Rising US-Iran Tensions: What It Means for India and China?

Dr. Monish Tourangbam
July 28, 2019


Image Courtesy: National Herald India

The rise in tensions between the United States and Iran is unmistakable and undoubted since the advent of the Donald Trump administration. In general, the relations between the US and Iran have been frosty and confrontational. However, the Barack Obama administration had brought Iran to the negotiating table with the signing of the Joint Comprehensive Plan of Action (JCPOA) also called the Iran nuclear deal. While the Trump administration walked out of the deal and pressured Iran to do more to assuage concerns regarding the controversial Iranian nuclear program, other negotiating partners including veto-wielding members of the United Nations Security Council (UNSC) and Germany have been willing to keep the deal alive and negotiate with Iran. Subsequent to the US walking out of the deal, American unilateral sanctions on Iranian entities have been more biting and non-negotiable. Much of the sanctions slapped on Iran have targeted Iran’s ability to trade oil and gas. This has been a cause of worry for major energy consumers like India and China, which have developed deep energy ties with Iran over the years.

Waivers were previously provided to countries including India and China to conduct business with Iran, on the expiration of which, these countries were expected to cut down their energy purchases from Iran and finally stop all transactions with Iran. Washington intended these waivers to allow these countries to shift to alternative sources meanwhile. Whenever America’s relations with Iran have gone downhill, there has been an expectation from Washington for other countries to scale down their dealings with Tehran, thus interfering with other countries’ perception and practice of their autonomous decision-making. Then, it becomes a matter of how far these countries can bear the cost of doing business with Iran, and to what extent they can defy America’s pressure.

The sanctions on Iran and America’s expectations from countries like India and China have also come at a time when the US and China have been ratcheting up tensions over trade differences, and the US has been engaged in a tussle over tariffs with India. The Indian, American and Chinese leaderships continue to talk to each other regarding the trajectory of the relationships, as seen, for instance, in the recent G20 Summit in Osaka. However, any upsurge in the economic tussle between the US and China or India, simultaneous to a volatile US-Iran relationship leading to tighter sanctions and confrontations like the one ensuing in the Strait of Hormuz will lead to a complex dynamics that all stakeholders need to negotiate cautiously. Tensions in the seas around Iran, have been increasing, following the Iranian shooting down of a US drone, America’s increased threats and force posturing in the region and the diplomatic row following the Iranian seizure of a British oil tanker.

Uninterrupted supply of energy from reliable sources is considered of prime importance for countries like India and China for internal growth and development. The domestic consumption of energy in these countries far exceeds their domestic production, and as such as energy suppliers like Iran plays a vital role in energy security and hence, the foreign policy of these countries. For both India and China, Iran accounts for a substantial portion of their energy imports, and as such, it remains a question as to what extent, these countries can depend on other energy sources, including the US for their energy needs. Moreover, the concern for energy consumers is not just about getting oil and gas, but it also about getting them, at attractive prices and conditions. Recently, the US sanctioned China’s state-run oil firm Zhuhai Zhenrong Corp, alleging the later of purchase of Iranian oil beyond the waiver period, and hence violating restrictions imposed by US sanctions. Chinese authorities as expected, opposed the US action, urging “the US to immediately correct its wrongdoing and earnestly respect other parties’ legal rights and interests.”

The constraints posed by America’s animosity with Iran and the latter’s relations with other countries like India and China is as symbolic as it is operational. While US sanctions do pose substantial restrictions to the extent to which energy consumers like India and China can do business with a significant energy supplier like Iran, the question is also about the principles of international relations, where sovereign actors can engage in relations with other sovereign actors, without the intervention of a third sovereign actor. While New Delhi may be more subtle in its defiance of US interference in its dealings with Iran, Beijing given the current trade standoff with Washington seems more confrontationist in dealing with Washington.

Moreover, Trump administration’s harsher stance on Iran and economic tussle with major economies like India and Iran also come in the wake of the ensuing campaign for the upcoming US Presidential elections next year. While the US is engaged in a trade war with China in addition to security divergences in the Indo-Pacific region, it is involved in a tussle over tariffs with India at a time when India-US security convergence is increasingly evident in the Indo-Pacific. Simultaneously, the rising animosity between the US and Iran is exposing the complex dynamics of how New Delhi and Beijing would manage their ties with Iran while trying not to derail their deeply intertwined ties with Washington. Moreover, Washington is passing through a time when the Trump administration seems intent to project its America-centric foreign policy at the cost of annoying allies and partners while pushing adversaries to uncomfortable corners. How all stakeholders will wriggle themselves out of this geopolitical cauldron remains a primary foreign policy challenge for all involved.

*** The author is an Assistant Professor (Senior Scale) at the Department of Geopolitics and International Relations, Manipal Academy of Higher Education (MAHE), Manipal ***