Taking tensions seriously
A true strategic partnership remains elusive between India and the U.S.
Why in news?
• The U.S.’s decision to not extend Iran sanctions waivers, including the one provided to India, has notable implications for India-U.S. relations, given the importance of New Delhi’s energy relationship with Tehran.
• Irk New Delhi: The Trump administration’s decision not to extend waivers from Iran sanctions will not be welcome in New Delhi.
o India imports over three-quarters of the oil it consumes, and Iran has long featured in the list of its top sources. Washington had previously issued it a waiver, and, since sanctions had gone into effect, India had decreased its imports from Iran.
o As a U.S. strategic partner, whose cooperation the Trump administration has sought for its Free and Open Indo-Pacific strategy, India had hoped to get another waiver—even if that required further import reductions on its part.
o India is looking to balance its ties between the US and Iran even as New Delhi plans to source oil from alternate sources following expiry of waiver for Iranian oil imports from early May.
o The administration’s decision will therefore irk Delhi, particularly since Washington has also imposed sanctions on another of India’s top suppliers, Venezuela.
• Other sources: Indian public- and private-sector refiners will likely find other sources—the Indian government has indicated that it has been planning for this eventuality.
o Among those alternatives might be Saudi Arabia and the United Arab Emirates, whose relations with India have deepened in recent years; they might also include the United States, a relatively new source of imports for India.
• Elections: Further this step comes at an inopportune time for the Modi government, which is seeking re-election and will likely face opposition accusations that it has caved to American pressure.
• Other concerns: Moreover, New Delhi has other concerns about this U.S. step: the potential impact on oil prices, and on India’s development and use of the Iranian port of Chabahar to facilitate alternate connectivity with/for Afghanistan.
• To maintain relations with Iran, it will likely
seek to continue to import some quantity of oil from Iran using the rupee payment mechanism it had developed (even though it might upset the United States).
• Chabahar Port: India’s sole gateway to Iran is through Afghanistan and provides a shorter route to Central Asia and Eastern Russia via the Chabahar Port.
o Central Asian majors Kazakhstan and Uzbekistan want to connect with India to push their respective economic partnerships with Delhi and connections tivity via Iran remains the most viable option.
• India’s Indo-Pacific construct: Iran is also a key element in India’s Indo-Pacific construct to connect Eurasia with Indian Ocean and Pacific as Delhi hopes to provide an alternative to China’s Belt and Road Initiative, another source said.
• International North South Transport Corridor (INSTC): INSTC, currently under negotiations, will connect Mumbai with St Petersburg in a shorter time period via Iran as India seeks to broadbase its economic ties with Russia. Iran is also critical to counter-balance Pakistan and securing Afghan interests in the long term, another source pointed out.
Chink in partnership
• These India-U.S. trade and economic tensions aren’t new; the non-security dimension of the relationship has long lagged behind the fast-growing defence side.
• Still, the complaints and perceived grievances, especially from the U.S., have seemingly intensified in the Trump era.
o It comes on the heels of many other deleterious developments for bilateral ties including the U.S.’s decision to withdraw GSP benefits for Indian exports (in retaliation for Indian tariffs that the U.S. deemed to be prohibitively high) and the Trump administration’s discontent deepening over India’s policies on e-commerce, intellectual property rights and data localisation.
o Washington is unhappy with India’s defence deals with Russia, despite US sanctions. Defence deals with the US, meanwhile, are still being negotiated or have stalled. India, in turn, is concerned about the Afghan peace talks and what Washington might cede to the Taliban — and to Pakistan for bringing them to the table.
• Both sides have played down these differences and offered reassuring data points:
o India will scale up oil imports from other top producers;
o the GSP withdrawal will have minimal impact on India’s economy;
o the two capitals are working actively on high levels, most recently through the U.S.-India CEO Forum and the India-U.S. Commercial Dialogue, to ease tensions; and
o above all the strength of the bilateral relationship can easily withstand all these headaches.
• A full-fledged strategic partnership, which both countries endorse, will be difficult to achieve amid such multiple and long-standing disconnects on the trade and economic side.
• Indeed, if bilateral ties are largely driven by technology transfers, arms sales, joint exercises, and foundational agreements on defence, this amounts to a deep but one-sided security relationship, and not a robust and multifaceted strategic partnership.
• To be sure, India-U.S. relations extend well beyond security. Recent joint statements have dwelt on the potential for cooperation on initiatives ranging from clean energy to innovation. And despite the problems, bilateral trade in goods and services has increased over the last decade.
• Still, so long as the non-security nuisances affect the bilateral relationship, the shift from a strong security relationship to a bonafide strategic partnership will be difficult. After all, one rarely hears complaints or concerns about trade and economic matters in the U.S.’s relations with the U.K., Australia, or Israel, some of its other strategic partners.
• The U.S. and India have long struggled to agree on what a strategic partnership should look like. Still, no matter how it is defined, any strategic partnership must be broad-based, with trust and cooperation present across a wide spectrum of issues and not just limited to close collaborations in the guns-and-bombs category.
• In this regard, a true strategic partnership remains, at least for now, elusive between India and the U.S.
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