael Advanced Defence Systems Ltd. Given India’s multi-billion dollar defence market, defence cooperation with Israel holds out great prospects.

However, as the rift between Iran and Saudi Arabia widens, spreading over into ever newer areas like Qatar — with the Saudi-led bloc of countries like UAE, Egypt, and Bahrain severing all ties with that country; and as the Gulf countries tilt overtly towards Israel, India will have to walk a tightrope in its relations with all these different regional powers.

President Trump’s courting of Riyadh amidst fresh sanctions against Iran and the current saber-rattling between Tehran and the White House also threaten to complicate matters for India which has been drawing closer to the US in recent years — one of the reasons analysts feel for Iran’s unusually provocative statements against India. Factoring in also that China — with whom India is locked in a standoff on its eastern border — with its greater economic clout has a larger footprint in Iran, India will have to carefully calibrate its policies in the region so as to withstand pressure and maintain balance in its relations with the individual power centers there.