What Modi Should And Shouldn’t Do In Iran

Prime Minister Narendra Modi leaves for his first state visit to Iran this weekend. The visit is seen to be particularly significant, given that New Delhi seems to be locked in a head-on battle with Beijing for influence in Tehran.

Iran’s entry into the global oil market since last year’s nuclear deal has been partly responsible for low oil prices, and both Beijing and New Delhi are keen to cash in on Iran’s oil fields while they remain cheap. India is set to import as much as at least 400,000 barrels a day of oil from Iran starting this April, and Modi’s visit is also likely to see the finalization of the ONGC’s proposed investment in a key natural gas field in the Persian Gulf.

But there is much more than oil on the table as Modi visits Iran. Taking centre stage will be connectivity. India’s outreach to Afghanistan and Central Asia has long been hampered by geography. To bypass Pakistan, New Delhi conceived the Chabahar port project on Iran’s southern coast well over a decade ago. But sanctions imposed over Iran’s nuclear programme have hampered progress on the project for years. Now that Tehran has made peace with the West, Modi is expected to get the ball rolling at Chabahar.

The Chabahar port project is a telling example of the central role Iran now plays in India’s engagement with Afghanistan and Central Asia. While Foreign Minister Sushma Swaraj was in Tehran last month, India, Iran and Afghanistan finalized a trilateral agreement which allowed Indian goods access to Afghanistan and Afghan goods access to the Indian Ocean – both through Iran. The agreement is expected to be signed during Modi’s visit and could be the start of a major corridor through Iran. In a statement released during Swaraj’s visit, the Foreign Ministry said that the agreement would “be a strategic bulwark for greater flow of people and goods among the three countries, as well as in the region.”

Modi’s agenda at Tehran should be to deepen this engagement for geographical connectivity. But an even greater opportunity is offered by the Iranian economy, post its return to the global fold. If there is one nation in the Middle East worth cultivating economic ties with, it is Iran. Unlike its neighbors across the Gulf, Iran’s economy is driven by a young and dynamic middle class with aspirations as high as India’s own (over 60 percent of Iran’s 80 million people are younger than 30 years). And unlike the young population prevalent in the Gulf (two-thirds of all Saudis are also under the age of 30), most of Iran’s youth are educated and globalized – making them a market of great untapped potential for Indian goods and Indian investment.

Economic ties will also be on President Rouhani’s own wish list. Iran’s middle class was instrumental in Rouhani’s own election and proved to be a great support base for Rouhani during the nuclear negotiations ahead of last year’s deal. In the most recent parliamentary elections, the middle class reaffirmed their support to Rouhani’s moderate allies by handing stinging defeats to some of Iran’s most well-established hardliner politicians and clerics.

If Iran establishes long standing economic ties with India, that will only benefit the middle class – further bolstering Rouhani’s more moderate agenda in Iranian politics and advancing Iran’s bid to free itself of hardliner politics.

But the biggest question among analysts in New Delhi is this: could Iran also be a strategy ally which would readily counter Pakistan? New Delhi has long hoped to earn Tehran’s support in pressuring Pakistan to act against terrorists on its soil, and Modi is likely to pitch for it during his visit. The argument some offer is that Pakistan, like most other Muslim-dominated countries, is Sunni majority, and also has militant outfits in its territory which actively target Shia Pakistanis. If New Delhi offers Iran support in the Middle East, they say, Tehran is likely to reciprocate positively.

But Pakistan has been deft in keeping itself out of the Middle East’s sectarian power struggle. Last year, Islamabad politely turned down an invitation from Saudi Arabia to join a Saudi-led Sunni coalition against Iran in Yemen and elsewhere – much to Tehran’s glee. And President Rouhani visited Pakistan earlier this year, partly to convey gratitude and partly to ensure that Pakistan policy stays the way it is. Pakistan continues to maintain close ties with the Saudis as well, largely through its significant diaspora in that country and ideological links, thereby keeping itself equidistant from both sides.

There is also the Baloch complication: under Prime Minister Modi, New Delhi has been mulling more active support for the independence of Balochistan. But the Baloch aren’t just Pakistani; they are also Iranian. Iran has a significant Baloch-majority province in its eastern half bordering Pakistan, home to Chabahar, no less, and with a population of as many as two million ethnic Baloch (most of them Sunni). And much like the Kurds of Iraq, Iran and Turkey, the Baloch call for a separate state is echoed on both sides of the Iran-Pakistan border. Almost 80 percent of Iran’s Baloch live under the poverty line and economic inequality has caused much discontent, adding fuel to the fire.

Iran’s increased geopolitical activity post the nuclear deal has also strengthened its ties with its own traditional allies – Russia and China. Many see the Chabahar project as a sign of India’s increasing strategic influence in Iran vis-à-vis China (Beijing has its own counter project on Pakistan’s coastline at Gwadar), but it isn’t quite so simple. According to one report in The National Interest, China is set to sell a wide range of advanced weaponry to Iran in the coming months, including J-10 fighter aircraft and Houbei-class high-speed missile boats – some of which Beijing may also sell to Pakistan. Iran has also embraced China’s Silk Road project with the first direct train between the two countries arriving in Tehran earlier this year.

All of these are challenges to India’s bid to cultivate a geostrategic alliance with Iran in South and Central Asia. New Delhi would be better advised to keep Pakistan and China out of its equation with Tehran for the while and stay away from the Middle East’s messy geopolitics. To his credit, Prime Minister Modi has done that so far – with visits to Saudi Arabia and the UAE and an upcoming visit to Qatar, as well as Presidential visits to Israel – all aimed at bilateral cooperation on common interests, ranging from agriculture to counter-terrorism.

Instead, Modi must focus on establishing economic ties with Iran which are likely to serve New Delhi well in the long-run, both because of Iran’s potential as a consumer market and its yearning for foreign investment from countries like India. As years pass, economic ties will prove to be the most likely tool India can use in the region to cultivate strategic influence, given its ideological differences with almost every country in the Middle East. Iran proves to be a good starting point for that venture.