Reducing India’s dependence on Iran

Given that Iran accounts for about 13 percent of India’s oil imports, large Indian businesses face a deep crisis as India was expected to decrease oil imports from Iran to zero before May 2.

Countries who have business relations, mainly oil imports, with Iran could face a scenario where it would be impossible to conduct trade activities due to political instability inside the country. Many factors are pushing Iran toward this instability, including frequent mass protests for several years now, armed rebellion carried out by various marginalized ethnic and religious groups, and secular opposition forces (both inside and outside Iran) seeking a regime change.

There is one more concerning factor that could compel businesses to look for permanent alternatives to Iranian oil: the United States policy regarding Iran is not a stable or consistent one and keeps changing. The sanctions timeline – decades-long sanction, sanction-withdrawal (2015), reimposing of sanction (2018), and, finally, tightening of sanctions (2019) – is a testimony to the US’ inconsistent Iran policy.

Considering the US’ inconsistent Iran policy and the profound political instability inside Iran (with the potential for further destabilization), it is perhaps time for countries like India, which are dependent on Iranian oil, to reduce their need on oil imports from the country.

US’ inconsistent Iran-policy

Iran had been suffering from a weak economy for decades because of the international community’s sanctions. However, the Joint Comprehensive Plan of Action (JCPOA), also known as the Iran deal, signed on July 14, 2015, between Iran and the UNSC 5 plus 1 (Britain, China, France, Germany, Russia, and the US) had paved the way for sanctions to be lifted. 

It was perhaps expected that the deal would (i) put pressure on the Iranian regime to behave in a civilized manner, (ii) compel the regime to stay away from its traditional practice of interfering into the internal affairs of other regional countries, and (iii) push the regime to change its policy of backing region-wide terrorism.

But these expectations were never fulfilled. Instead, the Iranian regime started behaving more aggressively after the deal was signed and accelerated its effort to destabilize the Middle East further, and in particular West Asia.

Hence, the US had to withdraw from the deal in May 2018 and had announced its decision to ban the import of Iranian oil. Countries across the world were given six months to decrease oil imports from Iran to zero by November 2018. However, in November, the US had given a further six-month exemption to eight countries, including India—meaning these eight countries could not import Iranian oil beyond these six months.

As the six-month exemption period was nearing an end, on April 22, 2019, the US announced it would not extend the exemption period any further.

As the exemption ran out on May 1, those eight countries, including India, are expected to decrease oil imports from Iran to zero moving forward. This means that those Indian state-owned or private entities who continue to import Iranian oil even after May 1 are likely to face sanctions from the US.

The situation for Iran would deteriorate further if US President Donald Trump is re-elected in the 2020 US presidential elections. Chances for Trump’s re-election are fairly high.

Despite all the media campaigns against the Trump administration, Trump’s support-base from the last election seems uninterrupted. Backing for Trump appears to be gaining strength among the ones who already voted for him in 2016 because of the fulfillment of his campaign promises. These promises include the withdrawal from the JCOPA, re-imposing sanctions on Iran, and a tough immigration policy among other local and international assurances.

Even if Trump loses in 2020 and a Democrat candidate wins, the US’ Iran policy would remain inconsistent. Given the growing popularity of the sanction policy among American citizens, it will take a considerable time for any future Democrat president to implement any decision to withdraw sanctions on Iran.

Iran’s economy, including its oil sector, is in a sheer inconsistent and unstable phase from the US’ foreign policy angle, and this inconsistency will continue to prevail as long as the current Iranian regime remains in power. It would be unwise, and perhaps foolish, on the part of Indian policymakers to continue to see Iran as a source of oil imports.

Growing political instability inside Iran

The US’ inconsistent policy toward Iran is not the only reason why countries like India should reduce its dependence on Iranian oil. Iran has other problems too, particularly the fact the country is on the verge of absolute political instability.

A few factors are pushing Iran toward this political instability. Various communities are dissatisfied over how the Iranian leadership treats them according to their ethnic and sectarian identity, and there is a growing sentiment among these suppressed communities to adopt an armed rebellion against the regime.

There is a tense atmosphere among Iran’s Kurdish-populated region, as the Kurds, who have long sought independence, have ramped up their call for freedom.

At the same time, the secular forces and individuals, both inside and outside Iran, have beefed up their call to overthrow the current Iranian regime and have increased their activities to this end. What is most surprising is that efforts are made to unite the opposition forces and individuals – both from a secular and religious brand – into one single formidable political power against the Iranian regime.

Moreover, Iranians have continuously protested in towns and villages against the failing governance system, with no solutions delivered by the regime in Tehran. Different marginalized ethnic and religious groups, which have been involved in armed rebellion against the regime, are attracting more recruits in their ranks from these frustrated protesting Iranians, who see their demands only met with words of hopes but no solutions.

As if these factors were not enough to give the regime a hard time, the leaders in Tehran have spoken of their concerns about the mounting efforts by some regional and extra-regional countries to destabilize Iran for a regime change.

Therefore, it is perhaps high time to reduce India’s dependence on Iranian oil, considering the US’ inconsistent Iran-policy and the ever-growing political instability inside the country.

Bahauddin Foizee is a an international affairs analyst and columnist, mainly focusing on the geopolitical trends and events taking place in the greater Middle East as well as in the overlapping mega-regions of Asia-Pacific, Indo-Pacific, and Indian Oceanic Region.

The views expressed in this article are those of the author and do not necessarily reflect the position of Kurdistan 24.

Editing by Karzan Sulaivany