US-India strategic dialogue: Iran disagreement recedes as talks begin - Broadsword by Ajai Shukla - Strategy. Economics. Defence.

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Wednesday 13 June 2012

US-India strategic dialogue: Iran disagreement recedes as talks begin

By Ajai Shukla
Business Standard, 12th June 12

On Wednesday, in Washington D.C., the third US-India Strategic Dialogue will be co-chaired by US Secretary of State Hillary Rodham Clinton and India’s Foreign Minister SM Krishna.

The US State Department has announced that the dialogue between “the world’s oldest and the world’s largest democracies” will include discussions on bilateral and regional economic issues, regional security and defence, public health, innovation, agriculture, and women’s empowerment.

While engagement between Washington and New Delhi has expanded since President Obama’s visit in 2010, the last year has seen strains over the two countries’ differing approaches to Iran, in particular India’s insistence that its energy needs demand continued oil imports from Iran, irrespective of US-led sanctions. However, vocal public disagreement involving the two countries’ media, legislatures and strategic communities has not prevented the two governments from deftly bridging the gap.

On Monday, Clinton granted India (and six other countries) a six-month waiver from sanctions, justified by the actions they have taken to reduce oil dependency on Iran. India has reduced oil imports from Iran from the 2008-09 high of 16% of total oil imports to just 10% last year, with further reductions planned to 7%. Reducing below this level is problematic because refineries like those of Mangalore Refinery and Petrochemicals Ltd (MRPL) are engineered specifically for Iranian crude.

New Delhi officials, speaking anonymously, say entirely shutting off Iranian crude would be undesirable, even if Saudi Arabia offered to make good the shortfall. “We would not like all our eggs in one basket. Besides, we are exploring other sources: imports of crude from Venezuela have begun; and our traditional source, Iraq, has begun exporting crude again,” says a senior foreign ministry official.

Even at the reduced import levels from Iran, India faces difficulties in making payment. While it has been agreed that 50% of India’s oil imports will be paid for in rupees (reassuring to America because that reduces the flow of hard currency to Teheran), India’s share of the $15-16 billion bilateral trade is a mere $2.6 billion. Paying in rupees requires India to step up exports to Iran, but enhancing trade arouses further criticism of India.

“After 28th June, if the US decides to implement watertight sanctions on the Central Bank of Iran, payments would be difficult unless we have a larger rupee component, or implement counter-trade,” says the foreign ministry official.

Within New Delhi’s strategic elites, India’s relationship with Iran has become a major discussion point. Officials and analysts inclined towards the US point to Iran’s unpredictability; to India’s emerging strategic partnership with the US and Israel; and to gulf states like Saudi Arabia with whom India has longstanding relations, and to the need to keep the gulf region stable as it has 6.3 million migrant Indian workers.

The counter view, which is closer aligned to official policy, sees Iran as an influential player in West Asia that opposes Sunni extremism; as a potentially crucial Indian ally in stabilizing Afghanistan, and as a country that provides India a gateway to Afghanistan and Central Asia through the port of Chabahar.

While many regard the ongoing Iran crisis as a “west-versus-Iran” confrontation, the longer-term Indian security perspective envisions a balancing act between Riyadh and Teheran, both geopolitical rivals in a West Asian power play. They have multiple points of confrontation: civilizational Arab-Persian tension; Shia-Sunni sectarian rivalry; radically different approaches towards the west, and different outlooks to tackling Israel.

“The internal dynamics of the Islamic world are crucial. If Iran is badly weakened, the fundamentalist, pan-Islamic forces, which are heavily funded by Wahabbi regimes like Saudi Arabia and others will gain in vigour,” argued a senior diplomat in a closed-door discussion in New Delhi last week.

MEA officials have long insisted that reports of US-India tension over New Delhi’s continuing relations with Teheran reflected analyst opinion rather than the official bilateral relationship. Washington and New Delhi, in fact, were understanding of each others’ concerns and imperatives in dealing with Teheran. That appears to have been verified by the US waiver on Monday.

The strategic dialogue caps an intense engagement between Washington and New Delhi over the preceding months. Andrew Shapiro, the Assistant Secretary of State for Political-Military Affairs, visited New Delhi in April, followed by Defence Secretary, Leon Panetta this month. The Us Treasury Secretary, Tim Geithner, is scheduled to visit India on June 27-28.


  1. For India, Iran is better than Saudi Arab. However if US really wants to go against Iran, then instead of following the arduous path of dialogues and the sanctions, they should directly attack the Iran. All their purposes will be resolved at once and the unending process and politics of sanctioning will need not to be resorted to.

  2. I don't understand why india finds it necessary to cooperate with the US in isolating iran. Let the shia's rise in power and numbers and get an equal footing with the sunnis.

    This would benefit us if you know what i mean.

  3. the terminator15 June 2012 at 18:48

    The USA has always followed a 'gun boat' foreign policy where they took it unilaterally on themselves as the policeman of the world. Whenever and whatever was not in their favour was more often than not removed with massive force notwithstanding the collateral damage.

    The five permanent members of the UN Security Council are armed to the teeth with nuclear and conventional weapons and they do not want any new nation to join the nuclear club, fearing peaceful nuclear research could easily be transformed into a military one by other nations.

    The USA is on record as having closed one eye and let its pet poodle (Pakistan) the initiator and provider of suicide militants the world over in cahoots with Al Qaedah. The USA attacked Iraq on suspicion of having WMD. Why didn't they attack Pakistan which not only acquired nuclear bomb making know-how illicitly but was also in the business of nuclear proliferation?

    Herein lies the US perfidy. Their foreign policy is like that of a chameleon, changing whenever it suits them.

    The USA is double quick when it comes to sanction on other nations not toeing their line of thought. Their idea of friend and foe is not based on right and wrong but on what is beneficial to them.

    Pressuring India to be another poodle is not going to work. Pakistan is the perfect poodle because it receives freely whatever military offensive items are asked for, claiming they are to be used in the war against terrorism.

    In fact the Americans know perfectly well all the sophisticated weapons system acquired from the USA are meant to be used against India.

    Here we have a country, the USA, that champions "US-India strategic dialogue" and claims to be a friend of India but in reality, they have not removed completely the sanctions imposed on India for exploding a nuclear device.

    Why didn't they impose sanctions on the other Security Council members who are all nuclear armed? Why didn't they put sanctions on China which is the largest exporter of arms to all the rebel armies in the world? They even chose to close one eye when it is common knowledge that China provided the transporter for the North Korean (nuclear?) missiles?

    India should make it known that if the USA wants India to be an asset and an ally to them, they have to remove all sanctions and totally stop supplying Pakistan with sophisticated offensive weapons. As it is Pakistan is being armed to the teeth by the Americans and China.

    I wonder whether the USA would gladly replace Iranian oil with its own.

  4. Dear Ajay Ji,

    What's your analysis/openion regarding ongoing Presidential Poll and Pranab Mukherjee's selection as candidate by Sonia Ji..?

    My analysis is as below..

    -Sonia Gandhi was facing a double edged sword on whether to select Pranab Mukherjee or Not.


    -- US and it's allys(Some MPs and Ministers) in Congress,are hell bent on making Rahul Gandhi as next PM..since he has short memory (He is not aware of past policies of US and Russia ..and how they behaved with India..on critical situations)and hence in the name of making a Young PM..they are trying clear the way for Rahul Gandhi.

    --Otherwise it's Pranab Mukherjee who will become next PM for Congress...has been a Nationalist Politician...have guts to say what is good for India and what is not.
    Remember..? how a single statement Pranab Ji said and it sounded negative about US(when he was Foreign Minister) and next day he was removed and made Finance Minister.

    -I understood once when asked about which comes first 1.The Country or 2.The Pranab Mukherjee...he answered ..always Country comes first. That means if he sees anything/policies going wrong made by PM or Cabinet...he will pull Army and remove those in power ,without hesitation. I feel has really has guts to do that.

    --Also has a FinMin he never bowed down on policies like FDI in Retail and other critical sectors,without making Indian vendors/companies self reliant on their respective fields ..he believes that as Indian vendors or Company...they have first right to set their foot in the Indian business firmly before allowing foregin Multi Nationals (who already has a big pocket and firm grip in the international markets and products). Hence he has annoyed Big super powers also ..and these Super Powers too wanted to remove Pranab Ji from his current post of Finance Minister.

    --Mamta Ji knows this game and hence has not supported this move...Mulayam,Mayabati and Lalu also knows these ...but they rely hugely on foreign funds and fear CBI and hence can not afford to OPPOSE Congress.

    I spoke to lots of people here and all seems to agree and knows these Facts and Game.

    What do you say ?

  5. Ajay Ji,

    Any update on $7.6-billion TAPI gas pipeline passing through Pakistan and Afghanistan after shelving IRAN-AFGAN-PAK-INDIA pipeline project due to pressure from US.

    "India signs TAPI gas pipeline agreement"

    Now with TAPI Pipeline,India will need to spend more than Iran-Pak pipe line.


    It seems Iran-Pak pipline gas would have been cheaper than the TAPI line as wiki says

    "The IP pipeline will deliver the gas to Pakistan at a price of $11 per MMBTU cheaper in comparison to TAPI which would deliver gas at $13 per MMBTU and importation of LNG which would cost $18 per MMBTU.[25]".


  6. A bit of topic but others should read this though I doubt Ajai will post this post of mine lol :)


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