NEW DELHI - The
reaction has been quicker than expected, and at
stake is India's energy security. Stung by what
Iran considers a betrayal by India's anti-Iran
vote last week on Tehran's possible referral to
the UN, Tehran has hit back where it hurts most.
Several reports in the Indian media have
said that a miffed Iran has already initiated
action to stall India's energy plans, including
any hope of implementing the $7 billion
Iran-Pakistan-India (IPI) pipeline, which is still
at the discussion stage. Pakistan issued a
statement after the Iran vote that it is prepared
to go ahead with the IPI pipeline without India.
The immediate impact could, however, be on
deals that are already concluded. According to a
front-page report in the
conservative newspaper The
Hindu, dated September 28, and also independently
confirmed by Asia Times Online, Tehran has already
conveyed to India that a five-million-tonne a year
liquefied natural gas (LNG) export deal, with
deliveries scheduled to begin in 2009 for a
25-year period, is off.
India signed the
deal worth $22 billion with Iran in June this
year, fending off stiff competition from China.
According to the report, Ali Larijani, who is
Iran's top nuclear negotiator, conveyed Tehran's
decision to New Delhi immediately after the
anti-Iran vote cast on Saturday by India at the
International Atomic Energy Agency (IAEA)
governing board meeting in Vienna. On September 2,
Larijani had said in Tehran: "The issue of
exporting LNG to India has been finalized."
With this move, India will lose any chance
of procuring the additional 2.5 million tonnes of
LNG a year that it is seeking. India produces
about 90 million standard cubic meters of natural
gas per day as against its daily demand of 120
million standard cubic meters - demand that is
likely to grow in the coming years. The projected
demand of natural gas in India by 2020 stands at a
huge 400 million standard cubic meters a day,
which cannot be met domestically.
India
might not be the only country to feel the sting of
Iran's wrath. Foreign Ministry spokesman Hamid
Reza Asefi said Tehran would reconsider economic
ties with countries that voted against it. New
Delhi and Tokyo were among the 22 out of 35
delegations that voted against Iran. China
abstained.
Iran is already Japan's
number-three oil supplier, but Tokyo is pursuing a
$2 billion development project at Azadegan in
southwest Iran, claimed to be one of the world's
largest untapped oilfields.
China could be
a big beneficiary as it already has extensive
investments in Iran and could expand them. In
March 2004, China's state-owned oil trading
company, Zhuhai Zhenrong Corporation, signed a
25-year deal to import 110 million tons of LNG
from Iran.
This was followed by a much
larger deal between another of China's state-owned
oil companies, Sinopec, and Iran, signed in
October 2004. This deal, worth about $100 billion,
allows China to import a further 250 million tons
of LNG from Iran's Yadavaran oilfield over a
25-year period. In addition to LNG, the Yadavaran
deal provides China with 150,000 barrels per day
of crude oil over the same period.
This
huge deal also enlists substantial Chinese
investment in Iranian energy exploration, drilling
and production as well as in petrochemical and
natural gas infrastructure. Total Chinese
investment targeted toward Iran's energy sector
could exceed a further $100 billion over 25 years.
At the end of 2004, China became Iran's top oil
export market.
After the IAEA vote, Tehran
conveyed to India in no uncertain terms that it
was "surprised and disappointed", by India's vote
in favor of reporting Iran's nuclear program to
the UN Security Council. Iran has said that it
would have been "happy" if India had voted against
the resolution, yet "satisfied" if Delhi had
abstained, but the anti-Iran vote was
"disturbing".
Iran's ambassador to India,
Siavash Zargar Yaghoub, met Foreign Secretary
Shyam Saran in New Delhi and told him that Tehran
was "very disturbed" by India's stance. "It is
surprising that a founder of the Non-Aligned
Movement such as India had voted against another
member nation like Iran," Yaghoub said.
Stung by the backlash, including criticism
by the opposition parties and the ruling Congress
Party's left allies, New Delhi has been trying to
do some fire-fighting, claiming that much of its
diplomatic effort was made "on behalf" of Tehran
and that India acted in "Iran's interests". Saran,
who has been defending India's stand, has said
that New Delhi was successful in persuading the
European Union Three (EU-3 - France, Germany and
Britain) not to refer Iran immediately to the
Security Council and allow time for discussions.
"Having got them [the EU-3] to agree to
what we wanted, then to say we will only abstain
on the resolution, would not have been the correct
position for us to take," Saran said. Saran also
said that uranium conversion activities restarted
by Iran in August did not constitute a violation
of the nuclear Non-Proliferation Treaty. "It is
not. I have already said it is not." This is
despite India's concern in the past that Iran's
nuclear program has been secretly promoted by
Pakistan and China, which was a crucial factor for
the anti-Iran vote.
The tussle over Iran
is not over yet. The IAEA governing board has to
vote again in November before any UN referral
takes place and there is no way to know which way
India, which actually surprised the West, and some
other countries who voted in favor, will turn. The
pressure will be from both sides - the US and
Iran. It will not be easy for New Delhi to keep
both happy.
Indeed, expert opinion is
sharply divided on India's vote at the IAEA last
week. Those who have defended New Delhi do so in
terms of the burgeoning ties with the US, and by
extension Israel, which now sees Iran as its main
threat. In this context, it is important that
India is seen as a "responsible" and "sensible"
country that is prepared to address the problem of
nuclear proliferation and at the same time soften
the impact of the IAEA resolution against
long-time friend Iran.
The IAEA vote also
makes it apparent that in its relationship with
nations, India values the US the most, with
Washington also inclined to build new strategic
ties with New Delhi to balance the growing
influence of China in the region.
In an
interview, Michael Krepon of the Stimson Center,
which focuses on conflict resolution, has said,
"Had India not voted to support the IAEA
resolution, the nuclear cooperation agreement
[between India and the US] would have been in big
trouble on Capitol Hill. The [George W] Bush
administration defended the deal on the basis of a
new strategic partnership with India. If, on the
first test of this partnership, India lined up
with Beijing and Moscow instead of Washington, the
administration's rationale would have been
dynamited."
On the other hand, others have
talked about the historical and commercial ties
between India and Iran, accusing New Delhi of
"caving in" to the pressure by Washington. In the
past, Tehran and New Delhi have joined hands
against the Taliban in Afghanistan, where India
disliked the Sunni hardliners as much as Shi'ite
Iran did. This set the ball rolling after years of
mistrust during the Cold War when Tehran,
ironically, had sided with the US against Moscow.
India relies heavily for its energy needs
on Iran and has signed a memorandum of cooperation
over building the IPI gas pipeline. India imported
Iranian crude oil worth $1.67 billion in
2003-2004, with a total volume of annual bilateral
trade $2.8 billion in same year, a 24% growth over
the previous year.
The dependence is only
going to increase. India imports nearly 70% of its
energy needs, with estimates suggesting that by
2020 the country will be importing 85% of its
energy requirements.
Observers also refer
to domestic politics impinging on foreign policy
that may finally tilt the balance in Iran's favor.
One aspect is elections to the important
north Indian state of Bihar, due next month, where
Muslims will play a critical role in deciding who
forms the government. Thus, New Delhi may be
averse to taking a strong stand against an Islamic
state such as Iran. There are close to 150 million
Muslims in India, out of which over 25 million are
Shi'ites.
By the same logic, elections in
the near future are also due in the states of West
Bengal, Kerala and possibly Uttar Pradesh, where
the Muslim population is known to vote en masse
and play a pivotal role.
Siddharth
Srivastava is a New Delhi-based
journalist.
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