We were expecting ‘2+2’, instead we got Nikki Haley. Quite like a school marm, she told New Delhi that it had better follow the new US prescription (or shall we call it proscription!). She did not stop at that. Lest we pulled the rabbit of public opinion from the hat, she chose to address the Indian public directly, well almost. Speaking via a televised interview, Haley made no attempts to nuance her message: India has to stop oil imports from Iran to comply with Trump-inspired sanctions.
This did not quite look like diplomacy. The contrast with the older mode of engagement would have been obvious to anyone watching the unfolding of Indo-US relations—from the time George W Bush tried to nudge New Delhi to send troops to Saddam’s Iraq, and Vajpayee dextrously engineered domestic opposition to wriggle out! No room for such play now.
The US has torn apart the Obama-vintage JCPOA deal with Iran: There is to be no more ‘appeasement’, expect more sanctions, and India must join in. If Iran is our third biggest supplier of oil and a relatively safer port of call in these times of soaring crude, the instruction is to switch to the Saudis lock, stock and barrel.
Even the staunchest supporters of Indo-US bonhomie in New Delhi were appalled by her tone. Haley obviously has riled the carefully built Washington network base here—enough for them to ask, “Who’s she to talk to us like that!” That is, she’s too junior in the hierarchy to be dropping basic niceties thus. Well, we are in Trump’s order of things, which means there’s no world order, only Trump’s orders.
Any other time, Haley’s performance would have been considered a fiasco. Not now. Not when seen against two reschedulings of the ‘2+2’ trade talks (no date has been fixed yet!) between India’s External Affairs and Defence Ministers, Sushma Swaraj and Nirmala Sitharaman, and their counterparts. Secretary of State Mike Pompeo had far more pressing engagements, like a trip to North Korea.
Back in the US, Democrats feel the rescinding of the Iran deal would be counterproductive at a time when Trump is hoping to nudge Kim Jong-un to give up his nuclear dreams. In India, some officials and experts offer rationalisations: North Korea is Trump’s priority right now, they say, and India has not been scaled down. Actually, that may not be a routine obfuscation of what looked like a snub. This is where those who have the unenviable job of devising a semblance of balance—to tackle the tricky fallout of sanctions barely 10-11 months away from elections in India—see Trump’s transactional diplomacy kick in. (The US president, flaunting his business credentials, fashions himself as a deal-maker.)
The reason is simple, the US is building pressure on New Delhi and Nikki Haley was just a teaser. It seems the prime minister politely told her India has a long-standing trade relationship with Iran, and it may not be possible to withdraw overnight. “These things take time”—is apparently what the PM told her. Foreign policy wonks feel he may try to replicate the balancing act he has been successfully doing in West Asia, managing India’s interests through the quagmire of warring camps. However, with ‘2+2’ put off indefinitely, how will India manoeuvre itself out of this bind without having to choose between friends? In February the PM had promised the visiting Iranian President Hassan Rouhani a 25 per cent increase in oil intake. And now November 4 looms: the deadline for the Iran sanction.
The ‘2+2’ talk was to be not just on the ongoing trade war but also CAATSA (Countering American Adversaries Through Sanctions Act), a new US federal law that bars all defence deals and specified trade with Russia and Iran, two of India’s vital old allies and suppliers of defence equipment and oil. It indeed puts India in a quandary. Particularly when the countdown to elections has begun and the possibility of a national consensus is as difficult as trying to get the Trump administration to be more accommodative of India’s sovereign interests. As Mike Lowengart, the Chief Investment Officer of E*Trade, commented: “Trump is not all bluster—he will walk away from (what he thinks are) bad deals ... (and) volatility is here to stay.”
Unless India falls in line, the sanctions will not cripple Tehran as much. Nor can it stop its continued involvement in Syria, Yemen and Iraq. China, Russia, Turkey and India are crucial for Iran. At loggerheads with Iran, one could have expected Turkey to be eager to comply with the US sanctions but Erdogan, surprisingly, has taken a contrary position. China, the biggest importer of Iranian oil and otherwise too massively invested in Iran, is as inscrutable as ever. Trump is meeting Putin soon. That leaves India.
The options before New Delhi are few and far between. The IOC is making noises about cutting imports from Iran in favour of Saudi oil. But MEA mandarins are hoping that New Delhi can again strike a bargain with a stressed Tehran and do trade in rupee—which would ease the pressure on foreign exchange reserves. But for that, Washington has to look the other way, which it may not this time.
The only exception India will get is on Chabahar port, where much investment has already been sunk in. The other point of relief may come from E3—Germany, France and Britain may go to WTO on Iran, and India may get indirect relief. As of now, it’s a tightrope walk. Prime Minister Modi can ill afford to be seen to be boxed in by US pressure, while China has us all but encircled. Be sure, India’s sovereign foreign policy and our oil economy will be talking points in the coming big contest.