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    South Asia
     Nov 21, 2009
The elephant in India and Iran's room
By Sudha Ramachandran

BANGALORE - Although India and Iran have met with some success in stemming the downward slide in their relations, their cooperation in the all-important energy sector seems to be stuck in a rut. And there is little to indicate that a breakthrough will be possible in the near future.

Negotiations between the two countries during the recent visit of Iranian Foreign Minister Manouchehr Mottaki to New Delhi saw them make "good progress" on the issue of a transit route for Indian goods via Iran and Afghanistan to Central Asia and beyond. The two also "exchanged useful notes on the shared problem of terrorism emanating from the Pakistan-Afghanistan belt", an official in India's Ministry of External Affairs (MEA) said.

However, apprehension over drawing American ire continues to


stand in the way of India engaging with the Iranians in some areas.

An area of cooperation with India that the Iranians are keenly interested in is space technology. They wrote to India some months ago asking it to launch a satellite. But so far, India has ignored the request.

"We don't plan to give them a response," the BBC quoted top Indian officials as saying.

Iran launched a domestically made satellite for the first time early this year. Since the long-range ballistic technology it used to hurl a satellite into space can be used to launch nuclear warheads as well, the launch triggered a barrage of criticism from the West, although Tehran insisted that the technology was for peaceful uses only.

India has launched satellites for several countries, including Israel. The launch of Israel's satellite from the Sriharikota space station in southern India was hailed in the Israeli media as a boost to Israel's intelligence gathering capability with regard to Iran.

But India is not keen to launch a satellite for the Iranians.

"India does not want to get entangled in Iran's problems over its nuclear and missile programs; hence its reluctance to launch satellites that could assist its missile capability," the MEA official explained.

It does not want to anger the Americans.

India's relations with Iran have been warm since the mid-1990s. The relationship blossomed in Afghanistan. Concern over the Taliban and the rising influence of Pakistan in Afghanistan brought the two together. India, Iran and Russia provided support to the Northern Alliance.

In the years since, oil and gas have energized the India-Iran relationship. Given Iran's possession of the world's second largest natural gas reserves and its third-largest oil reserves and India's growing energy requirements to fuel its expanding economy, Delhi and Tehran drew close to each other.

In 2005, the two signed an agreement under which Iran would supply India with 5 million tons of liquefied natural gas (LNG) per annum over 25 years beginning in 2009. Iran, Pakistan and India began exploring the possibility of cooperation over the construction of a pipeline (Iran-Pakistan-India - IPI) that would carry gas from Iran's South Pars gas fields through Pakistan to India. Iran also invited India to get involved in oil exploration.

In 2003, India invited Iran's president to be the chief guest of its Republic Day celebrations, signaling the importance Delhi accorded Iran.

But the relationship hit choppy waters in 2005-06, when India voted twice against Iran in the International Atomic Energy Agency (IAEA). With its ties with the US expanding rapidly and the possibility of a nuclear deal that would allow it to engage in nuclear trade on the horizon, India succumbed to US pressure and lined up behind it against Iran.

The IAEA vote impacted on India-Iran relations immediately. Iran canceled the agreement to supply India with LNG and then called for renegotiation of the deal. It has been demanding a higher price for the LNG since.

With the US opposed to the IPI pipeline, India began dragging its feet on the project. While Iran and Pakistan signed an agreement on the pipeline, India stayed away.

Over the past year, several high level meetings have taken place to end the deadlock over the LNG deal and to get Indian on board the pipeline project. This was attempted during Mottaki's visit as well but with little luck.

The Iranian foreign minister told India that the door was still open for India to get on board the pipeline project. India's Foreign Minister Somanahalli Mallaiah Krishna said that India remained interested in the project but pointed to its continuing concerns over the pricing of gas, its delivery point and the safety of the pipeline.

Indian officials draw attention to Iran's frequent upward revision of the price of gas it will deliver through the pipeline. The price Iran is demanding at present is over double that which it proposed initially, making it the most expensive gas in the country. Another issue of concern is the security situation in Pakistan that will have implications for the pipeline's safety. The pipeline will run through Pakistan's insurgency-wracked Baluchistan province and Sind before entering India.

Although India has not categorically ruled out joining the pipeline project, the prospects of it doing so are dimming by the day given the deteriorating security situation in Pakistan. It seems to be using the bait of its participation in the pipeline project to push the Iranians to honor their commitment to supply LNG under the 2005 agreement. The pipeline project's economic viability depends on India joining the project. Iran and Pakistan have indicated in the past that they are considering inviting China to join the project.

While no progress was achieved in breaking the stalemate over the LNG deal and the pipeline project during Mottaki's visit, discussions on the transit route appear to have moved satisfactorily. The two sides discussed the prospects of an India-Iran-Afghanistan trilateral dialogue on a trade and transport corridor that will run from the Iranian port city of Chabahar through Afghanistan to the Central Asian Republics.

While this has been a topic of discussion for several years now, the plan has moved closer to fruition over the past year with India completing the construction of a crucial link in this route - the 218-kilometer Zaranj-Delaram highway in Afghanistan. Zaranj is located on Afghanistan's border while Delaram is one of the towns that are linked by the Garland Highway. Once goods reach the Iranian-Afghan border they can be transported through the Zaranj-Delaram highway on to the Garland Highway to any part of Afghanistan and thereon to the Central Asian Republics.

India is in talks with Iran on the construction of a 708km rail link from Chabahar to Fahraj.

With Pakistan denying India overland access to Afghanistan, India is hoping to use Chabahar port to send goods via land to Afghanistan and Central Asia. India, Iran and Russia have been working on a north-south corridor too that will allow them to send cargo via Chabahar.

The positions of India and Iran on Afghanistan share several similarities. Both are opposed to the Taliban and Pakistan's role in supporting it. Both believe that there is no "good Taliban" and are opposed to attempts to reach out to "moderate Taliban". This shared perception has prompted some in India to call on Delhi and Tehran to co-ordinate efforts towards shaping a joint strategy to Afghanistan.

But there is an important difference in their positions on Afghanistan that stands in the way of their playing a more overt and united role and that is their perception of the US role in Afghanistan. Iran is wary of American troop presence in Afghanistan. India is worried that the Americans will leave Afghanistan. It is opposed to the US exiting Afghanistan at least for now.

Indian officials blame Iran for the current trouble in energy cooperation with Iran. They point to Iran's refusal to respect signed agreements and its frequent demand to renegotiate terms. This they say is standing in the way of the implementation of agreements. They compare this to the smooth implementation of oil deals with Oman or Sudan.

But this alone does not explain the below-potential co-operation between India and Iran. It is US pressure on India, their newfound closeness and India's reluctance to annoy the Americans that is to blame for the stalemate in energy cooperation. If the US has not put pressure on India regarding the trans Iran-Afghanistan trade corridor, it is because it needs all the help it can get to tackle the crisis in Afghanistan.

Indian officials will not admit it, but when Mottaki was in Delhi negotiating with them, the US was the elephant in the room that stood in the way of his visit being more fruitful.

Sudha Ramachandran is an independent journalist/researcher based in Bangalore.

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