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The Indo–Iranian Rappochement: Not Just Natural Gas Anymore

SUMMARY: Earlier this month India's Prime Minister Atel Behari Vajpayee became only the second Indian head of government to visit Tehran since the disintegration of the Soviet Union, and the first in over seven years. At the head of a large delegation, he signed seven cooperation accords on energy, water, trade and science but sought to downplay efforts at bilateral defense cooperation.


A few years ago, when transit of natural gas from Iran to India was first being discussed, Gazprom proposed the construction of an underwater gas pipeline. Such a project would obviate liquefaction and tanker transport, and it would also avoid the potential political complications of building an overland pipeline through Pakistan. However, such a route was judged too expensive, and Iran has now reportedly offered US$8 billion to Pakistan as transit fee, over 30 years, for the overland pipeline. This pipeline would run about half the distance from New York to Los Angeles and cost nearly US$5 billion to lay. According to industry reports, the project is modeled on existing transit pipeline contracts, mainly drawn from the European experience.

More recently, there has been a clear convergence between the two countries over their policy towards the Taliban regime in Afghanistan. Indeed, Vajpayee signed an important political declaration with the Iranian President Syed Mohammed Khatami that denounced international terrorism "in all its forms," and the two leaders urged a broad-based government be formed in Afghanistan. Pakistani Foreign Minister Abdul Sattar responded by telling India it had a right to be concerned about Afghanistan but no business doing anything about it.

By contrast, Ayatollah Ali Khamenei sought to promote an ephemeral "anti-hegemonic" (read: anti-U.S.) India-Russia-China bloc, by telling Vajpayee that such quadrilateral cooperation among "Eastern countries" was "logical and necessary". Yet India's Defense Minister Jaswant Singh was received with pomp at the Pentagon during his recent visit to Washington and, while Vajpayee was in Tehran, gave an interview to the Times of India in which he declared that India-U.S. relations should stand on their own and not be a "hyphenated relationship" subject to vagaries arising from either partner's relationship with third parties. In other words, from India's standpoint, neither China nor Iran is or should be a factor in India's bilateral relations with the United States.


Cooperation between Iran and India is destined to grow. Last year a test-run was made of a prospective transportation route for general commercial goods, a route that would go from India to Iran by water, then north across Iran to the Caspian Sea, across the Caspian to Russia and then by rail from Russia into Europe. Six months ago Kazakhstan joined this agreement to promote a "North-South" international transport corridor among Russia, India, Iran and Oman. There is no doubt that the sides are serious. During the Soviet period, India was a large supplier of consumer goods to the USSR. By this route it could be again, to Russia and also to Europe. A test shipment took just under four weeks to be delivered by this route, whereas the next shortest and now regular route (through the Suez Canal to Europe) takes more than half again as long as that.

As for the prospective gas pipeline, however, Iran does not plan to be a transit country for Central Asia gas to India (as was once proposed) but rather to be the producer country itself. No Memorandum of Understanding has yet been signed and trilateral discussions have not yet even taken place. Rather, Iran has until now played the go-between, shuttling between bilateral Iran-India and Iran-Pakistan working groups. Nevertheless, major international energy companies, including Gazprom, BG and Shell, have been positioning themselves to form two project consortia. Pakistan has tried to ease India's political trepidations by suggesting that bringing the World Bank, Asian Development Bank and other international financial institutions into the project would by itself make an agreement binding upon Pakistan. Also, Pakistan wishes to retain the prerogative for its own gas to enter the pipeline to India, if new reserves are found that obviate its purchase of gas from Iran en route eastwards.


Opposing the Taliban, whether in Afghanistan or elsewhere, is clearly a common cause shared by Iran and India, and it was so declared by them. Danger to an eventual overland pipeline from Iran to India comes perhaps more from religious fanatics in Pakistan than it does from the government itself. Nevertheless, a pipeline through Pakistan remains the least expensive way to deliver energy from Iran to India.

The developing Indo-Iranian relations mark the growing manifest complexity of international relations in Central Eurasia. South, Southwest and Central Asia are growing more and more interrelated. India, for example, is deepening its cooperation with Kazakhstan and Uzbekistan, particularly in the agricultural sector, while Kazakhstan has volunteered to host mediation talks among the parties to the conflict in Afghanistan.

The "North-South" transit project clearly accords with Iran's foreign economic strategy of becoming a crossroads or corridor coordinating trilateral relations with pairs of partners. As the Armenia-Iran-Greece cooperation shows, the countries do not even have to be contiguous if the cooperation involves defense issues. The U.S., for its part, is quietly concerned that India's assistance to Iran's space program may help the country's development of missile technology and spy satellites.

Copyright © Robert M. Cutler unless otherwise noted.
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URL:  http://www.robertcutler.org/blog/2001/05/the_indoiranian_rappochement_n.html
First published in Central Asia - Caucasus Analyst, vol. 2, no. 18 (9 May 2001): 7-8.

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