The US National Intelligence Estimate (NIE) recently reported that Iran had halted its nuclear weapons programme in 2003. This not only shifts the ground on which India erected its policy of distance from Teheran when it voted with the US against Iran in September 2005 in the International Atomic Energy Agency (IAEA), but also provides a policy space to rejuvenate its relations with Iran. In the quest for a nuclear deal with the US, India lost crucial geopolitical ground by alienating Teheran. For example, a week after the NIE release, China announced a US$2 billion deal for developing the Yadavaran oil and gas field in southwest Iran, pushing India's ONGC Videsh out of the running.
In principle, India-Iran relations cannot be mortgaged to concerns about the US relationship. Christine Fair, a South Asia specialist at the RAND Corporation, points out that, "The US continues to have its relationship with Pakistan, which is separate from India's own relationship with it." Similarly, India's relationship with Iran is peaceful and largely economic and should not come in the way of India's continuing good relations with the US.
India's ties with Iran were never close during the Cold War. Iran under the Shah was a close ally of the US while India remained closer to the erstwhile USSR. Even after the 1979 Islamic Revolution it remained fairly distant, with Iran coming closer to Islamic Pakistan rather than secular India. However, it was in war-torn Afghanistan in the 1990s that India and Iran discovered that they shared common security concerns from the threat posed by the Pakistan-backed Taliban regime in Afghanistan.
India-Iran relations reached a high point on 26 January 2003 when the Iranian President Mohammad Khatami was the chief guest at India's Republic Day parade, a privilege held in reserve for New Delhi's more trusted friends. India and Iran soon forged a strategic partnership and put in place military and energy deals valued at over US$25 billion. India has also been assisting in the development of Iranian port facilities and with the construction of road and rail links in that country. In 2003-04, India-Iran trade was US$1.18 billion, up from US$913 million in 2002-03.
In January 2005, India and Iran signed a multibillion-dollar deal under which Iran will supply India with 7.5 million tonnes of liquefied natural gas annually for 25 years beginning 2009. The deal also envisages Indian participation in the development of the Yadavaran and Jufeyr oilfields in Iran. To give an extra push to the India-US nuclear deal, India put the gas pipeline deal on hold though it largely ignored the US diktat. The pipeline is still stuck, but on the price front with Pakistan demanding a very high price for security and transit, and not because of Indian reluctance.
India's interest in Iran stems primarily from its demand for oil, a thirst that Iran is in a position to satiate. India currently imports 70 per cent of its crude oil requirement, and both oil and gas demands are expected to double by 2020 as the country's economy grows rapidly. Nuclear energy cannot be a substitute as it currently provides barely 3 per cent of India's energy needs. Even with the most optimistic predictions, however, nuclear power will generate, at best, some 20 per cent of India's energy needs by 2030 and that too only if the India-US nuclear deal comes in to effect. In January 2005, the Indian Oil Corporation reached an agreement with the Iranian firm Petropars to develop a gas block in the gigantic South Pars gas field, which holds the largest natural gas reserves in the world.
Iran now, seems no longer to be a member of the "axis of evil." However, India's friendship with Iran does not come in the way of its simultaneous improvement in ties with the US and Israel. Like Pakistan, Israel is concerned about India's defence ties with Iran. But Israel must understand that India's interest with Iran is more economic than defence-related.
Analysts - both American and Indian - have pointed out that instead of scowling at the relationship between India and Iran, the US and Israel should wake up to the fact that they have much to gain from India's close ties with Iran. The India-Iran relationship could help advance longstanding US objectives, including regional stability and security and the containment of Wahhabi extremism. In an article in the International Herald Tribune titled "India + Iran = Foundation for Stability," Stanley Weiss, chairman of Business Executives for National Security points out, "India's new ties with Iran make it more, not less, valuable to Washington" and that US President George Bush "should recognize that India and Iran are the key to regional stability, and join New Delhi and Tehran in an axis of friendship".
With the India-US nuclear deal in jeopardy, is it not time to revive India-Iran relations?