An Iran breakthrough?

In spite of the outcome of talks, India needs to secure oil supplies

The possible breakthrough in talks between the five permanent members of the UN Security Council (China, France, Russia, the United Kingdom, and the United States) plus Germany (the P5+1) and Iran over the oil-rich nation’s nuclear programme would impact the many interests in play. For the West, failure would have reflected a diminished power in global affairs and an escalation of nuclear tensions in the region; and for Iran, it would have meant a continuation of economic sanctions that are clearly biting. The Arab world led by Saudi Arabia is anxious that the balance of power does not tilt too decisively in favour of this one non-Arab, Shia power in West Asia. That explains the kingdom’s energetic support of Islamic State militias in Iraq and Syria and its recent crackdown on the Houthi rebels of Yemen, though the latter have the most tenuous of links with Iran. For nuclear-armed Israel, the possible emergence of another strong Western ally in the region is as disturbing as any existential threat from Iran. Israel’s feisty Prime Minister Binyamin Netanyahu says he fears any deal that allows Iran to produce nuclear fuel risks that country developing a secret weapons programme. In their vocal opposition to a deal, the US Republicans are reflecting an established position. That is why, even in spite of the breakthrough, negotiations on a full agreement, due to be concluded in June, will remain tricky. Several deadline have already lapsed and the reason negotiators opted to keep talking is that US Congressmen — including Democrats — have threatened to pass new legislation when they reconvene in mid-April to impose fresh sanctions on Iran.

Much of the disagreement, which builds on a significant November 2013 agreement that rolled back some critical aspects of Iran’s proliferation programme and opened it to greater international scrutiny, was about details that determine the time Iran can take to amass sufficient fissile material for weapons. And the effect of any lasting agreement is hard to predict, because the situation in West Asia is so impossibly complex and polarised. But all of this has a bearing on crude oil price, since Iran is the region’s second-largest producer and the world’s sixth largest. The low oil prices the world is enjoying is the result of a nudge-and-wink arrangement between the US and Saudi Arabia, principally aimed at Russia. That is unlikely to last.

So India, which has long enjoyed good relations with Iran, needs to gear up for some hard-headed realpolitik quickly. It stopped importing Iranian oil in March in response to US pressure. But as Asia’s third-largest crude importer, over 60 per cent of which comes from West Asia, it needs to ensure that it has secured supplies from elsewhere; it cannot depend on the resumption of supply from Iran. Solutions such as asking the US to step in are naïve given that the US does not and is unlikely to permit oil exports. Reviving India’s relations with Russia may be a more practical (and cheaper) solution. In fact, that is exactly what China has done.