US & South Asia - Articles

In September 2005 and February 2006, India voted at the International Atomic Energy Agency (IAEA) to refer Iran's nuclear program to the UN Security Council. Thus Prime Minister Manmohan Singh made a stark choice between Iran and the United States. Yet, contrary to the rhetoric from the Left, the Prime Minister made a correct, if unpopular decision to accommodate US concerns while pursuing a highly visible damage control strategy vis-à-vis Tehran.

Since the end of the Cold War, India and Iran have maintained a close relationship founded on several overlapping concerns. By contrast, India's relationship with the US sprang to life over the past five years with the much publicized nuclear deal cementing the way. However, the US officials, who see Iran as a threat to international security, have sought to link American cooperation in the Indo-US nuclear deal to Indian assistance in curbing Iran's nuclear ambitions. Hence, India had to choose between the US and Iran at the September 2005 and February 2006 IAEA meetings.

Manmohan Singh's strategic decision to subordinate its relations with Iran has led to severe criticism at home, especially from the Shia community and the members of Parliament from the Left who argue that India's decision signifies a departure from its commitment to follow "an independent foreign policy." In chiding the government's decision, some members of Parliament went so far as to say that India's vote "betrayed" Iran. However, such criticism ignores the larger question of India's long-term national interests.

Although critics have reduced the issue to demagoguery of US foreign policy, the real debate for India should be whether Iran or the US is the better long-term partner. There is little doubt that the US wielded influence over India's vote at the IAEA, but Iran was also trying to influence Indian policy-in particular, by cozying up to the Left and threatening to stall progress on the Iran-Pakistan-India pipeline deal. The choice was not between a principled ally and an unprincipled one as some critics suggest; the choice for India was about its national interests.

New Delhi's decision to align itself with the US was clearly the right choice. Although the nuclear deal has been the most visible component of Indo-US ties, cooperation with the US offers military, economic, and high-technology opportunities that India cannot gain from Iran. A robust bilateral high-technology trade has recently developed and bilateral conferences on space science have enabled Indian satellite launches and India's Chandrayan lunar mission scheduled for 2007. More importantly, the United States is currently India's largest trade and investment partner, with US companies accounting for about one-third of all Indian foreign direct investment. Even defense cooperation, still in its nascent stages, topped $288 million in FY2002-FY2005, with plans to double over the next few years.

Iran, on the other hand, has been an unreliable partner. Indian Petroleum Secretary MS Srinivasan's revelations in September 2006 that Tehran has kept Indian oil companies out of "coordination and finalization" of the independent pricing study on the IPI pipeline deal is the latest revelation in a stream of disputes that has undermined Indo-Iranian energy cooperation. Even the much-publicized LNG deal, which has been reportedly finalized several times, remains motionless because of a side deal-predating the IAEA votes-that allows Tehran to cancel it if the National Iranian Oil Company disapproves. In fact, with Iran facing an increasingly dire economic situation, it is possible that New Delhi's relationship with Washington may actually exert pressure on it to end its foot-dragging on energy cooperation.

India and Iran have increased non-oil trade in the past few years to 2.2 billion annually, which pales in comparison to India's $27 billion annual trade with the United States. The unstable state of the Iranian economy, Iran's nuclear ambitions and revelations about the AQ Khan connection, should point to the United States being the more valuable international ally. Even Russia and China have been reluctant to expand their ties with Tehran any farther than required by their energy needs.

Finally, had India decided to flout Washington's desires at the IAEA, it is possible that the growing Indo-US cooperation would have stalled. However, with Iran in need of allies, it is unlikely that India's vote will irreparably undermine Indo-Iranian bilateral ties. Indeed, in the wake of the IAEA vote, Iranian President Ahmadinejad quickly underlined that the vote "will not play a role in determining our relations." Thus, India should feel positive about benefiting from Washington's goodwill, while waiting for Iran to get its act together on the energy deals. Detractors, on the other hand, should temper their criticism and not undermine Indo-US relations, leaving India caught in the crossfire.