The situation was exacerbated last week by news reports that
India had become Iran’s top oil customer, while an Indian official announced
plans to send a trade delegation to Tehran. In New Delhi, diplomats and analysts say India’s purchasing of Iranian oil is a matter of economic necessity, given its dependence on imported oil. Some say the purchases
also represent diplomatic hedging in a region bracing for the withdrawal of American troops from Afghanistan by 2014, or possibly sooner.
Indeed, many Indian officials, even those supportive of a stronger partnership with the United States, caution against turning issues like Iran into diplomatic litmus tests, considering the complexities of a neighborhood in which India represents a bulwark of stability, democracy and economic opportunity compared with Pakistan, Afghanistan and other countries.
“This can’t be a test of our friendship,” said Lalit Mansingh, a former Indian ambassador to the United States. “Washington must realize that we are in a neighborhood where Iran is a factor.”
India’s most immediate concern is fueling its economy, which has slowed in the past year. India buys about 12 percent of its crude oil from Iran, and many Indian refineries have been built to run solely on Iranian crude, meaning they would have to be retrofitted in order to process oil from other countries.
“To shift is not something that can be done very easily,” said one senior Indian official, who would speak only on the condition of anonymity given the delicacy of the situation. The official added: “Where would we get that refining capacity? Who would be our new suppliers?”
Even so, India has tried for several years to reduce its dependence on Iranian crude oil, partly because of the new sanctions by the Obama administration punishing any banks that do business with Iran. To work around these sanctions, Indian oil companies have made payments to Iran through a bank in Turkey that fell outside the American restrictions.
However, Indian officials are preparing for the likelihood that the Turkish avenue may soon be closed. The senior Indian official confirmed recent reports that India and Iran had agreed on a deal in which Indian companies would pay for 45 percent of their imports in Indian rupees — thus avoiding the need to pay in dollars — and might even settle the remainder of the debts through barter....
Like the United States, India is alarmed at the possibility of Iran’s developing
nuclear weapons, and it has called on Iran to fulfill its obligations as a nonnuclear weapon state under the Nuclear Nonproliferation Treaty. Indian diplomats, though, also worry about the economic impact of greater instability in Iran and the Persian Gulf region; they say more than six million Indians work in the gulf, sending home roughly $40 billion a year in remittances.
Iran is also a factor in the uncertain endgame in Afghanistan. K. C. Singh, a former Indian ambassador in Tehran, said India and Iran cooperated to support the anti-Taliban Northern Alliance before the fall of the Taliban in 2001. But that relationship cooled as American troops settled in Afghanistan, and India and the United States moved closer together. Now, though, Mr. Singh said India was “scampering to recover” its relationship with Iran as a hedge to prepare for an uncertain future in Afghanistan.
“They are attempting to do it now out of some serious concerns about what may happen after 2014, or earlier,” Mr. Singh said.
Even so, India’s current leaders remain committed to ever-strengthening ties with the United States. In a speech on Monday in Washington, Mr. Mathai spoke of the great potential of the two nations’ partnership, if also the complexities embedded into it.
“Given our different circumstances, history, location and levels of development, we will occasionally have differing perspectives and policies,” he said, according to
a transcript of his speech. “But this can be a source of great value and strength.”
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