India Walks Tightrope as U.S. Toughens Iran Sanctions

NEW DELHI — A bomb attack Monday on an Israeli diplomat’s car in New Delhi underlines the tough balancing act that India has to perform as it attempts to manage its relations with the United States and Israel, and with Iran.

Despite Iran’s denial that it was involved, the incident complicates an equation that India has managed adroitly for years. As U.S. pressure mounts on Iran, the government in New Delhi finds itself in an increasingly uncomfortable position: Its dependence on Iranian oil and unwillingness to join U.S.-led sanctions against Iran put it at odds with Washington over a top U.S. national security priority.

Remaining neutral in one of the world’s most intense contests could become increasingly tough. At risk are not only the chances of building a united front to pressure Tehran to abandon its uranium-enrichment program, but also a burgeoning partnership between the world’s two largest democracies.

“We can avoid a train wreck between the United States and India, but it’s going to take some degree of seriousness, and some work,” said Richard Fontaine, a senior fellow at the Center for a New American Security in Washington.

Iran is India’s second-largest source of crude oil, and officials say it would be difficult and potentially expensive to shift suppliers. With India’s economic growth slowing, and global oil prices rising, New Delhi is reluctant to absorb those costs.

Wary of interfering in other countries’ affairs, India is also reluctant to join a U.S.-led coalition against a Muslim country, something that would be politically unpopular here.

“We have accepted sanctions that are made by the United Nations,” Foreign Secretary Ranjan Mathai warned last month. “Other sanctions do not apply to us. We don’t accept that position.”

India has quietly begun to diversify away from Iranian oil in recent years, with Tehran’s share of imports declining to 11.3 percent of the total in 2010-2011 from 16.4 percent two years previously. Mathai said at a forum in Washington this week that the proportion had since fallen further, to “just below 10 percent.”

If Monday’s bomb attack is conclusively traced back to Iran — especially if Iran is found to be working with in tandem with a local Islamist militant group, violating India’s territorial integrity to attack a third country’s diplomats — the strains between New Delhi and Tehran could erupt into the open.

“There are powerful long-term reasons for India’s cultivation of Iran, and these remain compelling,” said Shashank Joshi of the Royal United Services Institute in London. “At the same time, this touches on a very raw nerve for the Indian security establishment — and there will be many now arguing that India should stop working so hard to shield Iran from international pressure.”

Nevertheless, many here say it would be unrealistic to suggest that India completely sever its energy ties with Iran. Indeed, an Indian delegation is due in Tehran this month to work out a way around the U.S.-led sanctions regime, which has made it difficult for India to pay for Iranian oil.

The Iranian ambassador to India announced last week that an agreement had been reached to pay 45 percent of the bill in Indian rupees, a currency that is not fully convertible and would not normally be used for such a transaction, an indication of Tehran’s readiness to compromise to keep the oil flowing.

Nor is India keen to increase its dependence on Saudi imports, as Washington has suggested. Saudi Arabia is already India’s biggest supplier of crude oil, but its role in promoting a radical vision of Islam in the region engenders suspicion here.

“We’ll talk to the Saudis, but why would we want to go for excessive dependence on their energy supplies, at a time when we are not convinced their leverage in South Asia is being used in a positive way?” asked Siddharth Varadarajan, a strategic affairs expert and editor of the Hindu newspaper. “I don’t think India would like to be forced away from being a major customer of Iranian oil.”

Worries grow about conflict with Iran

India has made it clear it opposes a nuclear-armed Iran, supporting the United States against Iran in votes at the International Atomic Energy Agency on four occasions in recent years, despite complaints from Tehran and significant political fallout at home. India also backed away from plans to build a pipeline to import Iranian natural gas through Pakistan, partly due to American pressure.

But from India’s perspective, any effort to isolate Iran seems dangerous and counterproductive. India has long historical and cultural ties with predominantly Shiite Iran, and tens of millions of Shiites live among the more than 150 million Muslims in India.

India is also deeply concerned about the potential fallout from a Western conflict with Iran, especially if it were to worsen sectarian tensions between Sunni and Shiite Muslims across the region.

“Many oil-producing areas are dominated by [Shiites],” said Ranjit Singh Kalha, a former Indian ambassador to Iraq. “It’s sectarian strife that will cause problems; that’s what worries us. It might ignite the whole region.”

Conflict with Iran could also force the United States into a closer alliance with Pakistan, and what many people refer to as a “military-jihadi complex” there.

Mathai put India’s concerns as diplomatically as possible this week.

“Peace and stability and a climate of moderation in the region are absolutely vital for us,” he told the audience at the Center for Strategic and International Studies.

What he meant, commentators here said, is that India would choose a nuclear-armed Iran rather than war as the lesser of two evils.

But the Indian government’s position has been criticized here.

Varadarajan said India should have done more to talk the two sides down from confrontation, “to be a strong, independent voice for sanity in the region,” and to assume the global role that its ambitions for a permanent seat on the U.N. Security Council imply.

Last week, the U.S. ambassador-designate to India, Nancy Powell, defended India’s policy toward Iran under some pointed questioning at her confirmation hearings. She underlined India’s moves to curb oil imports and support the United States at the IAEA, while also promising to work on the issue “very seriously and very early in my tenure.”

While it is unrealistic to expect India to cut off all oil imports from Iran, there is a middle ground. New Delhi could play a role “to provide perspectives on what is happening in the region, as well as to carry messages,” Fontaine said.

“But we have to be sensitive to politics in India as well as the U.S.,” he said. “Publicly goading India to get tough with Iran is not going to result in the outcome the U.S. is seeking.... The question is how do we work with India as a partner.”