Walking the tightrope

Walking the tightrope

Article:

1. Anita Inder Singh, centre for peace and conflict resolution, talks about economic and strategic importance of waiver on sanctions granted by US to India and seven other countries.

Important Analysis

2. Background

• US has granted waivers for Iran oil imports to eight countries namely India, China, Greece, Italy, Turkey, South Korea, Taiwan and Turkey for six months.
• President Donald Trump’s explanation is that he is going slow on sanctions with the intent of avoiding a shock rise in global oil prices.

3. Author has observed that US waiver doesn’t mean that US has opened key energy market.
4. Both the country would now cooperate on India’s oil and gas needs. In 2017, India imported 8 million barrels of American crude. Until this July it had imported more than 15 million barrels of U.S. crude.
5. The sanctions relief for the Chabahar port is motivated by a mix of politics and economics. US sees Chabahar’s utility in development and humanitarian relief work in Afghanistan. The U.S. is also aware that China has a stake in developing Chabahar port and could easily replace India if the latter were unable to maintain its foothold there.
6. Importance of Iran for India

• Regional interests: Both India and Iran could build a strategic partnership focussing on Afghanistan, Central Asia and West Asia.
• International North-South Transport Corridor (INSTC) agreement: Iran along with Russia and some other countries are signatories to the INSTC agreement. INSTC transit routes enable India to bypass a hostile Pakistan by exporting goods via the sea to Russia and northern Europe.
• Chabahar port: Chabahar port in southern Iran in a strategic bid to connect to Central Asia through Iran and Afghanistan. Chabahar provides war-torn Afghanistan a crucial link to Indian goods and Iranian oil. In December 2017, India made its first shipment of wheat to Afghanistan via the port.
• A stronger relationship with Iran could help to counter China.

6. Issues between India and Iran

• India remains opposed to Iran’s alleged efforts to acquire nuclear weapon capability. A nuclear Iran would disrupt the balance of power across West and Central Asia, with serious consequences for India’s economic and strategic interests.
• India has had a bilateral trade deficit with Iran over many years. In 2017 it was $8.5 billion. India’s offer to pay for oil in rupees is unattractive to Iran. Tehran does not want to buy enough Indian goods to make acceptance of rupee payment for its oil worthwhile.