US drone strike: Unease in New Delhi over fallout, relations with Washington, Tehran

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Published: January 4, 2020 3:59:38 AM

India’s oil import bill in 2018-19 was $111.9 billion.

US drone strike, Major General Qassem Soleimani, commander of the Quds Force, Iran, IRGC, Baghdad, US-Iran tensionsIn the last year alone, Iran has shown that it can network the region against countries hostile to it. (AP photo)

Hours after the killing of Major General Qassem Soleimani, commander of the Quds Force of the Iran Revolutionary Guards Corps (IRGC), in an American drone strike in Baghdad early Friday, India said it had “noted that a senior Iranian leader had been killed by the US”, urged restraint and called for de-escalation.

The terse statement, which did not name Soleimani, masked the deep unease about how far the ripples from this massive escalation in US-Iran tensions will extend across the region, and impact India. One part of that question was answered after Iran warned of retaliation with jitters on Dalal Street over the potential for an oil shock. The stock market fell by over a hundred points, but more telling was the rupee’s 38-paise drop around the same time to Rs 71.74 to the US dollar, as fears grew about an oil price spike.

India is a huge importer of crude oil. India’s oil import bill in 2018-19 was $111.9 billion. And the new geopolitical tensions could not have come at a worse time for the country, when the economy is crawling at 4.5% GDP growth in Q2 of this fiscal year.

Exports have slowed, and a bigger import bill is the last thing the government would want less than a month ahead of the Budget. Experts calculate that every dollar increase in oil prices pushes up India’s annual import bill by Rs 10,700 crore.

The killing of Soleimani has also raised the risk of a widening of the US-Iran conflict to draw in the entire region from Saudi Arabia to Afghanistan and Pakistan, all of which could affect India. “The great nation of Iran will take revenge for this heinous crime,” Iranian President Hassan Rouhani said in a tweet. Where and how such retaliation will come, if it does, is now the big question for the world and India.

“We have to see what Iran’s options are. There will be enormous rage in Iran, but how will Iran retaliate? The power differential between the two is huge. If Iran does retaliate, it will know that the US will hit back, too,” said Vivek Katju, former foreign secretary.

In the last year alone, Iran has shown that it can network the region against countries hostile to it. Saudi Arabia is still recovering from an attack on its — and the world’s — largest refinery and a nearby oilfield in the eastern part of the kingdom. Both are owned by state-run Aramco, and the attack knocked out half the production capacity of the country, or 5% of the world’s total production.

That attack was claimed by the Houthi rebels of Yemen, who are fighting Saudi-backed Yemeni government forces for control. But Saudi and the US blamed the attack on Iran, which they allege has been supporting the rebels and had provided advanced drone technology for the strike.

In Iraq, there is outrage at the US violation of its sovereignty — Friday’s attack at Baghdad airport was the second on Iraqi soil less than a week after the air strikes against the Iran-backed PMF in Anbar, which was condemned by Iraqi Prime Minister Adel Abdul Mahdi.

These militias were crucial in helping the Iraqi government forces fight off the ISIS and Al Qaeda, although the US and Israel believe they are the real targets. “American forces acted on their political priorities, not those of the Iraqis,” a statement from the Iraqi government said, adding that the attack “force Iraq to review its relations and its security, political and legal framework to protect its sovereignty”.

Other than oil, for India, any threat of conflict or destabilisation in the region brings back the spectre of stranded expatriates. In every such crisis — the first Gulf War, the 2003 Iraq war, the Arab spring in Egypt, the 2014 Islamic State takeover of Iraq, the conflict in Yemen — the government has had to mount a huge rescue effort to bring back Indians.

Even without this, any potential risk situation makes the Indian diaspora in West Asia vulnerable to disruptions in employment, pay cuts and so on. Remittances back to India, which form a substantial chunk of Indian’s foreign exchange reserves, are the other side of this story.

The US-Iran tensions have for long put India’s strategic interests on a roller-coaster. Since the US re-imposed sanctions on Iran after the failure of the nuclear deal, India has walked a fine balance between its ties with the US and its relations with Iran.

India’s line has been that it is not a party to this conflict, and that its relations with the two countries is separate. However, it had to stop importing oil from Iran, and its own exports to that country have been affected.

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