How the China-Iran economic and security deal endangers India’s strategic interests in the Middle East
- The deal, which throws Iran a vital lifeline and gives China access to Iran’s hydrocarbon reserves, imperils India’s strategic stake in the Chabahar port project
An 18-page draft agreement spells out an outlay of Chinese investments worth US$400 billion into the Iranian economy over 25 years. Of this, US$280 billion will be funnelled into the oil and gas sector and the remaining US$120 billion into other core sectors including banking, telecommunications, ports and railways. In return, China will get a steady supply of Iranian oil at a heavily discounted rate for 25 years.
Iran’s vast military and hydrocarbon reserves will be a valuable asset to Beijing, in that they can help fuel its expansionist global projects. Both countries are also on the same page in their zeal to shake up a US-centric international order. Viewed in this light, the deal cocks a snook at Western – specifically American – economic and geopolitical might.
For India though, the deal raises some critical concerns. Especially disquieting is the pact’s overarching military dimension, which calls for joint training and exercises, joint research and weapons development and intelligence sharing “to fight the lopsided battle with terrorism, drug and human trafficking and cross-border crimes”. In an already fraught region, hosting nuclear-armed neighbours (China and Pakistan), this development will be a challenge for Indian Prime Minister Narendra Modi’s government.
However, by tying up with Iran, China has gained an upper hand in influencing affairs in Chabahar too. Worse, the development comes on the back of emerging fissures in Iran-India bilateral relations. New Delhi’s tardy progress on Chabahar’s construction – due to US sanctions – is frustrating Iran.
Delhi has been unable to find a partner company to run its operations at the port as investors and port management companies are wary of operating in Iran, fearing US arm twisting. Uncertainty over Chabahar’s future has thus jeopardised India’s economic and geostrategic interests in the region.
Though Iran didn’t express its displeasure directly to India, it has made it clear in subtler ways. For example, India’s efforts to mobilise international support against Beijing for its recent transgressions in the Galwan Valley of Ladakh garnered no support from Iran.
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The souring of the bilateral relationship is a loss to both. Civilisational ties form the bedrock of Iran and India’s friendship. The two are natural partners with convergences on several geostrategic and economic matters. Since the 1990s, they have also worked to promote bilateral trade, security, connectivity and people-to-people contacts. The signing of a comprehensive defence cooperation agreement added further ballast to ties.
Given these dynamics, Delhi will be treading a fine line in balancing relations with Washington, Beijing and Tehran while striving to augment its political influence in the Middle East. Embracing one country at the cost of the other is not an option. A multilateral foreign policy approach is India’s best bet.
Even so, Delhi might want to wait for the results of the November US election to plan its next big move on Tehran. With Joe Biden as president, the Iran issue may take a back seat. However, if Trump is re-elected, an unenviable diplomatic tightrope act awaits Modi.
Neeta Lal is a Delhi-based editor and columnist