Look West for energy

G parthasarathy

HAVING set the contours of an “Act East” policy over the past year, there are indications that the Modi government realises that it cannot afford to ignore developments beyond its western borders with Pakistan and Afghanistan. After an initial thrust to insulate our relations with Israel from the traditional “compulsions of coalition politics”, there now appears to be a growing realisation of the need to put our relations on an even keel with the Islamic World, primarily in the Persian Gulf. While stressing the need for Israel to live within secure and recognised frontiers, we cannot overlook the importance of reiterating our support for the establishment of a viable Palestinian State, living at peace with Israel.

Ever since the American invasion of Iraq and the crude western military intervention in Libya, the Islamic world has been in turmoil. There is every possibility of national borders mandated after the World War I, following the defeat of the Ottoman Empire, being changed. Within the next few years, the state structures in Iraq, Libya and Syria could well be transformed. Moreover, the Iran-US nuclear deal has shaken the Arab world. Iran faced years of crippling western and UN sanctions, because of what was evidently its nuclear weapons programme, which commenced in the 1990s with the help of the redoubtable AQ Khan. 

The nuclear programme included facilities for uranium enrichment and plutonium production and reprocessing. As global sanctions started to bite and its oil and gas production and exports fell, Iran’s economy started to crumble.

These developments pleased Iran’s Sunni Arab rivals, with Saudi Arabia’s monarch asking American General Petraeus to “cut off the head of the snake (Iran)”. The Saudis had reason to be nervous about Iran’s growing clout, despite sanctions, especially as Shia-dominated Iraq, with its immense oil and gas potential, was growing ever closer to its Shia brethren in Iran, with the Iranian Revolutionary Guard reinforcing the Iraqi army, against the dreaded ISIS. These tensions have been exacerbated by the conflicts in Syria and Yemen, where the Saudis are determined to end Shia/Iranian influence. What is also raising concerns in Riyadh is the growing influence of the ISIS across the country, which has led to widespread arrest of suspected ISIS supporters and even ISIS attacks on Shia mosques.

Politics, it is said, makes strange bedfellows. The strongest opposition to the termination of sanctions against Iran has come from Prime Minister Netanyahu and Saudi Arabia’s King Salman. There have long been reports of clandestine contacts between the Saudis and Israel. These contacts are becoming more open. Around two months ago, senior officials from Saudi Arabia and Israel met in Lucknow. Shia leaders, intellectuals and teachers from a Shia madrasa in Lucknow hosted them. Quite obviously, South Block was not unaware of what was happening. The Lucknow Shias are reported to have expressed concern about Wahhabi extremism, while both the Israelis and Saudis expressed happiness over the meetings. New Delhi appears to have positioned itself well as a country unaffected by sectarian tensions, now prevalent across the Islamic world.

Prime Minister Modi informed Iran President Hassan Rouhani in Ufa that he looks forward to visiting Iran. There are indications that he will alsovisit Saudi Arabia and the United Arab Emirates. Why is it important that he visits these countries? India is one of the very few countries across its extended neighbourhood to enjoy cordial relations with all three contesting parties — Saudi Arabia and its Gulf Arab allies, Iran and Israel.   There are an estimated 1.8 million Indians in Saudi Arabia who remit back nearly $9 billion annually. Saudi Arabia is our largest supplier of oil, accounting for around 20 per cent of our imports. Around 1.8 million Indians live in the UAE, who remit back around $16 billion annually. Moreover, a little known fact is that the UAE is our second largest export market in the world, after only the US, with our exports estimated at around $37 billion annually. Nearly 7.5 million Indians live in the Gulf Arab countries, with living conditions having improved steadily for our workers.

While Israel is now a crucial partner in our defence acquisition and defence production sectors, its archrival Iran, whose provocative statements have naturally raised concerns in Tel Aviv, is also a country with which we share strategic interests.  Our economic interaction with Iran, including our oil imports, have declined in recent years and major exports of finished petroleum products amounting to around $1 billion annually, have ended, because of growing international sanctions on Iran. The sanctions also jeopardised prospects of moving ahead and implementing projects for oil and gas exploration by our oil companies. 

Those who are starry eyed about economic opportunities in post-sanctions Iran should realise that there is a history of Iran backing off from deals, which appeared to be at an advanced stage. Culturally, the Iranians look up to western countries and tend to be dismissive of Asian partners, though Japan and China will be exceptions. India should remember this reality. India, in turn, should increasingly link oil and gas imports from Iran to investment opportunities that Iran provides Indian companies. Given the security scenario, an undersea gas pipeline between India and Iran would be preferable to a pipeline through politically volatile Pakistan. Moreover, while we have cooperated closely with Iran, which shared our aversion to Taliban rule in Afghanistan, one has to wait and see how Iran reacts to emerging developments in Afghanistan. 

Iran will remain a crucial partner for our access to Afghanistan, Central Asia and the Caspian Sea, through Chabahar and Bandar Abbas. It serves as a formidable barrier to the eastwards penetration of ISIS.

The emerging power play in our western neighbourhood will involve a dominant US, no longer dependent on Arab oil, but with a powerful military presence in the region. Washington will endeavour to benefit from Arab-Persian civilisational and sectarian rivalries and seek to influence our role by playing its Pakistan card. China, with its “one-belt one-road” fixation, will do likewise. We will have to navigate imaginatively in this new geostrategic environment.