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Indian and Iranian Perspectives on the Prospects for India-Iran Bilateral Relations
Chair: Dr Mostafa Dolatyar
Speaker:
- Prof. Girijesh Pant, Dean, School of International Studies, Jawaharlal Nehru University, New Delhi - India-Iran Relations: Economic Relations
- Dr. Mohammad Ajam, Embassy of Islamic Republic of Iran, New Delhi - India-Iran Relations: Iranian Perspective
- Dr. Meena Singh Roy, Research Fellow, IDSA - India-Iran Relations: Regional Cooperation
- Amb Ali Mojtaba Rouzbehani, Director, Center for Asia and Pacific Studies, IPIS - Security Issue in Afghanistan
- Mr. Vishal Chandra, Associate Fellow, IDSA - Emerging Situation in Afghanistan
Prof. Girijesh Pant flagged a few issues while discussing the economic aspects of India-Iran bilateral relations. According to the recent report of the Federation of Indian Exporters Organisation, India’s exports to Iran have increased by 21 per cent in the year 2010-11. It is expected that within the next four years, the volume of trade will increase to $ 25 billion from the $ 14 billion at present. This underlines the huge trade potential between the two countries. However, a closer analysis does reveal the negative balance of trade for India primarily due to the predominance of oil trade and the lack of trade diversification. Prof. Pant argued that in order to make the bilateral economic relationship sustainable in the long run, the two countries must come out of the shadow of the oil sector.
There remain significant impediments in the process of diversification of trade with Iran. As with any other oil rich country, the growth in trade remains lopsided around the oil sector and thereby restricts the scope of economic interaction between other sectors. Moreover, sanctions have made it extremely difficult for Iran to have an export surplus. Unless the two economies move in a complimentary way, their economies will grow but not beyond a point. Prof. Pant highlighted the shifts in politics and technology of the international hydrocarbon sector and argued that the producers may not enjoy the same leverage which they have enjoyed in the past.
He observed that India is looking for a sustainable economic growth rate which is possible only if the country is part of a global trading regime. Therefore, the country’s thrust is more towards the emerging markets. There lies a huge potential for India-Iran cooperation in a knowledge based economic system especially at a time when countries across the world are moving towards the same. India can be a good partner in this sector and this should also help the two countries overcome the hegemonic knowledge dominant power. Therefore, cooperation in research and development and human resource growth should be taken up.
Other sectors of potential economic cooperation include the healthcare system in Iran which has been significantly affected by international sanctions. This is where India has a comparative advantage in terms of both cost and know-how. The two countries can also explore avenues of cooperation in the agriculture sector especially research and development. At a time when both Asian countries face the challenge of water scarcity, it becomes imperative to develop water management technologies. Moreover, studies need to be taken up about the effects of seed technology and genome, which although increase productivity, also affect natural resources. The idea is to create structural complementarities between the Indian and Iranian economies. Moreover, it becomes imperative for India and Iran to find ways to overcome the banking and payment related restrictions brought about by the international sanctions.
Dr. Mohammad Ajam highlighted the close historical and civilizational ties between Iran and India. Even today, the two countries share more common interests than differences. He argued that Israel, the US and even Saudi Arabia have attempted to create differences between the two partners. He observed that historically Iran has never attempted to create a crisis situation; on the contrary a crisis is always imposed on it. Even the Arab Spring was seen as an Iranian conspiracy. Iran should be looked upon as a part of the solution.
On the issue of strengthening India-Iran bilateral relations, Dr. Ajam emphasised that Iran has encouraged Indian investment and opened its markets to India but Indian companies have so far hesitated to come to Iran. Moreover, India is the first country which has been allowed to do trade with Iran in its own currency. A considerable portion of oil sale money is deposited in Indian rupee account and the same can be used for financing Indian exports to Iran. The 16th meeting of the Joint Economic Commission of the two countries will held in Tehran in the near future. High level meetings have given a strategic dimension to the bilateral relationship with more than fifty such meetings being organised in the last five years.
He proposed that a joint conference be organised involving experts from Syria, Bahrain, Saudi Arabia, Egypt, Afghanistan, India and Pakistan to help in exchanging information and arriving at a common understanding of the developments in the region. Live broadcast of the same should help in expression of views. India and Iran should also exchange their publications, carry out joint studies and undertake translations of each other’s literary works.
Dr. Meena Singh Roy discussed India-Iran prospects for regional cooperation and highlighted the need for both countries to look beyond energy and focus more on developing connectivity and transportation sectors. This is a win-win situation for all. She emphasised on Iran’s tremendous potential of being a transport corridor on account of its geo-strategic location; it can help India connect with South, Central and West Asia and the International North South Transport Corridor (INSTC) is an important project in this regard. However, its success will depend to a large extent on effective regional cooperation.
Some of the important transportation links in the region involving Iran include the Central Asia-Persian Gulf corridor (Iran-Turkmenistan-Uzbekistan-Qatar-Oman), Northern Iranian rail project from the border town of Heart into Mazar-e-sharif, Iran-Afghanistan-Tajikistan railway line and railway link from Turkey to Pakistan via Iran and Afghanistan; projects which have either been implemented, are at different stages of implementation or can be taken up for discussions in the future. Iran is also very well linked with Turkey.
Dr. Roy emphasised on the need to work on missing links. However, she argued that due to the geopolitical nature of these projects one should not expect quick results. Apart from geopolitical considerations, the issue of huge financial investments in these large corridors will also need to be addressed. While highlighting the importance of Chahbahar port, Dr. Roy observed that an Iran-Afghanistan-Central Asia link already exists but if further connected to Chahbahar will help connect the entire region. Therefore, the role of Iran becomes extremely important in developing transport links across the region.
There is also a missing link of 75 kilometres of route which can connect Asia with Europe. As a result, the benefits of the North South rail corridor can get extended to South East Asia and the potential of this route becomes enormous. Dr. Roy highlighted the keen interest shown by Singapore which is already using the port of Bandar Abbas to export tea. In order to tackle the lack of information on these routes, she suggested a joint IDSA-IPIS research project to explore the practical problems and analyse the economic potential of this sector.
Dr. Roy argued that the New Silk Route Initiative, which tries to isolate Iran, will not be able to realise the full potential especially when the idea is to make Afghanistan a land bridge. While prescribing a way ahead for developing transportation links in the region, Dr. Roy emphasised the need to build not just bilateral ties but also some level of understanding between the countries of the region. India and Iran, who are both Observers at the SCO, can explore the possibility of participating in the Organisation’s connectivity projects and if they can find common synergies with other SCO members like Afghanistan, Russia and Central Asian Republics, connectivity links in the region will surely expand.
Discussing the security situation in Afghanistan, Amb Rouzbehani, highlighted Iran’s contribution to brining stability in Afghanistan in the last decade. Iran has consistently supported the legitimate government in Kabul, assisted in drafting the Constitution and called for removal of extremists and terrorists from the country. In the recent past, it has voiced its concern over the deteriorating security situation and rampant corruption prevailing in the country. As part of the reconstruction programme, Iran had provided a $760 mn aid over the period of seven years and has assisted in the implementation of more than 350 projects in sectors like education, infrastructure and transport. However, its economic role has been limited due to the international sanctions imposed against it.
Amb Rouzbehani observed that the priorities of western countries, and especially the US, have changed in the last couple of years with withdrawal of troops topping their agenda. He emphasised that it is the responsibility of all stakeholders to ensure free and fair elections in Afghanistan. There is a real danger that the present government and other external powers may plan to engineer the results. However, this will not be acceptable to many communities in Afghanistan and also to some external actors. If President Karzai somehow managed to hold on to the post of President, it will mean the death of the constitution and being back to square one.
He observed that the condition of the present government in Kabul was ‘not good’. The prevailing situation can be compared to Najibullah’s end of tenure. The Taliban has been able to expand its areas of operation from Southern to the Western and Eastern parts of Afghanistan. Meanwhile, Iran remains committed to ensuring stability in the country. However, the West, due to its geopolitical interests has refused to cooperate or even recognise Iran’s potential in ensuring stability in the country. He called on the external powers to be realistic and keep their geopolitical rivalry away from Afghanistan. Such rivalries will be major impediments in ensuing stability in the country and the negative repercussions will be felt across the region. At the same time, Amb Rouzbehani appreciated and welcomed Pakistan’s readiness to find a solution to the Afghan quagmire and felt that it would have a positive impact on the situation.
On the issue of India-Iranian cooperation in Afghanistan, he commended their joint efforts in the past and called upon them to continue working together towards finding lasting peace and stability in the region. He observed that Iran has made available the use of Chahbahar port for transiting goods from India to Afghanistan. Moreover, he recommended that India and Iran explore new avenues of cooperation in the field of drug trafficking and be a part of regional organisations (like the SCO’s) joint projects in Afghanistan.
Discussing the emerging situation in Afghanistan, Mr. Vishal Chandra highlighted the widespread confusion prevailing in the country. There exist many questions on the future of Afghanistan especially when the scheduled drawdown of American troops starts from 2014 onwards. However, the fact that Western troops will not withdraw lock, stock and barrel signifies a possible role which they may have earmarked for themselves in the post 2014 scenario.
There are also unanswered questions over the nature of next elections, the next leader, how different factions will respond to the electoral process and role of external powers. Even though Kabul and Washington are still negotiating their bilateral security agreement, one has every reason to doubt the effectiveness of the residual western forces simply because in the past, even hundred thousand plus troops have not been much effective in a true sense. Therefore, the role of regional powers will be of even more significance in the future.
Mr. Chandra argued that the transition process is not going to deliver the intended results as far as Afghanistan’s security is concerned. However, while looking at the positive side, he opined that the transition will test the capability of Afghan leadership and institutions to withstand the after-effects of the withdrawal and to take the mandated political developments forward on their own.
He emphasised that a whole range of politics has evolved over the question of the reconciliation process. Nobody is opposed to this process but doubts remain over its current form. One needs to analyse whether it will unify or divide the country and if at all help create a modern functional state. The acceptance of a Pakistan sponsored or brokered peace deal amongst the Afghan people needs to be studied. Mr. Chandra elaborated on the need to ensure reconciliation at the social level. Moreover, there are also questions of whether Afghanistan needs a strong Presidential form of governance or a more federalised structure. Some issues which need to be addressed include the absence of functional institutions, lack of pan-Afghan leadership, the extent to which the core Taliban have moderated their position and Pakistan’s negative role in the region.
Therefore, in the backdrop of these uncertainties, it is important for countries like India and Iran and other regional powers to continue their interaction and explore new areas of cooperation in and on Afghanistan. On the question of India’s engagement with Afghanistan, Mr. Chandra was of the opinion that India has taken a long term view of its engagement and will continue with its reconstruction and training assistance (development partner) and thereby hope to remain connected with the Afghan population. He argued that India must engage with the next generation of Afghan people.
Discussions
Following key points were raised by the Iranian delegation during the discussions:
- There is a lack of information about the capabilities of both sides in their pursuit of establishing a knowledge based economy.
- Some Iranian rail transport projects in Afghanistan are ready but there exist financial difficulties especially in the banking sector due to the sanctions.
- Iran has an ambition to build 15,000 miles of new railways in the country. One third of the project can be implemented by Indian businesses.
- The New Silk Route is a ‘wishful thinking’ and its prospects are bleak; Iran can not be isolated from such projects due to its geographical location.
- There is a need to move away from giving talks and exchanging ideas to promoting investment and field work. At this point, India has enough monetary security deposits to feel assured that its investments in Iran are safe and has adequate financial backing.
- There is a need for proper training of Afghan police and other security forces and Iran can help in this process. However, the foreign security forces are not a part of the solution but a part of the problem. A broad based national government is needed to resist the Taliban surge.
- The cooperation between Indian and Iranian navies is a possibility, especially to tackle piracy and security of navigation, in the Indian Ocean, Sea of Oman and the Red Sea.