India’s “Persian Puzzle” – A Possible Solution

Pratyush Chandra

[The recent Indian vote on the IAEA resolution is being generally interpreted as a sign of the Indian state’s subservience to the US. However, the reality belies this simplistic analysis. At the risk of being labelled economic determinist, this article brings out some facts that indicate towards the growing expansionist interest of the Indian capital. It is this expansionism that drives the Indian state to defy its ‘non-alignment’ past and design its own game-plan, which at least for now coheres with the US global strategies.]

India has finally voted in favor of the International Atomic Energy Agency (IAEA) resolution on Iran. Everybody was speculating that at last an issue has come up that will break the pace and uniformity of the growing Indo-US relations. But India has made its choice clear in the world market of strategies and alignments. There are various lines of explanation that dominate the discussion on the rationale of India’s choice on the issue. The most prevalent one is of course based on the belief that the “third world” states are congenitally incapable of taking such decisions except under the pressure from the West. This view generally presumes these states to be ‘soft’ and their ‘national’ hegemonic interests to be weak, which can easily be swayed by the external pressures. Further, any gesture of confrontation between these states and the Western states especially the US is generally taken as potentially anti-imperialist. However, this view cannot explain the Indian case as it does not capture the basic political economic processes that are increasingly integrating the Indian hegemonic interests within the global strategic alignments and realignments.

The Official Justification

Even before voting for the resolution, the Indian government had been categorically stressing that there was “no difference in objectives between India and the United States vis-à-vis Iran even if the two sides differ on tactics”.(1) Further, even when India stressed on “diplomatic consultations to evolve an international consensus on how to deal with Teheran’s decision to continue its uranium enrichment programme”, it never wanted “another nuclear weapon state in its neighbourhood”.(2) Under these circumstances India’s vote must not be taken as a surprise.

The Indian foreign ministry is not wrong when it says that India’s vote on the resolution was actually in line with whatever had already been happening. This continuity is what constitutes the “evolutionary” foreign policy of India, as envisaged by its present Foreign Minister. The Indian leadership has consistently expressed all its international dealings in terms of “national interests”, “security interests”, etc. Once again, with regard to its vote on the IAEA resolution, the justification given by the Indian state is based on an ideological depoliticization of the so-called “national interests”. In the words of the Indian Foreign Secretary Shyam Saran:

“I do not think that you should interpret India’s position as being aligned on the Left or on the Right or aligned with this group of countries or that group of countries. I think India has all along taken decisions on issues of concern to itself on the basis of its own assessment, and on the basis of its own national interest. So, the question of this representing a shift in India’s policy does not arise.” (3)

However, it all depends on the way you define the “national interest” which under neoliberalism (the professed ideology of the Indian state at least since 1991) means nothing but what provides leverage to the Indian businessmen and their businesses.

The Context

While analyzing India’s strategic maneuverings internationally, the analysts very rarely note their economic dimensions. It is scarcely admitted that India’s relationship with other developing countries after 1991 has been increasingly based on the export of capital and the Indian investment abroad. And in most of the cases, such economic relationship has been simultaneously equipped with militaristic aid to those states. India has been offering credit lines to many Afro-Asian countries that they can utilize for infrastructure building and other business purposes with a condition that they will employ Indian companies. India’s ‘non-aligned’ past has allowed it to have a major share in the capitalist subordination of the backward economies in Africa and Asia. In fact, the rhetoric of non-alignment (“South-South cooperation”) plays an efficient ideological role in rationalizing the expansionist drive of the Indian capital. Recently after India refused the foreign aid for its own Tsunami victims, the Indian External Affairs Minister, Natwar Singh, while offering Indonesians “concessional credit for reconstructing roads, buildings, harbours, ten units of fully equipped hospitals”, rattled proudly that “they were lumping us with the others but now we are seen separate offering our help and assistance”. (4)

Definitely, since 1991 India has been consistently endeavoring to be recognized as a faithful ally of the US. Its nuclear graduation and global politico-economic interests have shown the US leadership that it is a force to be reckoned with, and its subordination provides one of the most reliable allies to oversee the Indian Ocean and meet up with China. In recent years the growing energy needs of the Indian capital has forced the Indian State to invest in the oilfields abroad – India has operating assets in Sudan, Vietnam, Iraq, Iran, Myanmar, Libya, Syria, Sakhalin Islands, etc. It has been acquiring competitive amounts of shares in foreign oil companies. All these make India a player in the global oil politics too both as an investor and a consumer.

The Indo-US relationship is thriving in this context, and has a clear-cut ‘material’ semantics. India requires not having a confrontation with the “global police” state when its capital is struggling to stabilize its share in the global pool of surplus value, of which a major portion comes from the American market and the Indian investment in the US. Further, by providing dual citizenship to the Non-Resident Indians (NRIs) recently, the Indian state has further increased its own responsibility of protecting NRI capital in exchange of ‘rent’ and the assurance of repatriation of profit.

In this scenario, apparently one may interpret the Indian vote on the IAEA resolution as an appeasement of the US-led ‘coalition’. But here too there is a vital interest of the Indian capital that is playing an important role. The recent pipline diplomacy between Iran, India and Pakistan is quite well known. It is impossible to interpret the Indian vote, which is unequivocally affirmative (not even abstention!) on a resolution that is meant to isolate Iran, without connecting it to the facts of the Indian ‘oil politics’ in general and its pipeline diplomacy with Iran in particular.

The Nature of India’s Oil Interests and the Global Coalition

Recently, while rationalizing the Indian nuclearization, the Indian Defense Minister noted:

“India is a heavily energy deficient country. Of all the variables that could hinder India’s economic progress, energy scarcity and dependence are probably the most serious. Seventy percent of our crude oil is imported. Per capita energy consumption presently is only 1/5th of the world average. Considering a high growth rate of around 8 percent of GDP per year in the coming years, growth of oil demand is projected to be 6 percent per annum. If so, dependence on oil imports could rise from 70 percent to 80 (percent), to 85 percent over the next two decades. It is therefore imperative for us to look for cost-effective and long-term alternatives to meet our energy requirements. Indian oil companies are currently actively involved in a search for energy in the form of oil and gas fields, pipelines, LNG, and other new and non-conventional sources. But most hydrocarbon resources underline our dependence on limited reserves and others for this critical requirement. They also carry scope for avoidable strategic energy rivalries.” (5)

The clue to India’s alignment with the US hegemony in the Middle East lies here. Its energy deficiency, yet the desire and ability to proactively make up for it, makes the Indian rulers a player in the Middle East conflicts. Major, yet low productive oil producing industrialized countries, including the United States (6) and oil deficient industrialized economies can influence the global oil price only by appeasing or isolating OPEC countries. Since a major determinant of the oil price today is the differential oil rent appropriated by the highly productive oil economies like those of the Middle East, “cost effective” energy appropriation requires reducing this rent. The bully tactics (“either with us or against us”) of the US and other Western powers in the Middle East has been mainly geared towards this purpose.

The increasing Indian investment in the oilfields abroad was definitely triggered by the need to satisfy the domestic energy requirements, but ultimately as it happens with all capitalist ventures, these investments eventually develop their own logic of earning profit. With increasing divestment in the state owned oil companies of India and intrusion of private capital, this becomes furthermore true. Hence, the need to minimize the differential oil rent, which the oil companies have to pay to the oil producing countries, becomes an important aspect of India’s international political intervention, too. So this unity of ‘economic’ interest serves as the background for the increasing Indian intervention in the Gulf politics and that too in consonance with the US hegemony and other non-OPEC powers. India’s readiness to refuel the American warships during the First Gulf War and later during the Afghan War all point out that there exists an Indian consciousness of possible material gains from its subservience to the US led coalition. However, because of a formidable domestic anti-imperialist opposition, until now the capitalist preference in India could not come out as openly as it has in the vote on the IAEA resolution.

It is worthwhile to note that that a major hitch in the Indo-Iranian negotiations on the proposed pipeline was also related to pricing. “India has taken the position that any price above the US$3 per million British thermal units (BTUs) currently being paid by its power and fertilizer sectors for gas on the international market is unacceptable. Iran, in contrast, appears to be seeking more than US$4 per million BTUs, a rate that will only go higher if Pakistani transit fees are added.” (7) This might have been one of the major reasons in persuading the Indian state to go with the scheme of the West, since the isolation of the Iranian regime and its consequent desperation to earn revenues in the midst of enveloping sanctions can make the Iranians more compliant to the Indian demands and increase the weight on the side of the Indians in the negotiations for the pipeline.


(1) The Times of India, September 16, 2005
(2) The Hindu, September 21, 2005
(3) “Press Briefing by the Foreign Secretary on the events in UN and IAEA”, September 26, 2005
(4) Indian Express, January 8, 2005
(5) Defense Minister Pranab Mukherjee’s Talk on “India’s Strategic Perspective”, Carnegie Endowment for International Peace, Washington DC, June 27, 2005
(6) Cyrus Bina, “The Economics of the Oil Crisis: Theories of Oil Crisis, Oil Rent & Internationalization of Capital in the Oil Industry”, Merlin Press, London, 1985.
(7) A.J. Tellis, “India As a New Global Power: An Action Agenda for the United States”, Carnegie Endowment for International Peace, Washington DC, 2005


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