Millennium Post

A Persian hand of friendship

A new opportunity has come to India to give a fresh dimension to the economic relations with Iran with the conclusion of the historic nuclear deal in Geneva last month. A thorough appraisal is now necessary to identify the areas which will be most beneficial at the moment for the growth of bilateral relations between the two countries and which can avoid the parameters of the United States sanctions still in force.

Indian policy makers are still assessing the likely impact of the historic nuclear deal of the six big powers with Iran arrived in Geneva last month. The initial reaction is that it will certainly have a positive effect on stepping up India-Iran economic relations but the rider is that the follow up actions will have to be ensured by both sides and the latest cordiality should not be disturbed by any new move by Iran or the western powers which can act as a damper to the scheduled implementation of the agreement. Prime Minister’s Office (PMO) which has been actively monitoring the talks in Geneva before the deal was signed, has asked the external affairs ministry to work on a both short term and long term strategy taking into account the contours of the agreement signed in Geneva. The petroleum ministry is working on a paper indicating immediate benefits as also the possibility of expansion between India and Iran in the oil and gas sector if the deal is taken forward to its logical conclusion as per the agreement after six months.

One immediate relief for India is the lifting of the ban on insuring tankers in which Iranian crude oil is exported. The European law had invalidated the insurance on accidents such as spills or collisions which could now help Indian refineries import volumes of Iranian oil easily. However sources say that India which had trimmed down on its crude oil imports by Iran by more than 26.5 per cent in 2012-2013 will continue to abide by the present sanctions till future discussions lead to the US withdrawal of this specific oil import related sanction.

Indian external ministry officials are not ready to jump to any highly optimistic scenario at the moment though a new environment of trust has been created between the big powers and the present Iranian government. Israel lobby is very active in US government in the ruling democratic party and there is a view in the Indian external affairs ministry that this lobby will put all pressures to delay the follow up of the implementation since the next focus will be on Israel. That is why, the external affairs ministry is of the view the Indian government should make all efforts to extract maximum benefits out of the trade and the controversial issues including participation in the Iran Pakistan India gas pipeline project should be taken up later on the basis of the next phase of developments. The Geneva agreement releases $4.2 billion Iranian oil sales revenue from frozen accounts which had crippled the Iranian economy. Also the deal suspends restrictions put on Iran’s trade in petrochemicals, gold, car and plane parts. Indian government will have to focus on these areas which have been freed from restrictions and where India has the capability to trade with Iran. The PMO has set up a steering committee to fast track the projects which were discussed earlier and now out of the restrictions. National Security Adviser Shiv Shankar Menon is looking after the post Geneva course for Indian government and his main emphasis is to take advantage of this opportunity to go into traditional as also new areas in trade and investment with Iran. He has even asked the petroleum ministry to do some long term planning within the next six months by which time, the post agreement actions will be clearer.

As of now, India is focusing on follow up of the development work at Iran’s Chahbahar port which has the potential to emerge as an important port in West Asia. The work did not proceed earlier though the Indian Government showed keen interest in this port. Now with the PMO instructing, the Indian officials will be in touch with the Iranians to work out the details for immediate follow up action. Since the Lok Sabha elections are due in May 2014 and there is uncertainty about the return of the present Manmohan Singh Government, Iran also may not be interested for new ambitious projects to be concluded with the present Indian Government. That way the follow up of IPI gas pipeline can be taken up later but there are immediate issues of economic interests including the construction of the Chahbahar port which can be taken up in right earnest.

For India, ties with Iran are important and the strengthening of relations for oil supplies is of immediate interest for Indian economy. Taking into account the relief which has been promised in the deal, India has to aggressively work on the areas for bilateral cooperation.

Iran is ready for expanding areas of cooperation. Now in a relaxed environment, India has to respond positively and take the advantage of the post Nuclear Deal Iran.

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