India’s energy and diplomatic dilemmas have been compounded by murky big-power geopolitics, which has allowed the oil monarchies to ride out the Arab Spring but brought the region’s two remaining anti-Western regimes in Iran and Syria under intensifying pressure. The sharpening US-Israeli geopolitical confrontation with Iran risks escalating to military hostilities. After all, the US oil embargo to financially throttle Iran amounts to an indirect war.

The risks of India getting sucked into this geopolitical fight or becoming a proxy battleground are real. Israel’s instant accusation that Iran was behind the New Delhi car bombing serves as a reminder. Why would Iran target someone unimportant—an Israeli diplomat’s wife—just when the West is breathing down India’s neck to cease importing Iranian oil? This is the worst possible time for Iran to alienate one of its last-remaining economic lifelines, India.

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This explains why the Arab Spring has brought no change to the oil monarchies. It is the Arab states with a presidential form of government that are at the centre of the ongoing profound changes, which, paradoxically, are sought to be influenced by the iron-fisted but deep-pocketed oil sheikhdoms.

Their already-swelling coffers—thanks to the US energy embargo against Iran and rising oil prices—are set to overflow, increasing their leverage in the region and beyond.

The experience of the past half a century shows that the greater the transfer of oil wealth to these monarchies, the more they have funded fundamentalism and extremism, thereby contributing to the rise of international terrorism. In fact, the more wealth they have accumulated, the more the price of freedom has risen in the region.

In this light, the US’ attempt to give international effect to its new Iran Sanctions Act threatens a double whammy for strategic partner India. First, it will sabotage India’s energy import diversification strategy by making it place most of its eggs in the basket of the Islamist-bankrolling oil monarchies. India will become overly reliant on the wrong types of regimes and thus exposed to the games they play.

Over the years, the share of Iranian crude in India’s total oil imports has declined to barely 11%. If India joins US sanctions against Iran, Indian refineries with a technical capacity to process only Iranian crude will be left high and dry. Oil from different countries varies in terms of two basic properties—specific gravity and sulphur content. Retrofitting those old refineries to process crude from other countries is uneconomical.

Second, at a time when the US is quickening its Afghanistan disengagement and seeking to cut a deal with the Taliban with little regard for Indian interests, jumping on the American sanctions bandwagon will rupture India’s relations with the very country central to its Afghanistan strategy—Iran, a conduit for the substantial Indian aid flow to Afghanistan. America’s Afghanistan exit strategy—which is beginning to look like a sprint—only reinforces Iran’s geopolitical importance for India.

It should not be forgotten that India already has paid a heavy price for taking America’s side on some critical issues in its long-running battle against Iran, even though Washington doesn’t take sides in the India-China and India-Pakistan disputes.

The Bush administration persuaded India not to conclude any new long-term oil and gas contracts with Iran and—in return for a civil nuclear deal with the US—abandon the idea of a gas pipeline from Iran. And by voting against Iran at the International Atomic Energy Agency’s governing board in 2005 and 2006, New Delhi invited Iranian reprisal in the form of cancellation of a 25-year, $22 billion liquefied natural gas deal which had terms highly favourable to India. That deal’s scrapping alone left India poorer by several billion dollars.

Today, those states in favour of a total oil embargo on Iran (including the US, Britain, France and Germany) buy little or no oil from that country, while those countries advising caution (such as India, Japan, South Korea and China) are important importers of Iranian oil. The international division thus is between those that have nothing to lose and those that have much to lose.

Yet without offering any credible alternatives, Washington is mounting more pressure related to oil sourcing and payments that strike at the heart of energy-poor India’s efforts to secure stable, assured supplies. The Iran issue, in effect, has turned into a diplomatic litmus test as to whether India will stand up for its energy and geopolitical interests in the region or be co-opted to serve the short-term interests of its friends, particularly the US and Israel.

Brahma Chellaney is professor of strategic studies at the Centre for Policy Research in New Delhi.

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