India’s growing influence in the Middle East

A map showing the planned route of the Chabahar corridor in Iran and Afghanistan
India has put a lot of effort into building the Chabahar corridor, which it hopes will offer Afghanistan an alternative to importing through Pakistan (source: macpixxel for GIS)

Drastic changes in Middle East geopolitics are expanding India’s footprint in the region after years of a relatively low profile. A newfound relationship with the United Arab Emirates and deepening ties with Israel and Iran have brought some economic and strategic benefits.

Still, India continues to prefer a set of limited bilateral relations, primarily with those three countries, rather than a broader regional policy. That position will be tested as regional dynamics continue to shift.

United Arab Emirates

After taking office in 2014, Indian Prime Minister Narendra Modi was a frantic overseas traveler, averaging one foreign visit per month in his first year. But one region missing from his itinerary was the Middle East. Privately, Mr. Modi indicated that the only country in the region that interested him was Israel.

It came as a surprise in 2015 when the prime minister announced a hastily-arranged state visit to the United Arab Emirates. The UAE was a major trading partner, but it was one of the closest allies of Pakistan and a former backer of the Taliban. Just as surprising was the sweeping nature of the agreements made between Mr. Modi and the Abu Dhabi royal family, the UAE’s de facto rulers.

India has since described the relationship as “transformative” – code for ties that are seen in New Delhi as geopolitically significant, previously used only to describe relations with the United States and Japan. On issues of security, the two moved to a degree of counterterrorism cooperation that effectively severed the UAE’s relations with Pakistan. Abu Dhabi also committed to invest an initial $75 billion from its giant sovereign wealth fund in building up Indian infrastructure.

The UAE’s sudden pivot was driven by several factors. First among them was the UAE’s anger over Pakistan’s refusal to enter the war in Yemen in favor of factions supported by the Persian Gulf monarchies like the UAE and Saudi Arabia. Second was the UAE’s uncertainty over the future of the U.S. commitment to the Gulf. Abu Dhabi was gambling that given India’s growth trajectory, it would eventually emerge as a major counterweight in the region.

The Middle East’s present political churn is providing India with unprecedented economic and diplomatic opportunities

Third, the UAE’s wealth is oil-based, and India is now the world’s fastest-growing oil market. Finally, Abu Dhabi’s Crown Prince Mohammed bin Zayed has been concerned about the sectarian conflicts tearing apart the Islamic world and hoped that India, which is home to the world’s third-largest Muslim population, could help him promote quieter strands of Islamic theology.

Between the Abu Dhabi Investment Authority and the transport firm DP World, the UAE has already invested $5 billion into the Indian economy since Prime Minister Modi’s 2015 visit. The groups’ officials speak of investing a similar amount every year for a decade, and India will join the UAE for naval exercises in the Gulf later this year. Not to be outdone, Qatar and Saudi Arabia have followed with promises of investing tens of billions of dollars in India.

The UAE’s turnaround is an example of how the Middle East’s present political churn is providing India with unprecedented economic and diplomatic opportunities. Still, New Delhi remains wary. It is reluctant to waver from its traditional Middle East policy of concentrating on a handful of bilateral relations, securing its Persian Gulf diaspora and energy supplies, and carefully avoiding a larger regional role. It does not help that India’s most important bilateral relations in the region are with Israel, Iran and the UAE – countries whose relations with each other are frayed, if not outright hostile.

Israel

India’s relations with Israel are economically modest but have an unusually significant strategic element. Israel has emerged as one of India’s largest foreign suppliers of military equipment, on the same level as Russia and the U.S., and the two countries work exclusively with each other in sensitive areas like nuclear weapons technology. Mr. Modi also sees Israel as India’s partner in water programs, an acknowledgment of the Jewish state’s prowess in sustainable water expertise.

In the past, New Delhi’s quandary has been the strong negative emotions Israel arouses not only in the Arab states but in the Indian political left and its Muslim population. But Sunni Arab states in the Gulf now see Iran as a far greater security concern than Israel. India also has a jaundiced view of the Muslim Brotherhood, which controls Gaza, and is more comfortable with the secular Palestinian Authority. Mr. Modi, given his huge political mandate, can easily ignore domestic opponents of Israel.

Israeli Prime Minister Benjamin Netanyahu and Indian Prime Minister Narendra Modi visit an agricultural center in the state of Gujarat, India, in January 2018
India has assiduously fostered ties with Israel. After Indian Prime Minister Narendra Modi visited Israel in 2017, Israeli Prime Minister Benjamin Netanyahu came to India in January 2018 (source: dpa)

In July 2017, Mr. Modi became the first Indian prime minister to make a state visit to Israel and, earlier this year, he hosted Israeli Prime Minister Benjamin Netanyahu in India. He then made a separate visit to the West Bank in February; India recognizes Palestine and supports the two-state solution.

The trips helped put India’s relations with Israel and Palestine on separate tracks, which Israeli officials have applauded, as it gives them more space to expand military and political relations. High-level visits are now more likely, and the Indian Air Force recently participated in Israel’s multination Blue Flag exercises for the first time.

Iran

The third pillar of India’s Middle East policy is Iran, with which New Delhi has a working but often frustrating relationship. Tehran has a very strong sense of its own interests, and its fragmented internal power structure results in overnight policy changes with no warning. Indian diplomats talk of signing deals in the morning and having Iran tear them apart by evening.

India has several major policy interests regarding Iran. One is India’s long-standing desire to provide Afghanistan an alternative to the trade corridors that go through Pakistan. India has spent decades persuading Iran to join them in building such a corridor, running from Iran’s southeast Chabahar port to Herat in Afghanistan. In late 2017, with great fanfare, India announced the completion of the corridor’s first phase and the shipment of several thousand tons of wheat to Afghanistan. Afghan officials say that one billion dollars’ worth of goods has already been diverted from Pakistan. There are grander plans to extend the route to Central Asia, as the so-called North-South Corridor, but these are far from being realized.

Second, Iran is a major source of oil for India, though it is probably true that India deliberately buys some Iranian oil to maintain leverage with Tehran. During the height of international sanctions against Iran, India saw a precipitous drop in oil imports from Iran by domestic refineries. New Delhi intervened to ensure the purchases did not disappear altogether. In the present environment of surplus oil and gas, Iran is not crucial to India’s energy security.

India believes that an open door to Iran is important to prevent the Gulf’s primary fault line – between Shias and Sunnis – from rupturing

Third, India believes that an open door to Iran is important to prevent the Gulf’s primary fault line – between Shias and Sunnis – from rupturing. Persian Gulf stability is India’s overriding concern, but New Delhi feels it lacks the influence to help guarantee that stability and has been happy to leave the task to Washington. Without much success, New Delhi has acted as a messenger between Iran and the U.S. and Israel. It strongly supported the U.S.-Iran nuclear agreement and sees President Donald Trump’s attempts to scrap the deal as foolish. India is already working to find a means to keep trading with Iran, even if American sanctions are tightened.

Tehran is displeased with India’s close ties with Israel and the U.S., but like India, Iran is a jealous guardian of its foreign policy and does not let it affect their relations. As the Iranian ambassador once said in a closed-door meeting: “We will not tell you who should be your friends or enemies and we expect you will not allow other countries to tell you the same.”

There are other points of friction, most notably Iran’s renewed support for the Taliban in Afghanistan. As U.S.-Iran relations begin to sour once again, Tehran has put the Americans at the top of its enemy list, whereas India sees Afghanistan more through the prism of Pakistan. On this issue, the two sides agree to disagree. India is satisfied that Iran allows the Chabahar corridor to function, undermining Pakistan’s influence in Afghanistan. No eyebrows were raised in India when the Israeli prime minister and the Iranian president visited New Delhi just weeks apart.

A regional strategy

The broad principles that have long governed India’s policy in the Middle East remain in place. The Persian Gulf, especially its diaspora and energy, is still the priority. In the past, this has turned India into something of a supplicant, forcing the country to tolerate the close security and ideological ties that Saudi Arabia and the UAE had with Pakistan. India’s concerns about radical Islamism also made secular dictators, from Saddam Hussein in Iraq or Hosni Mubarak in Egypt, seem like sources of stability. Whether it was building relations with Israel in the 1990s or keeping the door open for Iran, New Delhi walked on eggshells when it dealt with the Middle East. It kept its military activities east of the Strait of Hormuz and declined to have an active role in any multilateral initiatives, whether a peace process or a military action.

Now, however, India is facing a sudden reshaping of Middle East geopolitics. The influence and interest of the U.S. in the Gulf has ebbed, Iraq and Syria have been resurrected as Iranian proxies, and global oil and gas markets are shifting.

New Delhi is still struggling to understand the implications of its expanding footprint in the region. It has made gains in the economic sphere, and the UAE’s investments are enormously helpful to India’s ambitious infrastructure plans. Qatar and Saudi Arabia have also promised to invest tens of billions of dollars, but they lack the strategic interest shown by Abu Dhabi.

When it comes to the larger issue of bringing stability to the Middle East, India prefers to remain aloof

There have also been strategic gains. Pakistan has never been so isolated in the Gulf, with the UAE having almost cut off its relations and long-standing patron Saudi Arabia skeptical of Islamabad’s usefulness. Mindful of China’s growing presence in the Indian Ocean, New Delhi has made agreements to hold naval exercises off the UAE’s coast and been granted port facilities by Oman. Middle Eastern states with which India has had only tenuous relations, such as Turkey, Morocco and Jordan, have become more interested in India.

Nonetheless, when it comes to the larger issue of bringing stability to the Middle East, India prefers to remain aloof. In a 2016 speech, the Indian diplomat in charge of the region said that “despite [an] ever-changing political environment … we have managed to insulate our core interests from the negative fallout of regional developments.” He spoke of how India “remains cautious” that its Middle East policy “should not be misconstrued as being partisan or sectarian,” and how the country has stayed away from any alliances and avoided “the risk of entanglement.”

Senior Indian officials privately admit that as the country’s economic and strategic interests in the Persian Gulf expand, they wonder how long they can maintain their distance. One senior diplomat admitted in a closed-door session that India was experiencing “a paradigm shift” in its Gulf policy, moving away from the single concern of the Gulf diaspora to one where energy assets, counterterrorism, countering China and Pakistan, and an array of new bilateral relations were jostling for space. India did not have a grand strategy for the region, he said, but no one else in the world had one either.

Scenarios

India’s Middle East policies are just as hard to predict as the future of the region itself. But several scenarios are possible.

One is that the present status quo in the Gulf continues. India will be able to pursue its larger Middle East policy without much difficulty and continue to accrue benefits like energy assets, large capital inflows and the isolation of Pakistan.

In another scenario, India will find it difficult to tiptoe around two smaller fault lines which are likely to worsen in the coming months: the hostility between Israel and Iran, and the growing military activity in Afghanistan pitting Iran and Russia against the U.S. and the Afghan regime. In both areas, India will struggle to preserve its relationship with Iran. While no one expects New Delhi to become directly involved, India may find its aid program in Afghanistan under threat and attempts made to agitate its domestic Shia population.

The worst-case scenario would arise from the larger battle between Iran and the Sunni Arab states. If it were to spiral into an actual conflict, India could feel the fallout from spiking oil prices, falling remittances and the loss of its largest trading partner. Making progress toward its ambitious green energy targets could mitigate the potential impact of rising oil and gas prices.

The real question, in such a scenario, would be whether India would be prepared to break its final taboo regarding the Middle East and lead the way in finding a diplomatic or military solution to the region’s problems. In 2015, India’s then-foreign secretary said that when it came to the Middle East, India was “no longer content to be passive recipients of outcomes.” A full-scale Gulf crisis would put this claim to the test.

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