United States Secretary of State Hillary Clinton's visit to New Delhi last week was to prepare ground for the next US-India Strategic Dialogue to be held in Washington, says Alok Bansal
The visit could be termed as relatively lackadaisical, even though it included all the statements that an Indian audience would love to hear from a visiting dignitary.
In fact, her visit was marred by the simultaneous visit of an Iranian trade delegation to boost India-Iran trade relations, consequent to restrictions placed on trade with Iran by the Western banking channels.
The delegation was primarily looking at Indian markets for goods and services that Iran could acquire from its enormous rupee reserves that have been accumulated in an attempt to bypass the US sanctions on trade with Iran.
As expected, one of Clinton's first statements on Indian soil was to urge India to curtail its energy imports from Iran.
If her visit to New Delhi was lackluster, it was her visit to Kolkata, where she went before New Delhi, that could be termed as the high point. It was her maiden visit as Secretary of State to Kolkata, where she went straight from Dhaka, and most of the significant statements of the visit were made there.
The visit was probably aimed at winning over the recalcitrant West Bengal Chief Minister Mamata Banerjee to the cause of amicable sharing of Teesta river waters with Bangladesh, which has been affecting bilateral relations between the two South Asian neighbors, and for winning Banerjee's support for foreign direct investment in multi-brand retail.
Clinton visited non-governmental organisations and schools, and won quite a few hearts in the traditional bastion of Communism in India.
It is in Kolkata that she asserted that the US would continue to press for the arrest of Hafiz Saeed, the founder and main ideologue of the Lashkar-e-Tayiba, for his role in the 2008 Mumbai attacks. She also accepted that Pakistani government had not taken adequate steps to ensure his conviction.
She declared that the $10 million reward on information leading to Saeed's conviction was an attempt by the US to push for his incarceration and to raise the cost for those who are associated with him.
She also dropped a bombshell on Pakistan by asserting that Ayman-al-Zawahiri, who has taken over the mantle of Al Qaeda's leadership, is somewhere in Pakistan.
Not that it was some great revelation; anybody with rudimentary knowledge of the region knows that Zawahiri has been living in Pakistan ever since he moved from Afghanistan. In fact, many a time he has survived American drone attacks in Pakistan by a whisker.
On May 5, an anti-terrorism court in Lahore issued a warrant against Zawahiri for his involvement in the abduction of Dr Warren Weinstein, an American national working with the United States Agency for International Development, from the city.
However, the venue and timing, as well as the tenor of Clinton's disclosure did create some flutter in Pakistan. She also vowed to keep up the pressure on Pakistan to find Zawahiri and other key terrorists.
Her Kolkata visit was a follow-up on her visit to Chennai in July 2011, where she had spoken about India's historical role in East and South East Asia and had reminded the audience that 'the stretch of sea from the Indian Ocean through to the Pacific contains the world's most vibrant trade and energy roots linking economies and driving growth.'
The visits to Chennai and Kolkata signify the enormous economic opportunity that the US sees in this region. It was also probably an attempt to apprise the regional satraps about the enormous economic dividend that could be tapped by following pragmatic policies.
She also talked of Kolkata becoming an important hub on the new Silk Route connecting the economies of East, Central and South Asia. In an election year, the US is definitely concerned about creating jobs and improved trade with India could be a win-win situation for both.
Though Clinton's visit was not spectacular, it will take US-India relations forward. Relations will improve not because the two countries share common interests, but more significantly because the two countries share the core values of pluralism and democracy.
It is not as if there are no differences, and Iran has been one such intractable knot.
Iran has a very significant geostrategic location and links West Asia, Caucasus, Central Asia and South Asia with one another. India's troubled relations with China and Pakistan have made Iran its only gateway to the vast resources and markets of Afghanistan and Central Asia. It also provides India the shortest access to the energy resources of the Caspian Basin and the Caucasus.
Indian economic growth not only needs the vast markets of Eurasian land mass, but also its large untapped energy resources. It can also provide an overland route to the energy rich regions of West Asia.
India and Iran have had close cultural, linguistic and religious links for centuries. Moreover, Iran is the largest Shia state in the world and the blatantly partisan Western policies in Syria and Bahrain have forced the Shiites world over to look to Iran as their savior.
Accordingly, over 25 million Shias in India look towards Iran for strategic direction. Cities like Lucknow and Hyderabad have significant Shia population and many of them have strong emotional bonds with Iran. India's tiny but economically powerful Zoroastrian community also looks at Iran with reverence.
Iran, with 10 percent of global oil reserves, is the fourth-largest producer of oil globally and the second-largest oil exporter within the Organization of the Petroleum Exporting Countries. More significantly, with 15 percent of the world's natural gas, it has the second-largest gas reserves in the world after Russia.
Although US pressure has ensured that Iran-Pakistan-India gas pipeline has not taken off and most of Iran's gas reserves remain undeveloped, India will find it difficult not to tap this vast source of energy available at such close quarters.
India has recently overtaken China and is the largest destination for Iranian oil exports. Iranian crude accounts for 13 percent of India's oil needs and unfortunately for India, there is no cost-effective viable substitute.
More significantly, despite large reserves, Iran lacks refining capacity and this allows many Indian refineries to export petroleum products to Iran. Some of the private Indian refineries are totally dependent on Iran.
Other products that India has been exporting to Iran are chemicals, pharmaceuticals, iron and steel, synthetic yarn, tea and rice.
The balance of trade is overwhelmingly in Iran's favor and it prevents India from bartering its goods with Iran, as US sanctions have made normal trade with Iran through global banking channels almost impossible.
Although currently Iran is selling 45 per cent of its oil in Indian rupees, India will still find it difficult to pay for the rest.
Most critical vulnerability for India is Iran's ability to destabilise the Persian Gulf region and disrupt maritime access to the Gulf through the Straits of Hormuz. The region has 54 per cent of global oil reserves and 40 per cent of global gas reserves and any disruption of supplies from the region would lead to the oil and gas prices skyrocketing, which could be catastrophic for a growing economy like India.
Some of India's largest trading partners are in this region. In 2010-11, Persian Gulf states received 18.59 percent of India's exports and contributed to over a quarter of India's imports.
More significantly, India is the largest destination for remittances and Indian economy is greatly dependent on the smooth flow and growing health of this pipeline. Any disturbance in the region can force this significant source of foreign exchange to disappear.
Thus, given Iran's immense strategic significance for India, it is not going to be easy for any Indian government to publicly condemn Iran for its nuclear program. The US believes that Iranian oil exports are paying for its nuclear program and wants India to significantly reduce its dependence on Iranian oil by June 28.
India officially does not recognise unilateral sanctions imposed by the US and asserts that it will pursue its national interests to ensure its energy security. However, India in its own subtle way is cutting down its dependence on Iranian oil.
Essar Oil and MRPL, the two Indian refineries that consume 70 percent of crude imported from Iran, are slowly switching over to Saudi crude and may reduce their dependence on Iran by 15 percent during the current financial year.
This was recognised by Clinton, when she lauded the steps taken by India to nudge Iran on the path of negotiations, by reducing imports of Iranian oil. She also recognised that it is difficult for India to reduce its dependence on Iranian oil.
Having done so, she must realise that any sanctions on India for having failed to curtail its imports from Iran by 28 June will be counter-productive to the long-term US-India relations and will negate whatever goodwill has been earned by the recent visit.
Alok Bansal is a New Delhi-based security analyst.
Pic: U.S. Secretary of State Hillary Clinton watches a girl do karate during an anti-human trafficking event in Kolkata.
Photographer: Shannon Stapleton/Reuters