By – Siddhant Nair
Beyond politics in the immediate neighborhood of the two Asian giants, West Asia is another critical region poised to play an essential role in the future of India-China relations. In this regard, Iran has been central to India and China in not only energy trade but also connectivity ambitions. For both countries, Iran is the key to the landlocked Central Asian region.
Under the Trump Administration, the United States pulled out of the Joint Comprehensive Plan of Action (JCPOA) and imposed crippling sanctions on Iran, pushing Iran further towards China. The two countries announced a 25-year agreement, and Iran officially became part of China’s mammoth infrastructure focused Belt and Road Initiative (BRI).
India, on the other hand, stopped importing Iranian oil after its waiver expired in 2019. Additionally, progress over the Chabahar Port stalled as Iran accused India of delaying investments due to the US sanctions. Despite a slow-down of relations between the two countries, Indian External Affairs Minister S. Jaishankar visited the then-president-elect Ebrahim Raisi and attended his swearing-in ceremony. However, now that the 25-year agreement has been announced between Iran and China, what does this development mean for India? More importantly, how can India balance China’s influence in the region through Iran?
India’s relations with the West and Iran:
West Asia has been an important source of remittances and fuel imports for India. In the 1970s, the number of Indians working in the Gulf dramatically rose after the oil boom. When the Indian diaspora in the region continued to grow, India set up a Ministry of Overseas Indian Affairs in 2004.
Under Narendra Modi’s “Look West” policy, India increased its engagement with the region; particularly the Gulf states, Iran and Israel. Modi visited Israel in 2017 and signed multiple agreements ranging from international development, agriculture and space cooperation. Modi’s visit to Israel showcased Palestine’s falling priority in Indian foreign policy, a contrast during the Cold War when India stood with the people of Palestine.
For India, growing closer to Iran is central to containing China, while also ensuring a cheap supply of energy sources and security in Central and West Asia. Importantly, India is in a unique position to increase its relations with Iran and influence West Asia. Despite Iran signing a 25-year agreement with China, India’s relation with Iran and the West will be vital in containing China. By using its relations with the West as leverage, India could strengthen its ties with Iran. For the United States, India growing close to Iran would mean India playing an active role in the region while obstructing China’s growing influence. Combined with India’s non-permanent membership at the United Nations Security Council, India could advocate for a neutral JCPOA and lifting sanctions off Iran’s economy, which is central to Iran’s economic relief. Additionally, India could play a vital role in promoting dialogue between Iran and the West, similar to Japan. Bringing normality back would be vital for Iran’s economic and diplomatic systems.
Iran-China’s 25-year agreement and the opportunity for India
The two countries signed a cooperation agreement that was initially announced when sanctions were lifted from Iran in 2016. Reports suggest that China will invest up to $400 billion in Iran, helping Iran diversify its energy sector by investing in renewable energy, modernizing its old infrastructure and railway lines in cities. The 25-year agreement, however, is just a roadmap for the two countries. The agreement does not contain any contracts or legally binding documents. In the next 25 years, the agreement will give the general direction the two countries will head towards.
The agreement presents a unique opportunity for India. As the 25-year agreement is not a commitment for the long term, India could show its own commitment to Iran and the region. By intensifying the construction of Chabahar Port and committing more resources to the project, India could show Iran how serious it is in strengthening its relations. Chabahar port has commercial and strategic importance for Iran. As Iran has access to the landlocked Central Asian countries, the Chabahar port will be an essential outlet for these states, making Iran a critical transit hub. Strategically and commercially, the Chabahar port will shift the focus away from the Persian Gulf to the Gulf of Oman. The Persian Gulf and the Strait of Hormuz are central to tensions, conflicts, and shipping attacks. The Islamic Revolutionary Guard Corps and the US military have often had confrontations in the region. Israeli ships were attacked, and Israeli authorities accused Iran for the attacks. An Iran-owned vessel was sunk in June as well after it caught fire. Shifting to the Gulf of Oman will bypass the Strait of Hormuz, allowing Iran to limit movement through the Persian Gulf, and reduce shipping routes distance.
India’s Supply Chain Resilience Initiative (SCRI) with Australia and Japan is another initiative through which India can attract Iran. The SCRI will be an attractive prospect for Iran as Iran could attempt to not be overly dependent on China and diversify its trade and economic relations with multiple countries. Additionally, the SCRI could give Iran options out of diplomatic and international isolation.
Iran and Japan have maintained friendly ties with each other, despite unilateral sanctions imposed by the Trump administration. Japan’s Foreign Minister Toshimitsu Motegi, who also met Ebrahim Raisi, visited his Iranian counterpart to discuss strengthening bilateral ties, reviving the JCPOA, and ensuring stability in Taliban-controlled Afghanistan. West Asia is a crucial region for Japan as nearly 90% of crude oil imports come from the region. Japan is also looking to play a mediator role between Iran and the United States, promoting dialogue between the two countries and ensuring the revival of the JCPOA.
Australia and Iran continue to share positive bilateral relations with each other, maintaining their diplomatic ties with Iran since 1968. Between 2006 and 2010, Australia imposed sanctions on Iran in compliance with the United Nations Security Council. Additionally, Australia imposed further autonomous sanctions on Iran that have remained unchanged even with the withdrawal of the US from the JCPOA. Despite sanctions, Australia and Iran continue to work on multiple issues ranging from human rights, terrorism, regional stability, to human smuggling. Additionally, trade between the two countries reached $319 million in 2019-20.
Bringing Iran into SCRI will be beneficial for India, too, as the SCRI aims at increasing maritime security and ensuring freedom of the seas. Protecting Chabahar port will be essential for Indo-Iranian relations and for India to maintain its strategic presence in the region. As the central agenda of SCRI is reducing over-dependence on China and diversifying supply chains, introducing Iran into the mix will help counter China’s influence in the region. Moreover, as both Japan and Australia share good ties; the three countries are likely to come to a consensus to include Iran into SCRI. However, no discussions of an expansion of SCRI have come up yet.
Concerns over Taliban-controlled Afghanistan:
Both Iran and India share security concerns over Afghanistan, which provides another realm where the two countries can cooperate and deepen their relations. Iran shares a 900 kilometers long border with Taliban-controlled Afghanistan. Sectarian differences are at the heart of tensions and conflict in West Asia, and Iran-Afghanistan will be no different. Iran is a Shia-majority country in a Sunni-dominated region, whereas Afghanistan is a Sunni majority country. Additionally, waves of Afghan refugees have been fleeing the Taliban takeover and have sought refuge in Iran. The new waves of refugees will add additional strain on Iran’s economy. Drugs production and trade will be another problem for the region, as Afghanistan was the primary source of opium and produced up to 80% of the world’s stock.
Stability in Afghanistan is essential for India, as, over the course of 20 years, India has made nearly $3 billion in investments in Afghanistan’s infrastructure. Afghanistan under the Taliban’s control could become a haven for militant groups. In the past, militant groups such as the Lashkar-e-Taiba and Jaish-e-Mohammad attacked India while operating from the Afghanistan-Pakistan border. These militant groups would be a security concern for Iran as well due to the sectarian differences between the Taliban and Iran.
On the other hand, China had held diplomatic talks with the Taliban even before they took over Afghanistan. The Taliban would welcome investments from China into Afghanistan. For China, the Taliban staying out of China’s handling of the Xinjiang region will be essential for China-Taliban relations to progress.
Iran and India have their security interests aligned over the Taliban and Afghanistan. With the Taliban in control of the governance of Afghanistan, stability in the region is their biggest concern. Reinvigorating the Afghan economy is a priority for the Taliban, and Chabahar port will provide Afghanistan with access to open seas, increase connectivity for trade and reduce logistical costs. Hence, the India-Iran bilateral should be prepared with a stronger Kabul policy which they can implement with the Taliban.
India can also provide resources and rehabilitation support to Iran with the new wave of Afghani refugees fleeing the Taliban takeover. As mentioned earlier, the refugee wave is likely to add additional strain on Iran’s economy. India’s support in helping Iran handle the crisis will alleviate some pressure off its economy.
India has found itself in a unique position that, if capitalized upon, will not only increase India’s sphere of influence in West Asia and Central Asia but also reduce China’s growing influence in the region. India should advocate for dialogue between the US and Iran, using its relations with both countries to bring them to the table. India and Iran can also strengthen ties with each other, with Chabahar Port playing a central role. In order to bolster Chabahar Port, India could introduce the idea of expanding the SCRI to include Iran. Taliban-controlled Afghanistan presents another opportunity for the two countries to work together on. As China has been holding talks with the Taliban and working to legitimize their control, India could bolster relations with Iran over Afghanistan to undermine Chinese influence in the region.
Siddhant Nair is currently a research intern with ORCA. He is studying at FLAME University, pursuing a diploma in interdisciplinary research and studies. He is interested in current events and international politics. Having interned with the Chennai Centre for China Studies, he has great interest in China and how the West chooses to respond to China. He has worked on an article that highlighted the historical significance of Tamil Nadu in India-China relations. He can be reached on Twitter @siddhant__nair.