In India-Iran oil spat, nuclear row trumps Afghan war

January 4, 2011

khatamiNot too long ago, you could have predicted relatively easily how regional rivalries would play out in Afghanistan.  Saudi Arabia would line up alongside Pakistan while Iran and India would coordinate their policies to curb the influence of their main regional rivals. 

But that pattern has been shifting for a while — the row over Indian oil payments to Iran is if anything a continuation of that shift rather than a dramatic new departure in global diplomacy.  And as two foreign policy crises converge, over Iran’s nuclear programme and the war in Afghanistan, the chances are that those traditional alliances will be dented further. It is no longer a safe bet to assume that rivalry between Sunni Saudi Arabia and Shi’ite Iran will fit neatly into Pakistan-India hostility so that the four countries fall easily into two opposing camps come any final showdown over Afghanistan.

India, which has been working to improve its relationship with the United States for much of the last decade, already earned Iran’s wrath by voting against it at the International Atomic Energy Association (IAEA) over its nuclear programme, first in 2005 and then again in 2009. Though India has since been trying to repair the damage, comments by Supreme Leader Ayatollah Ali Khamenei late last year criticising India over Kashmir soured the mood further between the two former allies.

The decision by the Reserve Bank of India (RBI) last week to suspend payments for oil imports made by Indian companies from Iran that use the Asian Clearing Union (ACU), a clearing house used to process multilateral payments between South Asian countries and Iran, was pretty much in line with that trajectory of slowly deteriorating relations.

As a caveat, it would probably be unwise to read too much into the oil payments row — Indian media have complained that the RBI decision was not coordinated across government departments and reported that the timing of its announcement came as a surprise even to the foreign ministry.  But extend the trajectory further and the outlook for coordination between India and Iran on Afghanistan does not look too promising.

India, Iran and Russia all supported the then Northern Alliance which opposed the Taliban when they were in power from 1996 to 2001.  But Washington and others have since accused Iran of covertly backing the Taliban — an allegation Tehran denies — in order to maintain pressure on the United States.  In the event of an escalation of the nuclear row, it could ratchet up support for the Taliban to make life even harder for the United States. That is anathema to India, which sees the Taliban as a Pakistan-backed movement used by Islamabad to try to maintain its influence in Afghanistan.

Meanwhile India has been cultivating ties with Saudi Arabia, which was one of only three countries along with Pakistan and the United Arab Emirates to recognise the Taliban government when it was in power.  In February last year, Prime Minister Prime Minister Manmohan Singh made the first visit to Saudi Arabia by an Indian leader since 1982, seeking to build economic ties and to enlist the kingdom’s help in improving regional security.

Saudi Arabia is India biggest supplier of oil, and some are already arguing that Delhi needs to build relations further to offset deteriorating ties with Iran. “Delhi should step up its engagement with Saudi Arabia, which is the world’s largest oil producer, and other petroleum-producing states in the Persian Gulf,” the Indian Express said in an editorial.  ” Saudi Arabia and other Gulf states are deeply concerned about Iran’s nuclear programme and are looking for security partners. Delhi must act purposefully to build on the natural convergences with Saudi Arabia on energy security and regional stability.”

Pakistan, meanwhile, has been trying to improve relations with Iran. Though that effort was dented last month by the bombing of a mosque in Iran by militants Tehran says are based in Pakistan, the two countries continue to meet at regional forums which notably exclude India.

At the same time, Pakistan’s relations with Saudi Arabia are not as good as they once were.  U.S. embassy cables published by WikiLeaks quoted Saudi King Abdullah as expressing deep frustration with Pakistan President Asif Ali Zardari

And the dissonance between the two countries is not limited to a Saudi dislike of Pakistan’s current civilian rulers. The two countries do not seem to see eye-to-eye over the need for a political settlement in Afghanistan which would require the Taliban to break with al Qaeda — an  idea promoted by Pakistan’s powerful military, which dominates the country’s Afghan policies. Saudi Arabia has been reluctant to be dragged into mediating talks with the Taliban; and it would also be wary of any settlement which forced al Qaeda to leave its safe haven in Pakistan if this were to drive it into Yemen.

Much can change between now and 2014, by which time the United States and its allies would be expected to have the contours of a political settlement in Afghanistan in place if they are to pull out their troops. But the nearer we get to a collision between the row over Iran’s nuclear programme and the war in Afghanistan, the harder it will become to predict how regional players will respond.

(Reuters file photo: Iranian President Mohammad Khatami reviews the guard of honour in front of the Presidential Palace in New Delhi January 25, 2003. Khatami was the guest of honour at India’s Republic Day celebrations that year.)

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