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Energise the relations

Economic and industrial cooperation, particularly in energy, is the crux of a future India-Iran relationship, writes SP Hinduja.

india Updated: Apr 29, 2008 22:36 IST
SP Hinduja

President Mahmoud Ahmadinejad’s visit to India, albeit for a few hours, was long overdue. It is an opportunity for both countries to put their relations on a forward-looking course. Iran, like India, is a regional power, a country of 72 million with a democratic system, although not in the Westminster mould. Assessments indicate that its economy grew at 6 per cent in the last two years, inflation is under control and soaring oil prices have swelled reserves and mitigated budget deficits. Iran’s privatisation programme is on track and relaxation of foreign investment laws presents new opportunities. Both India and Iran are trying to promote inclusive growth. Iran is confident of weathering the fallout of sanctions.

Iran’s uranium enrichment programme has become the focus of international pressure and cause for hostility with the US. Yet, it is an irony that Iran’s N-programme started with US assistance in the 1950s. It is unfortunate that the EU’s efforts to promote a dialogue on the issue are still without an outcome. It is important to understand that the issue is to recognise Iran’s amour propre in the matter of its rights under the NPT, and not of packages like those offered to North Korea.

Diplomacy is still the need of the hour. In spite of four UN Security Council resolutions, opinion within the Permanent-5 remains divided on the strategy of isolating Iran. In contrast to the US and Britain, Russia and China have maintained a distance given their energy and economic stakes. France also appears ambivalent. The same sentiment prevails among other major and regional powers, whether it is the Arabs or other countries in Asia. Meanwhile, neither the US nor Iran appear to want war; at least this is being read from both the US National Intelligence Estimate that Iran stopped enrichment in 2003; and the on-going secret ‘back channel’ talks.

The Ahmadinejad visit provides India an opportunity to foster better understanding and promote cooperation for bringing political stability in the region, particularly in Iraq and Afghanistan. India’s thirsty economy makes Iran an indispensable partner in its search for energy security. On the other hand, India and the US want to strengthen their bilateral relations as encapsulated in the civilian nuclear deal. As a result, the UPA continues to be pressed between the Left and the Right.

India’s relations with either country can’t be seen as a zero-sum game. While the 123 Agreement should see the light of the day, so should robust cooperation between Iran and India through the Iran-Pakistan-India (IPI) pipeline and collaborative exploration and production activities in Iran based on investment and market development. This is a good time to clear misunderstandings that have delayed the finalisation of bilateral projects. India needs to convey to Iran that it understands its quest for nuclear energy within its NPT obligations and call upon Iran to cooperate with the International Atomic Energy Agency. Iran needs to understand that India is its natural partner in the region.

Economic and industrial cooperation, particularly in energy, is the crux of a future India-Iran relationship. For India, we hope that the visit will de-block the agreement for the supply of 5 million tonnes of Liquefied Natural Gas by Iran. India can be a long-term consumer of Iranian gas while Iran needs to cultivate this relationship in the light of its troubled relations with the Organisation for Economic Cooperation and Development countries. An early confirmation by Tehran that participation of ONGC Videsh Ltd and our Group in the South Pars Phase 12, which entitles access to LNG, will help set up downstream petrochemical projects in both countries. Similarly, the OVL-Hinduja Group’s participation in the development of the Azadegan oil field will make available another source of hydrocarbon. The meeting on the IPI pipeline gives hope for optimism.

It is important for Iran to appreciate that the slow progress is due more to security concerns vis-à-vis Pakistan than to any supply concerns with Iran. Iran expects India to be flexible on gas price, agreement for providing banking facilities and investments in SP-12 and Azadegan development. These projects can provide India’s long-term energy security.

Similarly, the development of Chabahar Port and the railway line to Faraj with Indian investment has become urgent in the context of the escalating Taliban attacks on the Indian Zaranj-Delaram road link project. An early completion of these projects would provide a secure link for both countries into Afghanistan and Central Asia. We hope that these subjects will be followed up during the presidential visit.

It is as important for the US to realise that India is unlikely to sacrifice its energy and strategy interests with Tehran for its relationship with Washington. It is also important for Tehran to understand that India has an independent foreign policy and its robust relations with the US do not detract from its civilisational relationship with Iran. There is sufficient basis for India to play the role as a ‘facilitator’ between the US and Iran — not only in relation to the nuclear question but improving the overall relations if the US reaches a point where it needs to engage Iran in some capacity.

SP Hinduja is Chairman of the Hinduja Group that has been in Iran for almost a century