Iran recently celebrated the 30th anniversary of Ayatollah Khomeini's Islamic Revolution

Hard-line Islamist Regime

Iran's commanding location on the trade routes of the northern Indian Ocean region, including the Arabian Sea and the Persian Gulf, its shared sovereignty over the Strait of Hormuz that provides a vital passage for the export of the region's oil wealth, the gateway that it provides to land-locked Afghanistan, the Central Asian Republics and Russia (through Turkmenistan) and its shoreline on the Caspian Sea, imbue Iran with immense strategic significance. The Persian civilisation has historically provided a crucial link on the strategic crossroads between West Asia, South Asia and Central Asia. However, the ongoing wars in Iraq to Iran's west and in Afghanistan to its east have disrupted that link. Iran itself has also contributed in some measure to the regional instability that now prevails.

Under the Shah of Iran, who was deeply loyal to the United States, the country had made rapid progress as a modern state that was secular and progressive in outlook. After the 1979 Islamic revolution led by Ayatollah Khomeini and the imams, Iran had sunk back into the darkness of the Middle Ages, but not for long. President Hashemi Rafsanjani, a pragmatic conservative, attempted to revive Iran's failing economy on free-market principles, and gradually reopen the country to foreign investment. He made the first moves to re-establish relations with the West and promote Iran as a regional power.

Reformist President Mohammad Khatami's election in 1997, his call for a "dialogue of civilisations" and the sweeping victory of the reformers in the February 2000 Parliamentary elections augured the advent of a new era in Iran's political and social climate. However, President Ahmedinejad's radical views on Israel, Iran's seemingly unquenchable thirst to acquire nuclear weapons, its proximity to and vested interest in continuing instability in Iraq, the Iranian-supported Hamas and the Lebanese Hizbollah's prolonged assymetric war against Israel have angered world opinion. The complete domination of Iran's polity by a radical clergy and its retarded industrialisation despite large petro-dollar earnings have dampened the international community's desire to normalise relations with the country.

For India present-day Iranian policies present a complex challenge. Since its independence, India has traditionally enjoyed warm and friendly relations with Iran. However, these ties have begun to fray at the edges in recent years due to Iran's abrogation of its Non-proliferation Treaty obligations despite India's heavy dependence on Iran's oil and natural gas. In a September 2005 IAEA vote, India had voted to hold Iran in "non-compliance" of its safeguards obligations to the IAEA even though China, Russia and Pakistan abstained. Again in a February 2006 IAEA vote, India had voted in favour of referring Iran to the UN Security Council, due to India's apprehension that Iran's growing uranium enrichment capability may eventually lead to the development of nuclear weapons.

While the Iranian government has categorically ruled out any intentions of acquiring nuclear weapons, India is concerned that the acquisition of uranium enrichment capability may eventually create the propensity to develop nuclear warheads. As a hard-line nationalist regime has been ruling Iran for over two decades, the acquisition of nuclear weapons by Iran will add to regional instability in an already unstable neighborhood, particularly when viewed in the light of the ongoing conflict in Iraq that faces the prospects of a civil war and Afghanistan that has seen the resurgence of the Taliban. Saudi Arabia may also opt to acquire its own nuclear weapons and other neighbours may seek nuclear guarantees from the US and even Israel. Also, an Iran-Pakistan nexus cannot be ruled out in future even though their present relations are lukewarm. On account of national security considerations alone India's opposition to Iran's uranium enrichment programme, which violates Iran's treaty and safeguards obligations, is entirely justified.

Unreliable Energy Partner

During the regime of the Shah of Iran, India's perception of Iran was that of an alliance partner of the US and Pakistan. Post-1979, the two countries crafted a warmer relationship that laid the foundation for renewed bilateral cooperation on the basis of mutuality of interests. In the past Iran has taken helpful positions on Kashmir in the Organisation of Islamic Conference meetings despite Pakistan's extensive sabre rattling. More recently, Iran helped India in providing assistance to the Northern Alliance against the Taliban before the US-led coalition finally overthrew the oppressive regime in Afghanistan. In 2004, Iran offered India a road link to Afghanistan through the Chabahar port, a North-South corridor for access to Central Asia and Russia and long-term cooperation in the field of hydrocarbon energy.

India has a rapidly growing appetite for hydrocarbons to sustain its eight percent per annum growth rate and Iran is one of India's leading suppliers. Currently India imports over 70 percent of its requirement of oil and natural gas. This is expected to double by 2020. India's energy relations with Iran extend far beyond the proposed Iran-Pakistan-India (IPI) gas pipeline. In June 2005, the two countries signed a 25-year deal, potentially worth up to US$ 22 billion, under which India would import five million tons of liquefied natural gas (LNG) from Iran every year. In connection with this deal, Iran granted development rights to India in two Iranian oil fields that are potentially capable of generating 60,000 barrels per day in production.

In another deal, Iran awarded India development rights to a block in the North Pars gas field. Both countries have also pledged to explore joint investment projects in petrochemicals. All of these deals are now beset by uncertainty. Iran has reneged several times on the previously contracted price for natual gas and is now demanding exhorbitant commercial rates even though the price of oil and gas has been declining. Though the US is no longer actively opposing the IPI pipeline, India's negotiations with Iran and Pakistan are stalled due to non-agreement on transit costs through Pakistan. India is also apprehensive about Pakistan's ability to ensure the security of the IPI pipeline.

It is often forgotten that Iran has been an unreliable energy partner for India in the past as well. In the 1960s, India had joined a consortium led by Amoco to produce oil from the Rostam and Raksh oil fields in Iran. When Islamist hard-liners came to power, they nationalised these and gave India a pittance as compensation. Also, the wisdom of depending on gas pipelines running through Pakistan has been questioned by many Indian analysts on account of the likelihood of their frequent disruption by Jihadi elements in the north and the Baloch tribesmen in the south. Despite their obvious drawbacks, pipelines from Iran and Turkmenistan are attratcive lifelines for India's energy security and India can ill afford to ignore these unless alternative sources can be tapped. Howver, Iran is unlikely to use oil as a weapon and withold supplies to India as that would be detrimental to Iran's own commercial interests.

Securing Indian Interests

In a suo motu statement in Parliament on February 17, 2006, Prime Minister Monmohan Singh had emphasised the civilisational nature of India's relations with Iran, the importance of cooperation on hydrocarbons for India's energy security and the security implications of Iran's clandestine uranium enrichment activities. The Prime Minister highlighted India's security concerns arising from proliferation activities in India's extended neighborhood and favoured a solution based on compromises acceptable to Iran and the international community through diplomatic efforts aimed at seeking a consensus in the IAEA.

The best way to ensure that Iran is never tempted to make nuclear weapons will be to address its security concerns and accommodate it as a major regional actor that is now showing increasing willingness to play a more responsible role in international affairs. There is no reason for India to abandon its traditional friendship with Iran and endanger its energy security. However, India has made it abundantly clear that it stands for Iran respecting its treaty obligations under the NPT and IAEA safeguards and giving up the pursuit of nuclear weapons. India must balance the concerns of the international community about Iran's nuclear ambitions with the advantages of close ties that are in India's interests. India cannot wish away the crippling impact that economic sanctions and, even worse, US-led military strikes on Iran will have on its energy security and its trade in the region.

Indian Muslims comprise almost 15 percent of the country's population, but they have never voted en bloc on issues concerning the community. However, some political parties seldom lose an opportunity to exploit their sentiments for narrow electoral gains. Former Indian External Affairs Minister Natwar Singh, pointing out the sensitivities of India's 150 million Muslims, had said that a significant number of them are Shias. This raises the question whether India's foreign policy is no more than an extension of domestic politics. The majority in India perceives Iran as a non-hostile Muslim country with which India can and must do business for mutual benefit. However, most thinking Indians are unfavourably disposed towards the present hard-line regime, are in favour of greater restraint on the part of Iran and are against the development of technological capabilities that will give Iran the ability to produce nuclear weapons in future. At the same time, most Indians are disinclined to allow the US and its allies to dictate terms to Iran.

Conclusion

Iran's political, socio-economic and military status and the threats and challenges that it is likely to face are of immense interest to India. India must carefully study the strategic trend lines and the emerging contours of Iran's inevitable rise as a regional power as it has significant implications for India. The gateway that Iran provides to the Central Asian Republics and to Afghanistan is crucial for India to achieve its foreign policy objectives in the region and to tap the region's energy resources, particularly its natural gas wealth.

Despite President Ahmadinejad's recent overtures and the prospects of direct talks with the US when the new US Administration takes office, it is still not clear whether the current Iranian regime would ultimately opt to be isolated from the international community but refuse to forego its option to develop nuclear weapons, or prefer to integrate Iran with the new world order on Western terms, that is, gain in economic and technological terms but lose the capacity to develop its own nuclear weapons. A civil nuclear energy programme that bestows enrichment capability on a state that is ruled by a hard-line nationalist regime and has been among the most active state sponsors of international terrorism, is a threat to peace and stability and must be curtailed or at least subjected to an intrusive safeguards regime. India is likely to go along with the international community in seeking such an arrangement.

However, India cannot wish away the crippling impact that economic sanctions and, even worse, US military strikes on Iran will have on its energy security and its trade in the region. Fortunately, the Obama Administration is likely to favour a peaceful resolution of Iran's nuclear crisis, rather than opt for military action that will create more problems than it might resolve. In the ultimate analysis, India's interests lie in the diplomatic resolution of the nuclear crisis. India should offer its good offices to the international community to rebuild bridges with Iran and help it to integrate itself with the new world order peacefully.

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Gurmeet Kanwal is Director, Centre for Land Warfare Studies (CLAWS), New Delhi. He can be contacted at kanwal.gurmeet@gmail.com.