Options before India

Iran's recent display of advances made in nuclear technology has acted as a fresh trigger in the continuing tensions around that country's nuclear programme. With a host of UN sanctions and specific US and EU sanctions bearing down on the Iranian economy, the developments of the last few weeks have heightened the unease in the region. With constrained payment options, the sanctions are set to make India's import of Iranian oil more difficult.

India is under pressure to fall in line, in some measure, with the policy of the West. Considering that India has, in the past, adopted a pro-Western stance on related issues-most prominently at the International Atomic Energy Agency vote in 2005, while maintaining cordial relations with Iran and fortifying trade ties-there exists no determined path that the Indian policy establishment is expected to take.

India, along with Japan and China, is amongst Iran's top crude oil export destinations. In 2010-11, India imported 18.5 million tonnes of crude oil from Iran, second only to Saudi Arabia's 27.4 mt. Iran-India trade was to the tune of $13.4 billion in 2009-10. India saw a sudden spike in the monthly oil imports from Iran in January this year and emerged as Iran's foremost oil importer for the month, causing concern in some quarters. This was, however, due to the bunching of shipments delayed over payment mechanisms.

India's imports from Iran have gradually reduced over the last few years. Though India's effort towards diversifying oil supply sources has contributed to this reduction, this can be attributed, in part, to the need to work out payment routes that escape sanctions. Though India may increasingly come under pressure to halt/reduce imports from Iran, it would make little political or economic sense for it to do so. Oil may be a fungible commodity and India may well be able to increase its share of imports from other countries in West Asia, but oil under-girds long-standing Iran-India economic ties. Besides the fact that India shares strong historical political and cultural ties with the Persian Gulf, it would not be advisable for India to jeopardise its economic partnership with a country holding 10% of the world's proved oil reserves.

India, however, needs to walk a tight rope diplomatically. The West is proactively trying to persuade the international community to quarantine Iran so that the sanctions of today hit hard and convince Iran to rethink its nuclear programme. India's reaction has to be measured, both in the light of strategic interests and international law.

India's engagement with the US and EU on the matter needs be guided by prudence. India has often put its weight behind the argument that Iran must honour its voluntary international obligations undertaken as a member of the Nuclear Non-proliferation Treaty. Iran, however, continues to insist that its nuclear programme is civilian in nature - a programme it is within its rights to pursue even as an NPT member.

Economic sanctions and political isolation will only hurt the Iranian people and make the Iranian regime more antagonistic. Dialogue is the way to move forward and India needs to push the international community to re-open the six-nation dialogue with Iran. India could even choose to play a more proactive role in a process of plurilateral engagement with the Ahmadinejad regime.

An escalation of the crisis is in no one's interest. Though military confrontation and Israeli air strikes on nuclear facilities may not seem immediate possibilities, they cannot be dismissed. Aggressive military posturing by the western world can push Iran to employ oil as an instrument of strategic control-Iran has repeatedly threatened to obstruct access to the Strait of Hormuz. Countries need to focus on clear reconciliatory communication to avoid a flare-up in the region.

Tags: Iran-India relations, crude oil, oil imports, Iran sanctions