Report My Signal- Professional Matters

Why India and Iran need each other
Raj Chengappa

It’s 2 am and yet restaurants and sour-berry sellers are doing brisk business in Darband, Shemiran, their bright lights illuminating the craggy mountain slopes on the outskirts of Tehran. Iranian couples and children walk down the narrow pathway chattering away, occasionally stopping to buy kebabs cooked on a make-shift barbecue grill.
In keeping with the dress code, women don scarves to cover their hair. But among the young there are many who have dyed their hair blonde or a brunette colour, and allow it to flow out rebelliously onto their forehead.
On the surface, everything appears normal in Iran. There are no visible sign of the coming of a ‘Persian spring’ to overthrow the current power structure dominated by the clergy. Many Iranians boast that their “spring” has already bloomed — when the 1979 Islamic Revolution overthrew the Shah of Iran.
Tehran had been spruced up for the 16th Summit of the Non-Aligned Movement (NAM) hosted by Iran. Security was tight and journalists like us had to take special permission to shoot pictures or videos of the streets. To keep the streets of Tehran free from traffic, a five-day holiday had been declared. That reportedly saw half the city’s 7 million population leave town to enjoy a break either at resorts in and around Alborz mountains that dominate Tehran’s skyline or at the Caspian Sea. The Summit ended on Thursday without incidents.

Simmering discontent

The rumblings are discernible. Bazaar gossip was that the people were sent away as the government feared they would embarrass them with a show of discontent during the summit. Economic sanctions imposed by the UN and the US to punish Iran for its nuclear waywardness are beginning to hurt the nation’s burgeoning middle class. “Inflation is just too high,” complains a graduate, adding dramatically, “If you look at a price list and just blink, the prices would have gone up.”
Since most countries have cut off trade with Iran even for food, it has to go further away and pay more to the few nations willing to do business. Businessmen, including from India, are finding transactions with Iran increasingly difficult because banks are not willing to offer credit, fearing they’d be blacklisted by the US.

The barter way

India too has steadily cut down its oil imports from Iran, as private Indian petroleum companies are pruning their commitments because of the sanctions. While Iran still remains India’s second largest oil supplier (next only to Saudi Arabia), oil import from Iranian companies, which accounted for 16 per cent of India’s purchases, is now down to 10 per cent.
To improve trade, Iran agreed on 45 per cent of oil sales to India in rupees instead of dollars, and to settle payments through barter. Yet, with India exports accounting for barely $ 2.5 billion of the total of trade of $ 16 billion between the two, experts say there is little hope of Iran making a huge increase in imports to reach the $ 7 billion that it’s committed by way of barter.
There are many who believe that given its growing pariah status in the international community, Iran needs India more than we need it. Both the US and Europe scowled at India for gracing the NAM Summit with such a large delegation headed by Prime Minister Manmohan Singh, which they felt gave the Iranian regime a new legitimacy just when it was feeling the heat of international isolation.
Manmohan Singh, though, did the right thing by ignoring pressure from the US and attending the NAM summit. Iran’s petroleum resources are vital to India’s energy calculus. Iran has the world’s third largest proven oil resources and is today OPEC’s second largest supplier and exporter after Saudi Arabia.

Striking a balance

Apart from that, given Pakistan’s intransigence, Iran offers India through its Chabahar port an alternative sea and land connection to Afghanistan and Central Asia, enabling greater trade and investment to these countries. Iran is a key player in the Afghan imbroglio and will be even more so after the US withdraws its troops in 2014. There are also the centuries-old ties that bind the two countries, something Iran’s Supreme Leader Ayatollah Khamenei mentioned to the Indian Prime Minister when they met on the sidelines of NAM.
On the nuclear weapons issue, India has a nuanced stand that Iran has grudgingly accepted. It is not in India’s interest to have another nuclear-weapons power in the region, and it has said so openly. India agrees Iran has the right to develop nuclear energy, provided it meets its international obligations as it voluntarily signed the Nuclear Non-Proliferation Treaty, including observing the protocols laid down by the International Atomic Energy Agency.
Iran can’t quibble too much on India’s approach because the Supreme Leader had stated he opposed nuclear weapons, as their development and use was “un-Islamic”. Iran is also appreciative of the fact that India has advocated dialogue and diplomacy rather than force to settle the issue. It is important though that India strikes the balance between staying friendly in its dealings with Iran but remaining firm in its opposition to Tehran developing nukes.