US-Iran tensions and India: America can provide us oil but what about remittances

Updated: July 1, 2019 4:37:55 PM

Iraq was irredentist, Iran is expansionist. Iraq was bombed to end the reign of secular Sunni elite and Iran is being homed on to eliminate its Shia clergy. There is no logic to what the US is doing to Iran, it is simply based on imperial arrogance and lust for war.

US Iran tension, India, America, oil, IRGC, defence news, Iran news, Mike Pompeo, John Bolton, donald trumpThe hawks in Trump administration, Mike Pompeo and John Bolton are insisting on escalating the
American-Iranian showdown. (File Photo)
By Atul Bhardwaj

Déjà vu grips the international security discourse. A fresh war in West Asia is on the anvil. Iran is the latest target. The bomber is unchanged. The ostensible reasons for creating another Iraq is the perceived threat posed by Iranian nuclear programme. Iraq was and Iran is a threat to world peace. Iraq was irredentist, Iran is expansionist. Iraq was bombed to end the reign of secular Sunni elite and Iran is being homed on to eliminate its Shia clergy. There is no logic to what the US is doing to Iran, it is simply based on imperial arrogance and lust for war. America is certainly not oblivious of the loss of innocent lives that their actions would cause. However, the War-mongering continues unabated. Imperial farce continues without remorse.

Europe, Japan and many other countries, barring Saudi Arabia and Israel, are trying hard to persuade America from launching one-sided war against the people of Iran, which according to The Economist spends “just over $13bn on its armed forces each year—five times less than Saudi Arabia and about 50 times less than America.”

The hawks in Trump administration, Mike Pompeo and John Bolton are insisting on escalating the American-Iranian showdown. Diplomacy and restraint are alien to the two. Sanctions, coercion and bombing is what both believe in. They have foreclosed all diplomatic options by imposing sanctions against Iran’s Foreign Minister Mohammad Javad Zarif and ‘limiting his ability to visit the US. Earlier sanctions had been imposed on Iranian Supreme Leader Ayatollah Ali Khamenei and eight senior commanders of Khamenei’s Islamic Revolutionary Guard Corps (IRGC). America considers these individuals to be misguiding their own nation. It perceives the sanctioned Iranians to be in complete disharmony with US strategic designs. It sees Iran’s Islamic Revolutionary Guard Corps (IRGC) and its involvement in Yemen, Syria and Lebanon to be working against US energy strategy.

The Trump administration is using both covert and overt means to keep Iran off balance. Iran is being constantly provoked to commit an error that would give leeway to the US to launch deadly strikes on Iranian cities with its fighter jets and precision-guided munitions. Recently, Iran shot down one unmanned US drone that had allegedly infringed its airspace, the US President immediately ordered a counterattack. The operation was called off, but it brought war closer. The strait of Hormuz, a major strategic waterway for world oil supplies has become a hostile zone. Two tankers were attacked in the zone in this month. In may four oil tankers – two Saudi-flagged, one Norwegian-flagged and one Emirati-flagged, experienced explosions in waters off the United Arab Emirates. The US alleged that all incidents were the work of Iranian navy’s limpet mines to target trade at sea. Iran has obviously put the blame for increasing tensions and prospects of war on the United States and its allies.

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Interestingly, when I ran shot down the US RQ-4A surveillance drone, it spared the American P-8 plane, with 35 people on board, which was accompanying the drone. Iran showed restraint because it can ill afford war with America. It stands to be destroyed. But America has no such fears and is, therefore, more keen for war. The American problem is that it may find occupying Iran far more difficult that what it experienced in Iraq. In addition, American military is little wary of Iranian cyber and its anti-missile capabilities.

Coercion, sanctions and propaganda are all being employed covertly and overtly to prove that US is a victim and Iran is the rouge deserving severe punishment. The US has disconnected Iranian banks from the international banking network. The Belgium-based Society for Worldwide Interbank Financial Communications (SWIFT) financial messaging service has agreed to the US diktat to block Iranian financial institutions and banks from the international chain. Shipping and insurance companies have also come under US pressure and stopped underwriting vessels carrying Iranian export and imports.

The Trump administration’s goals is to deny Iran the revenue and squeeze its regional ambitions. However, keeping in mind Trump’s flip flops, the current the “fire and fury” may quickly be replaced by a lovey-dovey approach towards Iranian leadership as it happened with North Korea’s Kim Jong-un. At the moment US strategy is to drive Iran to the negotiating table for a more comprehensive deal to which Iran is not agreeing. Iran maintains that US has failed to honour the sanctity of the 2015 nuclear deal, formally known as the Joint Comprehensive Plan of Action, or JCPOA, and therefore, it cannot be trusted. Iran has threatened to breach its limits on enriched uranium imposed by JCPOA. However, both Europe and China are dissuading it from taking any action that would give a reason for the Trump administration to fulfil its desire to war.

The US is isolated on Iran issue because Europe, a party to JCPOA, has refused to join the sanctions bandwagon. The European Union along with along with Russia, China and Iran has come with INSTEX, an answer to SWIFT, to bypass the American sanctions. To begin with INSTEX, headquartered in France, will ensure that trade in medicine, and food to Iran doesn’t stop. It also intends to get into oil trade with Iran. This would be an open defiance of US that is bent upon reducing Iranian oil transactions to zero.

China is continuing with its oil imports from Iran, providing financial lifeline for the country’s buckling economy.’ Russia too is building mechanisms to continue trade with Iran and restrain US unilateralism.

India, on the other hand, has succumbed to the US pressure and ditched Iran, its second-most important energy partner. India’s security-oriented foreign policy is more concerned about defence equipment from America and how best to flaunt it in the Indo-Pacific. The India foreign establishment’s assessment of the global situation is based on the premise that the US hegemony will prevail and therefore, it is best to be in their good books. However, what is being ignored is the long-term harm that this policy is likely to bring to India. There is hardly any assessment of the impact of the destruction of West Asian oil industry by the US on Indian economy.

America is now the world’s top oil producer, replacing both Russia and Saudi Arabia. Texas alone produces more crude oil than Iran and Iraq and is blatantly using both its hard as well as soft power to grab markets across the globe, a policy it has adopted since Iraq war. India, with expanding demand for oil is a lucrative market for the US oil industry. The Indian elite’s fetish to be a great power is also an attraction for the US military Industrial complex. The moot is, how beneficial is it for our economy to ignore our neighbourhood oil and import it from distant America. Simple economics suggests that the shipping and insurance cost of US oil will be an additional burden on our energy register.

Secondly, the slowdown and disruption of oil trade in the Gulf region will adversely impact the remittances that India receives from its diaspora working in West Asia. Remittances have been the lynchpin of dollar inflows into the country. With the drying up of oil wells in the Gulf our remittances would dip, making it harder to finance our current account deficit. High energy costs will directly impinge on ‘make in India’ programme.

India’s long-term strategy demands that the West Asian oil markets continue to grow in an environment of peace. Strategically we are entering a dangerous phase where our energy security and defence is becoming increasingly dependent on the US, a hegemon that demands more than it gives.

(The author is an Honorary Fellow in the department of International Politics, at City, University of London. He is the author of India-US Relations (1942-62): Rooted in the International Liberal Order. Views expressed are personal.)

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