Iran, China mega deal rattles India’s shaky foreign policy  

The mandarins in Delhi would probably not mind Iran distancing itself from India, but they would (and should) be concerned that China is taking hold of Tehran in its embrace.

Prime Minister Narendra Modi with Iranian President Hassan Rouhani. Photo: PTI

After Nepal it is now the turn of Iran to rattle India by aligning with China and triggering fears it may go slow or freeze projects signed with New Delhi.

Iran’s turn towards China poses a major foreign policy challenge to India, as one friend after another is moving away from New Delhi into the arms of Beijing. Iran is the latest. Nepal did the same a few weeks ago, accusing India of encroaching on its territory. Sri Lanka has allowed China to massively invest in the country and has given up a major port for Beijing’s use in Hambanthota. Similarly, Maldives too has a significant tie-up with China including investment worth $1.4 billion. Beijing, since 2015, has been Bangladesh’s largest trading partner, displacing India. Moreover, China has pledged deals worth $38 billion in Bangladesh.

In the latest instance, that of Iran, there appears to have been not much choice for Tehran but to go with China.  For, Iran is the target of US-led sanctions over its nuclear power programme.  A multi-country nuclear deal signed in 2015 with Iran when Barack Obama was US president derailed when Trump walked out of it unilaterally in 2018.

Since then, Iran has been struggling to keep its economy afloat. Politically, it has found itself isolated with even other signatories in Europe not coming to its help beyond doing lip service. China, a co-signatory to the nuclear deal, has however moved to bail out Iran in a reported $400 billion deal over the next 25 years that includes cooperation in the areas of military, infrastructure, trade and security.


The deal, reported recently in the New York Times, is a huge relief for Iran. And it is no surprise that it is willing to let go of its commitments to friendly countries like India. If anyone is to be blamed for Iran’s move away from India, it is New Delhi which has firmly got itself ensconced in an alliance with the US, in the process cramping its freedom of choice.

India has been unable to countenance pressure from Washington which has demanded that New Delhi not have any dealings with Iran. From importing nearly 24 million tonnes of crude oil in 2017-18, India under US pressure reduced buying Iranian oil to just 1.7 million tonnes in 2018-19 and no oil imports from the next fiscal.

On the ongoing Chabahar port-linked multi-modal transport agreement signed with Iran in 2016 the ball is in Iran’s court as it needs to authorise an entity to finalise technical and financial issues, reports say. Though Iran has officially stated its agreement with China or US sanctions will not come in the way of the project’s completion, Tehran still needs to get a move on to neutralise fears that it may not be willing to go ahead with it.

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Iran is reportedly planning to deny India’s Oil and Natural Gas Corporation (ONGC) Videsh Limited permission to produce gas from its high-profile Farzad B gas field. Incidentally, it was the Indian company which had discovered gas in Farzad B.

On the other hand, China initially decreased imports of oil from Iran but it eventually defied the US sanctions and has made Tehran an important partner in its Belt and Road Initiative (BRI). Beijing appears to have the necessary bandwidth to take on the US with which it is already at loggerheads on various other issues — the Huawei 5G trials which is being blocked by the US across various parts of the world including the United Kingdom,  the skirmishes in the South China sea with its neighbours like Japan, Vietnam and the Philippines that has riled Washington and on the trade front where its exports have been subject to heightened tariffs by the Trump administration, to name a few.

India, faced with a challenge on its borders with China and a threat by Beijing to its influence in the South Asian region has moved much closer to the US-led allies including Japan and Australia, in what is known as the Quad. This arrangement is inherently antagonistic to Beijing in its scope and vision.

What makes the situation distressing is the distancing of relations with Iran which has been a long-term friend of India.  For years, Iran, more often than not, supported India in international forums against Pakistan’s anti-India resolutions including at the Organisation of Islamic Countries (OIC), exported oil on terms favourable to India and backed New Delhi’s strategies in Afghanistan during the time when a hostile Taliban was in power there.  There were occasional spats, over Kashmir for instance.  But, they did not dent their mutual relationship.

India was so close to Iran that they even conceived of a gas pipeline that would run from one country to the other via Pakistan termed as the peace pipeline. However, the then Bush administration in 2004 targeted Iran over its nuclear power programme and pressured India to move away from Tehran four years later when sanctions were imposed against the Islamic republic.

The gas pipeline which was already in the stages of planning all but came to a halt with India not pursuing it actively. New Delhi again came under pressure to lower its oil imports from Iran which it complied with.  In 2009, at a meeting in Geneva of the International Atomic Energy Agency (IAEA), India voted against Iran on the nuclear issue, angering Tehran.

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The latest shift away from India towards China is therefore not an impulsive decision by the government in Tehran but a natural slide that is a culmination of India’s cold-shouldering of Iran over the last two decades under US pressure.

The mandarins in Delhi would probably not mind Iran distancing itself from India, but they would (and should) be concerned that China is taking hold of Tehran in its embrace.  However, it is not just India that will be affected. With a large dollop of military cooperation too part of the deal between Iran and China, it is bound to change the contours of geopolitics in the Asian region, the Middle-East and by extension the rest of the world.