THE IRAN CHALLENGE
Why has this issue cropped up?
After U.S. decided to withdraw from the Iran nuclear deal, Iran has indicated that it remains committed to salvage the pact with the deal’s remaining signatories — the European countries, Russia and China.
India’ Stake
India too has a lot at stake in this regard. Iran’s attempt to woo Chinese investment in Chabahar, often projected as India’s pet project (and a response to Gwadar in Pakistan), has raised eyebrows in New Delhi. Inviting Chinese investment is perceived as an attempt to dilute Indian influence.
The view from Tehran
- The development of the Chabahar port needs to be viewed as Iran’s call for “engagement”.
- The participation of Pakistan’s Minister of Shipping at the inauguration ceremony made it clear that for Iran Chabahar means business.
- Post-sanctions, the development of the Chabahar port reflects Iranian quest for multilateralism, and China by default is an important player in the Iranian scheme of things.
- Given the overt hostility of the Trump administration towards Iran, it is imperative for Tehran to maintain cordial relationship with a rising power like China.
Iran – China Relations
- China is one of the few countries which never severed its ties with Iran.
- In fact, it had played a crucial role in bringing Iran to the diplomatic table to negotiate the P5+1 nuclear deal.
- Iran’s GDP growth rate is to get further impetus from Iran’s participation in China’s connectivity projects.
- China was also one of the countries that maintained steady trade relations with Iran even during the sanctions era.
- A large chunk of China-Iran trade is petroleum-based products. China is the largest importer of Iranian oil.
- China’s iron-ore buyers see in Iran an alternative to Australia and Brazil.
- Over the years, China has emerged as Iran’s leading trade partner.
- Post-sanctions, Chinese President was the first head of state to visit Iran, in January 2016.
- Iran, with its massive infrastructural needs, sees China as its most valued partner and Beijing has been investing in Iran in crucial sectors like railways.
- Iran perceives the BRI as a project that would make it an indispensable transit hub for countries like China, India and Russia and an effective antidote to the U.S. sanctions.
- Iran’s premium geographical location (as a bridge between Persian Gulf and Central Asia) along with a relatively stable political architecture makes it a central player for China’s BRI. This will give China de-facto control over two of the three major routes to world markets.
- In addition to their economic partnership, China and Iran share substantial defence cooperation with each other. After the 1979 revolution, Tehran has been dependent on Beijing for meeting its defence requirements. China has supplied Iran with surface-to-air missiles and has also trained Iranian nuclear scientists. The November 2016 agreement signed between defence ministers of both countries entails regular military-to-military exercises.
- China, being permanent member of the Security Council with veto power, could be of great strategic help for Iran when it comes to vetoing any proposal against Iran in the United Nations. A parallel, China-dominated global order suits Iran more than the U.S.-centric world order.
India’s Policy Options
- This strong relationship between Tehran and Beijing makes it pertinent for New Delhi to navigate its interests in the region accordingly.
- To assume that Iran would help India counter Chinese influence in the region might be wishful thinking.
- India needs to resist the temptation of falling prey to “excessive securitisation” in the case of Chabahar agreement in particular and India-Iran relations in general.
- For India, to be an influential player in the region, economics and politics should complement and not substitute each other.
- India will have to capitalise upon the existing synergies. It is imperative to compliment geopolitical premises with robust commercial exchanges.
- In collaboration with countries like Japan, India should offer favourable terms of trade in the region vis-à-vis China.
- To consolidate its strategic depth in the region, India should focus on initiatives like frequent joint naval exercises in the Persian Gulf.
- India will have to adopt a nuanced approach towards Chinese investment in Iran, especially now that Tehran’s reliance upon Beijing is only likely to grow after US’ exit from the nuclear pact.
- Some form of Chinese participation in the Chabahar project would be helpful for the future of the project, especially if the terms and conditions are clearly specified. India and China are exploring joint economic projects in Afghanistan; they can surely also extend this engagement to the Chabahar.
Conclusion
Iran would do well by maintaining a fine balance between the elephant and the dragon. Experiences of countries like Sri Lanka should encourage prudent thinking on the part of Iranian policy-makers.
Relevance: GS 2
