Friday, August 6, 2021

US-Iran Tensions: India Calls For De-Escalation

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The US’ unilateral decision to kill Qassem Soleimani, one of Iran’s top military officials in Baghdad airport, has added to the instability in the region. The attacks have galvanised the public opinion in Iran against America, further eroding the space for negotiations between Iran and America. It has also been detrimental to two stated goals of the Trump Administration, to bring back American troops from the Middle East and to stop Iran from becoming a nuclear weapons State. The unilateral action by the US, with no prior notice, has worried its’ allies in the Gulf, who in recent months have seen their shipping lanes and oil infrastructure targeted and had been working toward bringing down tensions with Iran.

Iran has retaliated to the killings by attacking two U.S. air-force bases in Iraq. Tehran has stated that it has retaliated against a military target as General Soleimani was a military officer.  There were no American or Iraqi troops injured in the attacks on the Al Asad and Erbil air bases. In response to the attacks, US President Trump has signaled that the United States would not strike against Tehran. This is being seen as a move to de-escalate the hostilities. Iran has also signaled that it would be taking no further action, for the moment.

Despite these assurances, tensions remain high in the volatile region.  The continued hostilities between the two nations will have a direct impact on energy prices and shipment, including insurance prices for ships. While India is not importing oil from Iran; New Delhi imports close to 80 percent of its energy needs from the Gulf. Disruptions could lead to an increase in energy prices. It will also add to the elevated costs of shipping and insurance for container. Increased prices at this juncture will be a strain on India’s economy. India has deployed naval assets in the Gulf waters to protect her crude supplies in the wake on attacks on container ships. This vigil would have to continue leading to additional financial costs to the overall price of importing oil. 

Apart from oil, missile attacks and other attacks could put in danger India emigrants who are part of the business and service class in the Arabian countries. By some estimates there are close to 8 million Indians living in the region remitting close to $40 billion back home. The security of the Indian expatriates is of paramount concern for the Indian government.  New Delhi had in the past, successfully evacuated its citizens from the conflict zones in the region.

A third major impact would be the possible slowing down of India’s growing trade with the nations of the region. India has been following a policy of strengthening its relations in the ‘extended neighbourhood’. In keeping with this, India has increased its economic engagements with the nations of the region such as Oman, Saudi Arabia, and UAE etc. Rising tensions could affect the growth of these relations.

In this backdrop, Indian Defence Minister Mr. Raj Nath Singh spoke to the US Defence Secretary Mark T Esper. The two Ministers discussed the evolving security situation in the Gulf region. Mr. Singh conveyed to Secretary Esper India’s stakes and interests in the Gulf region and how concerned New Delhi is over the escalating tension there. They expressed firm resolve to strengthen the bilateral defence cooperation. Mr. Esper also briefed the Indian Defence Minister about the recent developments in the Gulf Region. India shared her concerns and interests in the region.

India is also a partner of Iran in the development of the strategic Chabahar port, which is an important link for India’s trade with Central Asia and Afghanistan by-passing Pakistan. While sanctions on Iran have deterred Indian companies from investing, instability would further reduce investments for the port. This would be detrimental for India’s larger connectivity projects for the region.

India needs to keep a close watch on the developments and encourage multilateral efforts for de-escalate the tensions.

Script: Dr. Stuti Banerjee, Strategic Analyst On American Affairs

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