The Iran-India Oil Impasse

IRD: Iran-India relations have recently reached an impasse due to problems in payments for oil imports. What do you think is the reason behind these tensions?

NS: Countries act primarily based upon their national interest. It should not be forgotten, as the saying goes, that there are no permanent enemies and no permanent friends, but there are permanent interests. Therefore the national interest is the decisive fact in any nation’s behavior. The Indians have now realized that in the current situation and based on the advantages Iran has provided them, cooperation with Iran could be beneficial to them.

In another situation this cooperation may not be beneficial to them and they might put a stop to it. What is generally more dominant in the field of international relations is competition.

The other point is that Iran is considered a unique opportunity for India. Thus, new competitors may enter the energy market, and some have done so during the recent economic developments. With the entrance of other competitors to the Iranian energy market there might be no room left for India. Therefore it seems that the Indians have become cautious in their energy relation with Iran.

IRD: Some believe that the solution to the oil payment dispute between Iran and India is a temporary one and these two countries are buying time to reach a definitive decision. What factors do you think influence this decision?

India’s decisions are based on two factors. First is US pressure, and second is India’s increasing demand for oil. India will decide considering these two factors. However, the expansion of relations with Iran in the energy sector might be more influenced by the internal factor of India’s increasing demand for oil.

IRD: Do you mean that the American pressure has not been influential on this issue?

All countries regulate their relations with other countries based on internal and external elements. If currently India has decided to expand its relations with Iran in the energy sector, this means that internal elements have dominated external elements in India. In other words, India is more concerned about its national interests than the American pressures. 

IRD: Could tensions between Iran and India be an incentive for Pakistan to reach out to Iran?

Due to the competition existent in South Asia and the rivalry between Pakistan and India, these two countries try to reach out to Iran in order to keep the balance of power in the region. Therefore, India’s distance from Iran could be an incentive for Pakistan to further expand its relations with Iran. In other words, Pakistan does not welcome exclusive relations between Iran and India where it is left out of the equation.

IRD: Saudi Arabia has announced its preparedness to fill the possible vacuum created in the oil market by Iran in India. How probable do you think is the replacement of Iran by Saudi Arabia in India’s energy market?

This could take place under a number of situations. Meaning that if the Americans force the Indians to halt their energy cooperation with Iran, they then have to replace this energy vacuum for India. One of the possibilities for filling this energy vacuum is Saudi Arabia.

However, even if Saudi Arabia succeeds in filling this vacuum it does not have the geopolitical position that Iran possesses. In other words, Iran is important for India in terms of its strategic importance, the consumer market, its energy reserves and its geopolitical position.

Saudi Arabia can only be beneficial to India in terms of energy and market; however, Iran can have additional benefits for India. Therefore replacing Iran with Saudi Arabia for India’s oil consumption could bring about many developments in India’s energy sector, but it seems that such a deal would basically be a loss for India.