3 Jan 2020 Elizabeth Roche
- The strike that killed Soleimani, seen as an architect of Iran’s growing military influence in the West Asia, is expected to slow down India’s plans to develop the Chabahar port
- Analysts in India say Soleimani’s killing is Washington’s way of retaliating in the proxy battle being fought in Iraq and Syria
NEW DELHI : The US killing of Qassem Soleimani, commander of Iran’s elite Quds through a drone strike on Friday has fuelled worries of tensions spiraling out of control. India sees the region as part of its extended neighbourhood housing about 7 million expatriate Indians who send home valuable foreign remittance. It also a major source of energy for import-dependent India.
The strike that killed Soleimani, seen as an architect of Iran’s growing military influence in the West Asia, is expected to slow down India’s plans to develop the Chabahar port that New Delhi first spoke of turning into a gateway to access landlocked Central Asia and Afghanistan –bypassing hostile neighbour Pakistan — in 2003.
Analysts in India say Soleimani’s killing is Washington’s way of retaliating in the proxy battle being fought in Iraq and Syria, between Iran-supported militias and US troops in the region. Earlier this week, the US embassy in Baghdad was stormed by the militias whose logistics and command and control centres in Syria and Iraq were hit by US airstrikes.
Against this backdrop, a statement from the Indian foreign ministry spokesman Raveesh Kumar advocated restraint and underlined the need for “peace, stability and security in this region.”
“We have noted that a senior Iranian leader has been killed by the US. The increase in tension has alarmed the world. Peace, stability and security in this region is of utmost importance to India. It is vital that the situation does not escalate further. India has consistently advocated restraint and continues to do so,” Kumar’s statement said.
New Delhi’s immediate concern was the impact of tensions on international fuel prices that soared 4% on Friday. Brent crude futures jumped nearly $3 to hit a high of $69.16 a barrel, the highest since September while the U.S. West Texas Intermediate (WTI) crude futures rose $1.76, or 2.9%, to $62.94 a barrel. Earlier, it touched $63.84 a barrel, highest since 1 May. At present, India imports more than 80% of its fuel requirements.
With India’s GDP growing at a record low of 4.5% in the September quarter, there are serious concerns that high fuel prices could adversely impact it’s economic recovery. Though India does not import oil from Iran thanks to a new set of sanctions that came into effect in May, any unrest in the volatile region could impact imports from countries like Saudi Arabia given that most of the exports take place through the Straits of Hormuz – a narrow waterway carrying a fifth of the world’s traded oil — that Iranian officials had in April threatened to block in retaliation for sanctions targeting the country’s oil industry. The US had then said it would move to stop any Iranian attempt to block the waterway. India had deployed naval assets in the region to protect its supplies in the wake of mine attacks on oil tankers. A
A secondary worry, according to officials, is that tensions between Iran and the US could impact India’s trade with the region that now stands at $ 78 billion (from Gulf Cooperation Council member countries ie Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain and Oman) according to April-November figures from the Indian commerce ministry.
According to one estimate by an Indian government official, the West Asia region is the source of some $200 billion in terms of remittances, trade and investments for India.
Since first coming to power in 2014, Prime Minister Narendra Modi has crafted a policy that maintains a delicate balance among countries like the Sunni-dominated Saudi Arabia and United Arab Emirates on one hand and Shia-majority Iran on the other.
The 2015 Iran nuclear deal gave the Modi government a chance to revisit its plans to develop Chabahar port, also seen as a strategic counter to Pakistan’s Gwadar port developed by China. US sanctions on Iran for its suspect nuclear programme and India’s aim to clinch a civil nuclear deal with the US had delayed plans to develop the Chabahar port in the intervening years since 2003. In May 2016, India, Iran and Afghanistan signed a transport and transit corridor pact as well as a bilateral pact with Tehran to develop the Chabahar port and lay a railway line to Afghanistan and Central Asia.
But the election of US president Donald Trump in 2016 and his pulling the US out of the Iran nuclear deal in May 2018 complicated matters for India. While the US government insisted that India stop importing oil from Iran, New Delhi and Washington reached an understanding under which India could go ahead with the development of Chabahar – especially since it was seen as a way to economically stabilize Afghanistan. But getting Indian companies to undertake any activity at Chabahar has been a non-starter with Indian firms nervous of sanctions despite assurances that India had won a carve-out from the US on developing the Iranian port. Things started to look up last month when the US gave India given a written assurance that it would help facilitate global banks to fund the purchase of equipment worth $85 million to be erected at Chabahar port which India is developing in Iran. The assurance came during the recent Indo-US “2+2″ meeting of Foreign and Defence Ministers in Washington and it included a confirmation of the special exemption to the development of the Chabahar port and a rail link from America’s Iran sanctions, provided there was no involvement of the Iranian Revolutionary Guard Corps. (The Quds Force is the elite arm of the Islamic Revolutionary Guards’ Corps, a US sanctioned entity whose complete exclusion from the project was Washington’s precondition for giving India a special exemption to develop the infrastructure at Chabahar port and lay a railway line to Afghanistan and Central Asia).
Days later, Indian foreign minister S Jaishankar visited Iran for talks to speed up the port development. Senior officials of India, Iran and Afghanistan had also met to discuss the expansion of Chabahar port’s operations to more Indian ports.
Ironically it was on Thursday, a day before the US strike that killed Soleimani that Indian foreign ministry spokesman Raveesh Kumar spoke of “lot of good news’’ coming from the port since it began operations in December 2018. Since then, 4,500 containers and almost 0.5 million tonnes of cargo has moved between India and Afghanistan, he said.