It might seem far-fetched, but in a world where global politics and fuel prices are closely linked, a military development in the Persian Gulf could make a big difference to the Indian economy.
Former US Ambassador to India Robert D Blackwill has cautioned that a nuclear build-up in Iran could have very serious consequences for the Indian economy. A crisis over Iran may emerge between 2008 and 2012, he told the India Economic Summit.
Citing an Asian Development Bank report, he said $10 per barrel increase in the price of crude oil could result in 1 per cent gross domestic product loss. “Crude oil at $150 per barrel for a year would wipe out 3-4 per cent of GDP,” the former envoy stated.
Painting a gloomy picture, Blackwill said in the next year or two, the US administration would have to either opt for a war with Iran or see that country emerge as a nuclear weapons state. “The war with Iran will be long drawn and result in further radicalisation of Islam, apart from increasing terrorism,” he cautioned.
He pointed out that emergence of a nuclear weapons State in the region could result in nuclear weapons being acquired by Sunni Muslim nations who rival Shia-dominated Iran. “There could be a nuclear catastrophe with western or Indian cities as targets,” he added.
Blackwill stressed the fact that though US has an option to deal with Iran bilaterally, it is doubtful if it would produce positive result.
India’s deputy national secretary adviser Shekhar Dutt, however, sought to underplay fears of “external shock” severely impacting on the economy. “There is nothing black or white, but shades of grey. We should have an ability to recognise and deal with the situation. Diplomats have to decide on the engagement,” he stated.
Former US Secretary of State Madeliene K Albright stressed the need to bridge the growing gap between rich and poor. “Globalisation has many positive effects, but the negative is increasing gap between rich and poor,” she observed.
She said there was a need to reform the global institutions, including United Nations, to be in tune with emerging realities. ”UN needs reforming. There should be distribution of power between business people, non-government organisations and States,” she added.