The recent decision of the Donald Trump administration to end waivers to countries that purchase oil from Iran demonstrates its desire to up the ante on President Hassan Rouhani’s Islamic regime in the country.
This decision may make limited tactical sense – increasing economic pressure on Tehran – but it will have strategic implications beyond the Middle East and will hurt friendly countries, namely India.
India as South Asia’s security provider
The US wants India to be its partner in confronting China’s rise across Asia, but the Trump administration does not seem to understand that India’s size and history make it different from other, smaller American allies. Subjecting the India-US relationship to a one-size-fits-all policy demanding conformity from allies will only hurt it more.
India has consistently sought freedom from external pressures. While every country seeks this kind of autonomy, for India it has been a matter of policy. India is different from traditional American allies whether in Europe, Latin America or Asia for whom the United States was the key security provider.
India views itself as a net security provider for its immediate and greater neighbourhood. For that, New Delhi welcomes American economic investment, technological expertise and the sale and manufacture of state-of-the-art defence equipment. But Indians are unlikely to give up their right to maintain different relationships with different countries and fall in line with Washington’s directives.
Loss of Iranian oil
India, like China, is one of the top energy importers in the world today. Energy security is a key part of India’s foreign and strategic policy that is centred around ensuring that India has a basket of energy suppliers. New Delhi has traditionally sought to balance its relations between the Sunni Gulf countries and Iran.
American sanctions on Iranian oil have led India to diversify its oil purchases and import more from the Gulf countries. Over the last few years, India has reduced its oil purchases from Iran. According to Reuters data, there was a 60 per cent fall in India’s oil imports from Iran between February 2018 and February 2019.
In the short run, India, like other countries, is likely to take advantage of the American offer that Gulf countries – namely Saudi Arabia and the UAE – will increase oil production to compensate for the unavailability of Iranian oil on the global market.
This, however, only takes care of the targeted problem emanating from loss of Iranian oil in the market. It does not, however, look at the broader issue of how American allies and partners in the region will be hurt as a consequence of American actions.
Significance of Iran for India
Washington views Iran solely from the lens of Iraq and Israel. For India, however, Iran is strategically important. India has an old historical and civilisational relationship with Iran, but in the current day the relations centre around oil and Afghanistan. Limited purchase of oil from Iran is key to India’s continued access to Iran and hence to Afghanistan and onwards to Central Asia.
Without Iran, India cannot access Afghanistan, the country in whose stability India has invested over US $ 2 billion in assistance – making it the largest bilateral regional donor. Since Pakistan has consistently denied India transit access via land to Afghanistan, the only way that India can continue to provide assistance to Afghanistan is by using the Iranian port of Chabahar.
India’s concerns about its immediate neighbourhood remain paramount in the threat perception of India’s leaders and strategists. Thus, for India, what happens in Afghanistan is more important than what happens in the South China Sea. If Washington wants New Delhi to play a bigger role in the ‘Pacific’ part of ‘Indo Pacific,’ then it needs to understand India’s concerns about its immediate neighbourhood – the ‘Indo’ in the ‘Indo-Pacific.’
Countering the rise of China
Ever since the end of WWII, the American grand strategy rested on creating a diplomatic and security architecture that ensured stability and security. American preeminence ensured a rules-based liberal international order that rested on American economic and military might, combined with a network of partners and allies.
The Asia Pacific, and later Indo Pacific, strategy of successive American administrations has sought to counter the economic and military rise of China. This American strategy rests on renewed engagement with its partners and allies across the region – India, Japan and South East Asia – to construct a configuration that will be able to counter the Chinese march.
Among Asian countries, India has consistently viewed China’s expanding influence with suspicion. With a population of more than one billion, India is also the country with sufficient human resources to match China. India is, thus, central to any security architecture aimed at ensuring that China does not transform its considerable economic clout into threatening military muscle in the Indo Pacific.
If the long-term goal of American policymaking is to counter the rise of China, then Washington needs New Delhi on its side. On the strategic front, the American administration has come to view India as important and sought to convey that message – from the renaming of the American Pacific Command to Indo Pacific Command to the mention of India’s importance in the latest National Security Strategy (NSS).
However, US trade policies also need to be adjusted to enable the rise of India as a strategic competitor to China. Any short-term loss in dollars and cents or other, less significant nominal alliances, would be offset by the immense benefit to the United States of having a major, one-billion strong nation standing by its side to ensure that China and its closed system do not emerge dominant in the Indo-Pacific for years to come.
Dissonance in US foreign policy
Washington cannot penalise India on the economic front – ending India’s GSP privileges because of the trade deficit issue and not allowing any waivers on purchase of Iranian oil – and expect New Delhi to collaborate with the United States on the Indo-Pacific front. This policy also detracts from the belief at the core of the US Indo-Pacific strategy, which is that American national security benefits from a rising India being an American ally and future security provider in Asia.
There also appears to be a dissonance in US policymaking between an economic strategy that is purely inward-oriented and a foreign policy that is only partly strategic. Foreign policy-making, however, needs synchronisation between economic and strategic decisions.
The US may have to accommodate India’s economic concerns to secure its strategic partnerships. Bullying over trade and where India might buy its oil is hardly the way forward in what was once described as ‘the defining partnership of the 21st century’.