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Ties with Iran: Will India be able to avoid US wrath?

By Aziz Haniffa
April 23, 2012 12:55 IST
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India's Ambassador to Washington, DC, Nirupama Rao and her team are doing everything to avoid American wrath, and the resultant legislation of sanctions, against India for not whole-heartedly joining the US-led efforts to isolate Iran. Aziz Haniffa reports

Over the past few weeks, senior United States State Department and Indian government officials led by Ambassador Nirupama Rao have been engaged in intense discussions to set right Washington's perception of New Delhi's reticence to join the US-led efforts to isolate Iran from turning into full-blown crisis that could unravel the US-India strategic partnership.

There are nagging concerns on both sides that this is exactly what could happen if the Obama administration is left with no alternative but to trigger the legislation of sanctions against a dozen countries, including India, that have not significantly reduced their imports of Iranian oil and other commercial ties with Teheran. The US believes Iran is on the verge of developing a nuclear weapon that could pose an existential threat to Israel.

Both sides have been virtually walking a tightrope on this issue and trying to show a public face that everything is hunky-dory in the relationship. At the same time, they are keeping their fingers crossed that the latest diplomatic efforts with Iran would show some traction so that there would not be any fallout in US-India relations and the legislation being triggered can be avoided. At the same time, both sides are realistic enough to know that Teheran is unlikely to acquiesce to the latest round of pressure by the US-led international community.

While US diplomats -- not to mention their Indian counterparts -- are horrified as to what repercussions there could be if sanctions kick in against India, they have made it clear to that they are on overdrive to reach a modus vivendi with India on this issue.

They have also acknowledged that this is the last thing (sanctions against India) that US Secretary of State Hillary Clinton wants to be her legacy, particularly since in one of her first major foreign policy addresses three years ago she had declared that she wanted to take US-India relations to the next level.

They also don't want the third US-India Strategic Dialogue to be held in Washington in June -- which would be Clinton's swansong (as she has said she hopes to retire at the end of the Obama administration's first term) -- to be focused on this single issue. But they are cognizant that the pressure would come from US Congress, including from some of India's closest friends on Capitol Hill, who value Israel and that country's security much more than they value the US-India strategic partnership. And that if sanctions are to be imposed against India for not going along to isolate Iran, then so be it.

Already Senators Robert Menendez, Richard Lugar and other influential lawmakers both in the Senate and the House -- all members of the Friends of India Caucus in the Senate and the Congressional Caucus on India in the House -- have come out strongly against what they believe are India's efforts to try and circumvent the sanctions against Iran, which have put the administration, including Clinton and the new US Ambassador to India Nancy Powell on the defensive, and have promised to make this issue a priority in their discussions with India.

When Clinton last appeared before the US Senate foreign relations committee, she was peppered with questions regarding India's reluctance to join in the sanctions regime against Iran so much so that she said, "With respect to India, they are making steps that are heading in the right direction."

"In fact, I think in a number of instances, the actions of countries and their banks are better than the public statements that we sometimes hear them making," Clinton said.

It is Clinton, who by end-June, will have to make the final determination on which countries she would have to put on the sanctions list for not 'significantly' reducing its oil dependence from Iran.

These sources have said that it hasn't helped that in recent months, beginning with the likes of former US Under Secretary of State Nicholas Burns, other leading policy analysts have also jumped on the bandwagon in pillorying India for not going along with the efforts to isolate Iran, and instead redoubled, in their eyes, their commercial ties with Teheran.

In February, in an op-ed, Burns, a key protagonist in consummating the US-India civilian nuclear deal, now as a private citizen teaching at Harvard University, slammed India's decision to continue importing Iranian oil as a slap in the face of the US.

"This is bitterly disappointing news for those of us who have championed a close relationship with India. And, it represents a real setback in the attempt by the last three American presidents to establish a close and strategic partnership with successive Indian governments," said the former under-secretary, who during his official days would strongly defend India's ties with Iran when appearing before the Congressional committees.

Burns was biting in his remarks, saying, "India's decision to walk out of step with the international community on Iran isn't just a slap in the face for the US, it raises questions about its ability to lead."

"With its unhelpfulness on Iran and stonewalling on implementation of the landmark US-India civil nuclear agreement," he said, "the Indian government is now actively impeding the construction of the strategic relationship it says it wants with the US."

Last week, Rao, who has hitherto referred to her discussions with US officials on Iran only on background, made a strong case publicly in an interaction with reporters and policy analysts at a breakfast briefing hosted by the Christian Science Monitor.

She denied reports that India was a spoiler in the US-led efforts to prevent Iran from acquiring a nuclear weapons capability by continuing its commercial ties and oil imports from Teheran. She argued forcefully that New Delhi had taken several significant steps to cut down its oil imports from Iran that should be appreciated by the US and the international community.

"We've had an open, frank, and candid discussion on issues concerning Iran. And I think there is understanding, there is a degree of understanding, and it's not a miniscule degree of understanding that I'm speaking of," she asserted.

"You will not find, I don't believe you will find, an instance where India has been delinquent in any way when it comes to observing international sanctions whenever they've applied to countries. India, of course, is a net petroleum importer, you all know that and West Asia is the major source of imports and in that energy mix, Iran has been a supplier, but Iran has been a supplier whose supplies to India have gone down in the last few years."

Rao then provided statistics, saying, "As of 2008-2009, the percentage of imports from Iran in India's total crude import was about 16.42 per cent. As of 2011-2012, that percentage had come to 10.29 per cent. So, there's been a drop in that as you see and that drop is even more perceptible now because we all know that banking transactions with Iran have become virtually impossible and practical reality demands that diversification is needed. And that is exactly what we're engaged in."

But she argued, "You must understand, and I think it's important that I speak frankly on this issue, that energy security is vital for a country like India with about 400 million people who still are in need of sustenance and assistance from the government to access cheap source of energy. It's very important. We have 500 million people in India who do not have electricity, for instance."

Thus, Rao said, "You can understand the nature of the challenges we face in this regard. So, therefore, just overnight cutting off imports from Iran becomes virtually impossible, but, I want to emphasise this, the share of Iranian imports in our total volume of petroleum imports is going down, as we speak, and there has been a significant reduction."

However, she pointed out, "Iran is also important in terms of the transit that we need to Afghanistan and Central Asia. Now we have a very crucial development assistance programme for the Afghan people. We've committed about $2 billion to this type of assistance, just in terms of human development and in terms of building infrastructure -- roads, schools, hospitals -- in Afghanistan. And transit to Afghanistan by virtue of the challenges that we face to enable transit through Pakistan has to be undertaken through Iran."

Asked what the response from the administration is when she lays all these cards on the table, Rao said, "They are very attentive and very receptive to what we've conveyed to them. They've said we need to continue to discuss these issues, which, of course, India has always been prepared to do, we've never shied away from talking about what our situation is, what our concerns are, and what we can do."

Rao also addressed the controversy of the Indian trade delegation visiting Iran, which was pilloried in the media and in the US Congress, noting: "Let me first of all say that most of our trade with Iran consists of our imports of oil, most of it. We export very little to Iran, so this news about trade delegation going from India to Iran, I want to speak about it, we're not camouflaging anything, here."

She explained, "It was a delegation that consisted of exporters in food grain, rice and wheat, pharmaceuticals and these are not items that are prohibited in terms of export to Iran. I know that a lot of developed countries sell food grain to Iran, I'm not going to indulge in naming them at this moment, but the fact is that this trade goes on."

"And we have to pay for whatever oil we still import from Iran and some of this can be paid for in rupees, but some of it cannot so we will have to export something to pay for the oil that we import and these are items that are not covered by sanctions. I want to emphasise that. So, that's the way it is. I've just tried to answer you as honestly as I can," she said.  

Rao, also in reiterating that reductions of oil imports from Iran cannot be implemented overnight, pointed out, "We have at least five of our refineries geared to processing petroleum -- what they call 'sweet light crude' -- from Iran, so that process of retooling and reengineering to meet processing needs of crude from other sources would obviously have to be completed."

"But without going into the technical details about this, I want to tell you that we are alert to all of these needs and we take the situation seriously. We are not dismissive of the constraints and the developing nature of the situation and we are responding to the situation," she emphasised.

For Rediff Realtime News on Iran sanctions, click here!

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