New Delhi, We Have a Problem by Sumitha Kutty

With the US State Department exempting 11 nations (10 EU members and Japan) from sanctions for trading with Iran, Washington has signaled that it remains unconvinced about India’s intentions. Facing penalties along with India are China, Turkey and South Korea–nations that the US accuses of not demonstrating ‘significant reductions’ in volume of crude oil purchases from Iran. Interestingly, the legislation, Section 1245 of the National Defense Authorization Act for 2012 (NDAA), does not define how much reduction qualifies as ‘significant reduction.’ 

The State Department’s special briefing on March 20 commended the European Union for its decision to decrease Iranian crude oil imports to zero and Japan for cutting its Iranian crude imports by 15 to 22 percent despite the hardships it has faced since the Fukushima disaster. The State Department official also commented that the EU and Japan give an indication of what the remaining countries should consider bringing to the table before the end of March. On March 30, President Obama will declare whether or not the sanctions will be imposed in late June.

Expecting India to match standards set by Japan or the EU seems far-fetched given India's widely-known energy deficit. Understandably, New Delhi is upset with Washington’s growing rhetoric demanding it choose sides. When asked about the demands for ‘significant reductions,’ Indian Petroleum Minister S. Jaipal Reddy said, “We continue to receive their representations... But, they also need to understand our requirements. We need to take care of our own consumers' interest.” Reddy stressed importing Iranian crude “without violating any international laws” (ie. the existing UN sanctions) to prove India does not support a nuclear Iran. The matter of crude oil purchases has already been settled with the establishment of a new rupee payment mechanism involving the non-governmental Parsian Bank as Iran’s nodal bank. In fact, India has cut imports from Iran down to less than 10 per cent. Iran’s biggest Indian oil client, Mangalore Refinery and Petrochemicals Limited (MRPL), has already implemented a hefty cut of about 44 percent.  Even though a 70-member Indian business delegation visited Tehran in early March, the delegation was unable to finalize a payment mechanism for Indian exports to Iran.

Meanwhile in Washington, media reports and pressure from lobby groups have taken a toll on the Indian embassy. The embassy spokesperson released a statement earlier this month rejecting allegations that India was capitalizing on opportunities created by Europe's withdrawal from Iran. The statement noted India’s historic relationship with the West Asian nation and Iran’s regional and strategic importance as India’s only corridor for land access to Afghanistan.  In addition, more than 400 million Indians lack access to commercial energy and an automatic replacement of all Iranian sources is not a simple matter or “realistic option.” Though India has already begun diversifying its crude imports, it has always been wary of relying excessively on India’s No. 1 crude supplier, Saudi Arabia, for fear of its radical ideological exports.  As described in a recent report by some of the country's leading public intellectuals and foreign policy experts, New Delhi believes it must ‘steer clear of the escalating rivalry between Iran and Saudi Arabia.’ The mere title of this report–Non-alignment 2.0–endorses the fact that if there is one phrase that is most used in the limited foreign policy discourse in the subcontinent, it is ‘strategic autonomy'—India's desire to not become a lackey of any great power. This line of thought is what has, and apparently, will continue to dictate India’s path. Although it could be argued that the heyday of the US-India nuclear deal saw India do America’s bidding on various international platforms, at stake then was an unprecedented gain for one of India’s most pressing domestic interests—energy.

With time running out and the ‘window of opportunity’ to make a mark on the global arena closing fast, India would like global interactions to be less of a ‘boxing match’ and more of a 'chess grandmaster’s game.’ Yet however the game may be played, the bottom line remains that India’s domestic concerns will overrule everything else. Would any nation choose otherwise? 


Sumitha Narayanan Kutty is an editorial assistant for the online section of the Georgetown Journal and a student in the MA in Security Studies Program at Georgetown University.