News Excerpt
Recently, the governments of the United States in a drone strike killed a top Iranian general in Iraq. In retaliation, Iran targeted the military bases of the US in Iraq. In the confusion of these incidents, Iran accidentally shot down a Ukrainian Civilian Aircraft killing all the passengers. These incidents have once again placed middle east on the edge. It has also created new foreign policy challenges for India.

•    Ever since the election of the new government in the United States in 2016. “Make America Great Again vs Death to America” has come to loggerheads.
•    The United States withdrew from the Joint Comprehensive Plan of Action (JCPOA) also known as Iran Nuclear Deal and imposed various sanctions crippling the Iranian economy.
•    The US also through its law of CAATSA (Countering American Adversaries Through Sanctions Act) has sworn to take action against those countries who indulge in business with American adversaries such as Russia, Iran and North Korea.
•    The US has also intervened in the Iranian domestic protest against the current regime of Ayatollah Khomenei and there are allegations that the US is trying to change the regime in Iran.
•    US and Iran are also at loggerheads in the larger West Asian Politics. Iran has been successfully able to create its pocket of influence in the region through its militia and is able to fulfil its vision of establishing direct connectivity between Iran and Lebanon. Their support to Bashar Al-Asad regime in Syria also runs counter to the American Interest.
•    To show its strength Iran always showcases its ability to block the Strait of Hormuz- a critical lane for global supply of oil (for more read Current Connect, July 2019 Page 58)

India’s Reaction
India is tamely skewing its Middle East policy in favour of the informal US-Saudi Arabia-Israel Coalition and it seems that it went along with the US administration ‘maximum pressure’ policy on Iran. This seems prudent primarily for two reasons
o    The draconian nature of US sanctions, especially the newly enacted CAATSA.
o    India had made successful forays to the UAE and Saudi Arabia which are the economic power-house and can provide much needed investments in India. Government is targeting the Saudi and UAE sovereign wealth funds for promoting infrastructure construction in India.
o    Further, there is no significant challenge for India to meet the shortfall in crude oil imports from Iran due to support from UAE and Saudi Arabia.

India’ Dilemma
    Challenge for India is to manage the political aspect of its relations with the US and Iran.
    India’s decision to stop sourcing of oil from Iran will affect bilateral relations. It also does not comport with India’s pursuit of independent foreign policy and its endeavour to maintain strategic autonomy.
    On the other hand, if India were to continue to buy Iranian oil, say by sidestepping US sanctions, it is likely to impact the strategic relationship with the US.

India’s option
India has two options.
    Outright rebellion: India found one or more informal arrangements and team up with EU, Russia, China and other SCO nations to defy US sanctions. But this will hamper the US-India relation more so in the regime of the current administration which is unlikely to look upon such a step kindly.
    Talks and Negotiations: India, on the other hand, can choose to continue its negotiation with the US to either secure a formal waiver or to have an informal understanding to buy Iranian oil. The likelihood of getting one is remote given the plausible supply of oil in the region. In the meanwhile, India can offer Iran to enhance its investments in the Chabahar Port development project as well as consider initiating other developmental and connectivity projects to strengthen linkages to Afghanistan, the Caucasus and Central Asia. This will help India not openly defy the US or subvert its policy towards Iran but also at the same time ensure that its relationship with Iran is not completely derailed and it is also able to pursue an independent foreign policy.

The bottom line is that while India can wait for the easing of US-Iran tensions to resume buying oil from Iran, it is unlikely to undermine its relationship with the US to please Tehran.