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Iran: An Important Player for South Asia

Building a relationship with Iran is valuable for India. Will Pakistan try too?

May 20, 2016

Building a relationship with Iran is valuable for India. Will Pakistan try too?

On the global stage, Iran is generally viewed through the prism of the Middle East – specifically its tensions with Saudi Arabia and Israel. What is often forgotten is that, given its geographical location, Iran is also vitally important for South Asia.

That is presently underscored by Indian Prime Minister Narendra Modi’s scheduled visit to Iran in the coming days, which follows a series of ministerial visits by Indian officials.

In addition to its borders with Iraq, Turkey, and former Soviet countries, Iran shares a border with both Pakistan and Afghanistan. That has geopolitical and economic implications well beyond the Middle East.

India is building a strong economic axis between itself, Iran, Afghanistan and the former Soviet Republics of Central Asia, via the Chabahar Port, on Iran’s Gulf of Oman south coast.

This facility will provide India with trade and transit corridors not just to Afghanistan, but also to Central Asia’s interior – through new rail networks tied to the port.

The Indian government expects that the port will “contribute to economic growth of Afghanistan and facilitate better regional connectivity, including between India and connections to Afghanistan and central Asia.”

Due to its strategic relevance, India is investing heavily in the project. Apart from a line of credit of $150 million for small port upgrades and $400 million in steel rails for the connecting lines, India has also expressed willingness to invest in the Special Economic Zone at Chabahar.

India’s private and state-owned petrochemical and fertilizer companies are willing to invest up to $20 billion in the Special Economic Zone or other parts of Iran.

Pakistan enters the equation

Pakistan, unlike India, shares a direct land border with Iran’s Sistan Province. Nevertheless, it has been traditionally closer to GCC countries, especially Saudi Arabia, than to neighboring Iran.

That said, Pakistan cannot afford to come down too firmly on the side of Iran’s rivals and open itself to yet another longterm border security problem. Pakistan offered in January 2016 to broker a peace deal between Tehran and Riyadh.

However, Pakistan (especially the military’s General Headquarters) is also wary because Iran is opting for greater cooperation with India, not just economically, but also in the context of counterterrorism, as well as on Afghanistan.

Pakistan is now upping the ante against India, and accusing India of creating problems in Pakistan’s Balochistan province, which borders Iran’s Sistan and Baluchestan Province – home of the Chabahar port development with India.

Pakistan alleges that this interference by India in Balochistan is driven by the fact, that it wants to destabilize the longstanding China Pakistan Economic Corridor project.

The Chabahar project by Iran and India is in some ways the direct geographic (and geopolitical) rival to the China-Pakistan project. Iran flatly denied the allegations.

Can India and Iran forge a lasting bond?

The questions which arise out of the burgeoning partnership between India and Iran are:

  • Will India be able to balance out its ties with Iran and Saudi-aligned Gulf countries?
  • What will be the impact of the recent Organization of Islamic Cooperation statement, against Iran, on ties with both India and Pakistan?
  • How important is the China factor in the India-Iran-Pakistan equation?

So far, India has been able to balance out its ties with Iran on the one hand, and GCC countries including Saudi Arabia. In fact, even when the U.S. had imposed sanctions against Iran, India continued to trade with Tehran.

The real challenge in the near future is how India would manage relations with Iran if a new administration in Washington were to re-adopt a hardline stance against Tehran.

Then there is the recent OIC statement, which attacked Iran for its support for promoting terrorism (or at least groups opposed to Saudi-aligned factions) in the Middle East.

Despite signaling a deepening sectarian push against Iran, the OIC move will not have much of a bearing on Iran’s ties either with India or Pakistan in the short run,

India’s Iran policy, in the past two decades, has been dictated by strategic and economic convergence. It is largely unaffected by the internal power struggles of rival sectarian claimants to the mantle of Islamic leadership.

Pakistan too will adopt a pragmatic stance. It no longer seems to view ties with Saudi Arabia or Iran exclusively through the Shia-versus-Sunni lens that its Saudi allies had long attempted to enforce.

This is most evident in Pakistan’s intense resistance over the past year to being drawn into Saudi Arabia’s coalition for the war in Yemen.

Pakistan’s recalcitrance came despite repeated entreaties to join the fray that Riyadh insists is a key proxy battle between Shia and Sunni forces.

China could, however, upset the best laid plans of India in the Gulf Region. China will keep a close watch on how the Chabahar Port pans out to hedge its bets with the nearby project in Pakistan.

It has been eyeing the strategically important project, with a number of investors expressing interest in investing there.

In recent times, there was a feeling of frustration in Tehran that India has not been moving fast enough on the project, providing an opening for China. India’s recent high level visits have sought to send a clear message that India means business.

Where to next?

It is, thus, quite unclear as to how the complicated Iran-Pakistan-India relationship plays out and what role external players – especially China – play. But one thing is clear: Iran’s importance in the South Asian context, as opposed to its Middle Eastern role, is likely to increase.

While the world’s attention is focused on Iran’s tussle to the west with the GCC countries (especially Saudi Arabia), its important role in South Asia’s geo-economics and politics is getting much less attention than it should be.

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