Iran-China Relations and Implications for India

Context

In between US-China tussle and the Ladakh Conflict, new reports are coming revealing the deepening ties between China and Iran. Beijing and Tehran are nearing the conclusion of an extensive economic and military partnership which would be of critical concern for India.

Background

While the Sino-Indian de-escalation at the Line of Actual Control (LAC) in Ladakh is still in progress, China as a factor in India-Iran relations became more manifest by two developments.

One, the New York Times published a leaked draft of a Sino-Iran, sweeping economic and security partnership, encompassing $400 billion in Chinese investment over next 25 years, another one is that Iran was dropping India in the development of the Chabahar-Zahedan rail project, a showpiece of Afghanistan-Iran-India trilateral cooperation and likely cancellation of contract of Farzad-B Gas Block.

Iran China Ties

The foundation of this deal between Beijing and Tehran was laid during President Xi Jinping’s visit to Iran in 2016. As per available information, China is to invest US $ 120 billion for upgrading Iran’s transport infrastructure beginning with the 2,300 kilometre road that will link Tehran with Urumqi in China’s Xinjiang province. Major expenditure of the US $ 280 billion would be earmarked for developing Iran’s petrochemical, oil and gas industries which have suffered immensely as a result of US-led economic sanctions.
Another significant aspect of the strategic partnership is military cooperation between the two countries which includes weapons development, training between Iranian and Chinese armed forces and intelligence sharing.

There is however also resentment against the Iran China “Strategic Agreement” amongst Iranians who feel that the same has not been disclosed to the Iranian parliament or people, even former Iran's President has declared it void.

India-Iran Relations

Historic & Cultural

• It is believed that Indians and Iranians belonged to one single family before the beginning of the Indo-Aryan civilization and lived together with a common language for many centuries in pasturelands of Oxus valley in Central Asia (Tajikistan, Uzbekistan, Kyrgyzstan, Turkmenistan and Kazakhstan).
• Buddhism became the religion of the east Iranian province of Khorasan through the Kushana emperors.
• In north west India, Zoroastrianism and Buddhism came into close contact. The Zoroastrian doctrine of the Saviour (Saosyant) probably influenced the idea of the future Buddha, which later became part of the orthodox belief.

Political

• During the Cold War, India and Iran owed allegiance to different political blocs – the former to the Soviet Union and the latter to the US, yet their relations remained mostly cordial up to the Islamic Revolution.
• After the 1979 Revolution in Iran, Tehran joined the India-led NAM (Non Aligned Movement) declaring it had no alliance with the US or the Soviets, temporarily boosting relations between Tehran and New Delhi.

Economic

Both India and Iran hold Joint Business Council meetings regularly.

India-Iran economic and commercial ties have traditionally been buoyed by Indian import of Iranian crude oil. India imported about 22 million tons of crude oil valued at about $ 10 billion in 2009-10.

• The India-Iran bilateral trade during the fiscal year 2018-19 rose to USD 17.03 billion as compared to USD 13.76 billion in 2017-18.

• India and Iran were about to set up the IPI gas pipeline project, a long term annual supply of 5 million tons of LNG and the TAPI gas pipeline project, both were expected to have been operationalised few years ago, but still continue to face an uncertain future in the atmosphere of US sanctions.

Chabahar Port Project

The Chabahar port project, often scene as India’s strategic magnum opus in Iran, is also envisaged as a bridge between India, Iran, Afghanistan and Central Asia.

The port itself is often seen as a counter-balance to Gwadar in Pakistan, which was built and run by China as part of its China-Pakistan Economic Corridor (CPEC) design. The distance between the two ports is only 172 km, and both Gwadar and Chabahar are in fact often postured as “sister ports” by Tehran and Islamabad, despite India’s narratives on the same.

Implications on India of Iran-China Ties

From the Indian perspective growing Iran China relationship is a reason for worry and changing strategic landscape. It points to growing Chinese dominance in alignment with Pakistan which threatens its relations with Afghanistan.

The development of Chabahar and future of India-Afghanistan-Iran Trilateral Agreement for the development of Chabahar has also not seen anticipated progress. Similarly, China-backed Pakistan-Iran-Taliban alignment emerging in India’s immediate neighbourhood is also a reason for Indian concern.

India’s relations with Iran cooled off substantially after India agreed to reduce its trade relations with Iran after imposition of sanctions. The visit of President Trump and increasing Indo-US economic and strategic partnership seems to have been the last straw. It is unlikely that relations with Iran would improve in the near term.

Growing Chinese footsteps in Iran will have a long-lasting impact on our relationship with not only Iran but also on Afghanistan and Central Asian nations.

Way Forward

• Many political and strategic issues could be listed to underscore the importance of both countries for each other. India, as one of largest economies, can be a part of Iran’s growth story.
• For Chabahar, and India’s balance act with the US, the game changer was Afghanistan, and its access to the port as well. In February 2019, the first load of Afghan goods traded through Chabahar, highlighting the economic use of the project for greater stability of Afghanistan, a country the US is currently negotiating its way out of a 19-year-old war with the Taliban. With Chabahar being one of the few international trade routes operational for the Afghan economy, sanctioning India from building upon and operating it would have been too myopic even for the Trump administration.
• If both sides try to boost their economic profiles, the strategic dimension will ensue soon.

Connecting the Dots

Question for Prelims

What is the principal importance for Chabahar Port for India ?

(a) It provides strategic base for India to counter Pakistan in Arabian sea.
(b) It provides access of Oil import from Iran.
(c) It provides access to Afghanistan and other Central Asian countries to India.
(d) None of the above

Question for Mains

China recently joined hands with Iran to counter US; how this partnership would change the geopolitical scenario of Central Asia? Discuss the strategic concern of this bilateral development for India.