As the international community, led by the United States, intensifies pressure on Iran to suspend its sensitive nuclear activities, India finds itself in a delicate diplomatic situation. On the one hand, New Delhi seeks to maintain cordial ties with Tehran, both to guarantee India’s access to fossil fuel resources, in particular natural gas, and to show solidarity with Iran’s commitment to the Non-Aligned Movement (NAM), which India has long championed.

On the other hand, India is seeking to advance a strategic relationship with the United States, at a time when Washington is attempting to isolate Iran economically and diplomatically. The centerpiece of the new U.S.-India relationship is a pending peaceful nuclear cooperation agreement. That deal could founder in Washington, if Indian policy veers too far toward Tehran, but it could also founder in New Delhi, if the coalition government of Prime Minister Manmohan Singh is seen as adopting an anti-Iran policy under U.S. pressure.

Indian decision-making will become all the more difficult if the United Nations (UN) Security Council further strengthens sanctions against Iran in the wake of the May 25, 2007, International Atomic Energy Agency (IAEA) report on Iranian nuclear activities. The report concluded that Iran is continuing to improve its uranium enrichment capabilities, potentially capable of producing weapons-usable nuclear material, even as Tehran defies previous UN resolutions calling upon it to halt this and other sensitive nuclear activities. [1]

Congressional Challenge
The sensitivity of India-Iran relations was put in stark relief in April 2007, when a number of senior U.S. lawmakers sent a joint letter to Prime Minister Singh, calling on India to curtail its military and economic ties with Tehran. The letter declared, “Regarding Iran, we are deeply concerned by India’s increasing cooperation with that country, including the exchange of visits between high-level officials, enhanced military ties, and negotiations of agreements to establish closer economic relations.” [2] The letter also expressed concern over the then-recent indictment in the United States of four employees of the U.S. office of a Singapore-based firm, Cirrus Electronics, on charges that they had illegally supplied Intel i980 micro-processors and computer chips to Indian state-run defense research entities. [3] The message went on to state that these developments could negatively impact Indo-U.S. relations – in particular, the pending nuclear trade agreement between the two countries. [4]

The letter appeared, in part, to be a reaction to the visit to India of the head of the Iranian Navy, Rear Admiral Sajjad Kouchaki Badelani in March 2007. [5] During his visit, according to the Indian press, the two sides agreed to revitalize a joint defense working group apparently established in 2003, and India agreed to consider Iran’s request for training military personnel. [6] Under the January 2003 accord, India reportedly had agreed to assist Iran’s military through training, maintenance, and the provision of equipment. [7] Press reports also stated that this accord would allow India to use Iranian military bases during a future crisis with Pakistan. [8] However, in the intervening four years, the only activity apparently connected to this accord was the March 2006 visit by two Iranian naval training ships to Kochi, in southern India. [9]

Responding to the letter from the U.S. lawmakers, India’s top diplomat, Foreign Secretary Shiv Shankar Menon, denied reports that India and Iran were forging closer military ties, stating that while a joint working group on defense had been established in 2003, it had not met for years. [10] Although the Bush Administration did not offer any initial comments in the letter, one administration spokesman stated that the United States hoped New Delhi would use its influence over Iran to persuade it to comply with UN Security Council resolutions. [11]

The letter provoked a strong reaction in New Delhi, however, from the Communist bloc in the Parliament, a component of Singh’s ruling coalition, as well as from the opposition Bharatiya Janata Party (BJP), both of which had already expressed reservations over the nuclear agreement with the United States. The two groups declared that the letter amounted to interference in India’s internal affairs. [12] The Communist Party of India (Marxist) (CPI-M) demanded that the government make a statement in Parliament on the status of the nuclear trade agreement negotiations with the United States, as well as on the status of the Iran-Pakistan-India (IPI) pipeline. [13] The controversy echoed a similar outcry in February following the comment by former U.S. Assistant Secretary of State Stephen Rademaker during a February 2007 speech in the Indian capital that India’s votes against Iran at the IAEA in September 2005 and February 2006 had been “coerced,” apparently by an implicit U.S. threat to delay the U.S.-India nuclear accord. [14]

In response to the concerns expressed in the letter from the U.S. legislators, the Indian government highlighted the recent ban it had imposed on the export to Iran of sensitive nuclear and missile technology. Foreign Minister Pranab Mukherjee stated that, in accordance with UN Security Council Resolution 1737, which bars trade with Iran in sensitive nuclear- and missile-related commodities, New Delhi issued a notification that “prohibits direct or indirect export and import of all items, materials, equipment, goods and technology which could contribute to Iran’s enrichment-related, reprocessing or heavy water-related activities, or to the development of nuclear delivery systems.” [15]

Previously, the Indian government had stated that it was exercising “caution” in granting educational visas for Iranians and was implementing an “asset freeze” on funds of Iranian proliferation-related personnel and entities identified in UN Security Council Resolution 1737, another requirement of that resolution. Various Indian government agencies such as the Department of Revenue, the Departments of Space and Atomic Energy, and the Indian Council of Agricultural Research are involved in implementing these restrictions. [16] In addition, in November 2006, the Indian Coast Guard detained a North Korean ship, the MV Omrani that was bound for Iran on suspicion that the ship might be transferring prohibited nuclear or missile commodities to customers such as Iran. [17]

According to one report in a prominent Indian newspaper, New Delhi’s objective behind these measures has been to demonstrate that it does not want to see another nuclear-armed state in the region. [18] The Iranian nuclear program may be of particular concern to New Delhi because of its past links with the nuclear smuggling network of Pakistani nuclear scientist A.Q. Khan; in the late 1980s, at least one senior Pakistani military officer is said to have supported this connection as part of an anti-Western Pakistani-Iranian entente, based on the concept of “strategic defiance,” a linkage that could also have strengthened Pakistan vis-à-vis India. [19] India has favored a comprehensive investigation of Khan’s role in the Iranian nuclear program. [20]

Pipeline Politics
The IPI pipeline, which Washington opposes, has raised equally difficult issues for New Delhi. The pipeline, estimated to cost $10 billion, will run 2,600 kilometers from Iran to India, and according to Indian officials, will be crucial to meeting the country’s natural gas requirements, only half of which can be satisfied from domestic sources. [21] Given U.S. opposition to the project, some analysts believe that India will ultimately be forced to choose between the future supply of nuclear goods from the United States and an enlarged supply of natural gas from Iran. [22]

During his visit to New Delhi in March 2007, U.S. Energy Secretary Samuel Bodman underscored the Bush Administration’s opposition to the pipeline project, stating that the revenues it would generate would help Iran advance its nuclear program. [23] Secretary Bodman also sought to reassure New Delhi, however, that the issue was not linked to the U.S.-India nuclear trade agreement, an assurance subsequently undercut by the April communication from senior U.S. Congressional figures. [24] Petroleum and Natural Gas Minister Murli Deora later rejected demands that India abandon the IPI project, declaring in the Indian Parliament that “India will not be cowed down by any threat.” [25] Nonetheless, Indian leaders appear to recognize the need to balance domestic energy needs with growing international concerns over the Iranian nuclear program, as manifested in UN Security Council Resolutions 1737 and 1747. [26]

The U.S. effort to stop the pipeline project is part of a broader strategy by the Bush Administration and the Democratic-led Congress to step up economic pressure on Iran by discouraging investment in Iran’s energy sector. [27] Currently, U.S. law provides for the imposition of penalties against foreign companies that invest more than $20 million in a single year in Iran’s energy sector. [28] According to a recently released report, since 2000, firms from approximately three dozen countries have invested about $153 billion in Iran; Indian entities placed ninth on the list with a combined investment of $9.9 billion. [29]

Apart from the involvement of India, Pakistan, and Iran, other entities, including the Russian natural gas giant Gazprom, have also expressed an interest in participating in the pipeline project. Gazprom is interested in the procurement and construction stages of the pipeline and also favors extending the pipeline to China. [30] However, some influential Indian analysts have stated that with the intensification of sanctions against Iran, it will become increasingly difficult for India to raise international financing for the project. [31] If financing costs increase, the project could prove less cost effective for India, especially when cheaper alternatives may be available, such as the importation of Iranian natural gas by ship or the purchase of oil or natural gas from Saudi Arabia. [32]

Aside from these geo-political issues, the pipeline has already run into more mundane difficulties. There is still no agreement, for example, between India and Iran on the price of the gas it will carry or between India and Pakistan regarding the tariff to .. be paid for transportation across Pakistani territory. [33] In April 2007, the prime ministers of India and Pakistan did reaffirm their commitment to the pipeline, but there was no indication that the central transit price issue had been resolved. [34]

Still both sides recognize that the pipeline represents an important confidence-building measure in the context of the on-going peace process between New Delhi and Islamabad. According to Pakistani Prime Minister Shaukat Aziz, the pipeline would infuse helpful “linkages and interdependencies” into the peace process between the two states. [35] The pipeline could also prove extremely lucrative for Pakistan. Some estimates suggest that Pakistan would receive an annual fee of $150 million once the pipeline is operating, a sum that may represent a more important economic benefit to Pakistan than the profits from gas sales would be for Iran or the benefits of additional energy supply would be for India. [36] Given these prospects, it is not surprising that a Pakistani spokesperson insisted that the Security Council’s imposition of additional sanctions against Iran under Resolution 1747 would not impact the pipeline project. [37]

Domestic Divisions
In India, attitudes of domestic political parties (both in the opposition, as well as within the ruling coalition) are a crucial factor behind New Delhi’s amorphous Iran policy and constrain the Singh government’s room for maneuver. Singh heads a parliamentary coalition led by the Congress Party but is dependent on India’s Communist parties to maintain its majority.

The leftist parties, along with other political factions with socialist leanings, such as the Samajwadi Party, have been extremely reluctant to lend their support to Washington’s anti-Iran policies. They pressed the Singh government, for example, not to act against Iran at the IAEA, arguing that India must focus on its need for increased energy supplies and maintain its independence by keeping its distance from Washington. [38] The Communist parties also have reservations about certain provisions of the Hyde Act – the U.S. law setting the terms for the U.S.-India nuclear cooperation agreement – in particular its provisions calling upon India to support Washington’s Iran policy. [39] This led the CPI-M, in March 2007, to press the government once again to disregard U.S. objections and complete negotiations with Iran and Pakistan to finalize the IPI project. [40]

Somewhat surprisingly, India’s main opposition party, the Hindu nationalist Bharatiya Janata Party, has supported the Congress Party-led government’s anti-Iran votes at the IAEA. The party’s leadership has declared that it would not be in India’s national interest for Iran to develop nuclear weapons and that New Delhi must recognize the strategic dangers of such a development. [41] Indeed, the BJP criticized the Singh government’s anti-Iran votes at the IAEA not because of the government’s underlying position, but because of what the BJP asserts was the “mismanagement” of the votes at the Agency and the government’s succumbing to U.S. pressure. [42]

From the Indian government’s perspective, domestic politics are therefore an immensely complicating factor as it tries to lock in the nuclear deal with Washington, without appearing to make concessions to broader U.S. objectives that many parliamentary factions oppose.

Conclusion
India’s Iran dilemma could become still more acute in the coming months, should the Security Council impose sanctions curtailing economic ties to Tehran. Indeed, a number of European states, including France and Italy, are already beginning to implement such restrictions voluntarily, following long-standing U.S. policy. [43] If additional nations adopt this stance, India could find itself increasingly isolated on the issue, even in the absence of UN action. In this context, should it pursue highly visible engagements with Tehran, such as increased military cooperation or finalization of the IPI pipeline project, the nuclear accord with Washington could be in even greater jeopardy.

As one influential analyst in New Delhi has stated, India will have to “follow a nuanced policy” to succeed in its quest for both nuclear technology from the United States and fossil fuel supplies from Iran. [44] Officially, New Delhi’s position has been that its policy on Iran’s nuclear program would be in accordance with the principles of non-alignment and the national interest. [45] But the Singh government may find that implementing such principles and executing such a “nuanced policy” toward Tehran is easier said than done.


Sharad Joshi – Monterey Institute Center for Nonproliferation Studiesh