The West Asia Conundrum; China-Iran bonhomie and the challenge for India

The burgeoning China-Iran relationship has over the last two decades already led to considerable Chinese investment in the country.

By Commodore Anil Jai Singh

The recent explosion in Beirut caused by 2750 tons of ammonium nitrate seized from a ship in 2013 and stored in a warehouse which has resulted in large scale loss of life and property has given rise to political crisis and unrest amongst the people. This incident has refocused attention on the discontent that is constantly simmering just below the surface in West Asia which requires just a minor spark to conflagrate.

This incident is one more in the continuum of violence in West Asia which does not seem to have an end in sight. Whilst the settings and the actors keep changing, the Great Game in the region continues unabated. Characterised by extra-regional interference, warring states, internal insurgencies, political volatility, state-sponsored militant groups and rebel forces operating as proxies of the extra-regional powers, any such incident is bound to be viewed with suspicion. Speculation is rife about the involvement of states or state-supported actors with an intention to either alter the regional dynamic in their favour or exploit the instability to simply have a larger presence on this stage.

Iran’s Travails

This explosion has also revived the discussion on a series of explosions and fires that have rocked different parts of Iran in the last two months, including one in the Bushehr port in southern Iran on 30 July 2020 which left seven ships burning alongside. Just a day earlier, an aluminium factory was damaged by a fire. On 02 July, a fire was reported at Iran’s Natanz nuclear enrichment facility. Other significant incidents included an explosion near the Parchin military and weapons development base on 26 July followed by an explosion at a medical facility in north Teheran on 30 June which led to 19 fatalities. While Iran has been quick to state that it may be just a coincidence and is still investigating the incidents, suspicion of the involvement of Iran’s two main enemies, Israel and the US is not being ruled out as any damage to these important facilities could result in disrupting Iran’s nuclear and conventional capability and could, therefore, be more than just a coincidence.

Iran has been at the receiving end of sanctions from the west for over a decade and a half over its nuclear weapons programme and the US imposed sanctions on purchasing Iranian oil has dealt a severe economic blow. After a brief period of rapprochement with the west which led to the signing of the JCPOA (Joint Comprehensive Plan of Action) in May 2015 which limited Iran’s nuclearization efforts and eased the sanctions, President Trump, in his typical unilateral fashion literally pulled the rug out from under Iran’s feet in 2018 by pulling out of the JCPOA against the advice of his European partners despite no definite proof that Iran had violated any of its commitments. He also threatened to impose CAATSA on countries doing business with Iran which included India.

Enter the Dragon

With its back to the wall economically and subjected to crippling sanctions which are causing domestic unrest, the ruling dispensation in Iran reacted positively to China’s recent overtures to establish a deep economic and military relationship which had been discussed in 2016 as a ‘comprehensive strategic partnership’ but has yet to be formalised. The Chinese offer to progress this partnership includes an assurance of a USD 400 Bn investment over the next 25 years which will include major investments in improving Iran’s industry, transport and oil and gas sectors in return for substantially discounted ( 16-18%) supply of oil and gas. It also includes defence cooperation including training, exercises, development of military hardware and intelligence sharing. Additionally, China would have a presence at most ports in Iran including strategic ones off the Straits of Hormuz from where it could monitor and, if necessary, control the entry and exit of ships to and from the Gulf. This also includes the movement of the US Fifth Fleet based in Bahrain and could lead to a US-China confrontation with disastrous consequences for the fragile political stability of the region.

China will seek every opportunity to take advantage of the deteriorating Iran-US relationship to cement its own equation with Iran towards gaining a stronger foothold in West Asia as part of its larger consolidation strategy in the Indo-Pacific. The burgeoning China-Iran relationship has over the last two decades already led to considerable Chinese investment in the country.

The Chinese offer has also met with considerable resistance from the Iranian opposition and the fiercely independent people who fear that their country could become a victim of China’s debt-trap diplomacy. Knowing China, this would not be of much concern to it and would, in fact, be seen by it as an opportunity to further expand its footprint in that region.

China already has a ‘comprehensive strategic partnership’ with Saudi Arabia and the United Arab Emirates, both of whom have a tenuous relationship with Iran which has led to the view that China’s budding relationship with Iran could fall short of expectations if it in any way compromises the closeness of China-Saudi Arabia relations. However, from a purely strategic perspective, it makes sense for China to seek a balance. Iran’s location, with the Straits of Hormuz at one end and the Caspian Sea at the other and a strategic corridor (INSTC) from the Arabian Sea to Afghanistan and Central Asia linking the Belt and the Road makes this relationship invaluable for the success of the BRI. It also provides China with an assurance of uninterrupted crude oil supply at discounted prices to meet its growing domestic demand. China can also leverage this relationship to create an anti-US axis in the region and as a sub-set, jeopardise the security of India’s energy supplies. All these and more would be a powerful strategic motivation for China.

India’s Conundrum

India has deep historical and trade links with Iran over centuries and even in more contemporary times it has withstood the transition from the Shah to the Ayatullah. Iran has also been a major supplier of oil to India at favourable prices, a commodity that is of critical importance for India’s economic well-being. India has also very deftly balanced its relationship with Iran as also Saudi Arabia and Israel, two of its bitterest enemies. However, the post-JCPOA sanctions have led to India discontinuing its sourcing of oil from Iran with a deleterious effect on the relationship. This is evident in the lack of warmth that now characterises this relationship. Of greater concern though is the rough weather India is facing in its involvement with the development of the Chahbahar port, the Free Trade Zone and the rail link connecting Chahbahar with Zahedan. It is believed that India is no longer part of the rail project though Iran has said that India can always join later while India insists it is sitting out due to certain objections.

The Chahbahar port operations are being managed by an Indian firm. However, if the Iran-China agreement gets formalised, it will only be a matter of time before India is out of the picture. That will also be the effective end of India’s ambitious INSTC plan to bypass Pakistan and get a link from seawards to Afghanistan and Central Asia. The souring of the relationship with Iran or a cosy China-Iran relationship will be a strategic blow to India’s regional power aspirations besides providing China a firm and definite strategic advantage over India in the Indian Ocean region. China is already shaping a narrative which is projecting India as a pro-US entity in the region and if it succeeds in creating an anti-US axis in the region, India could face considerable headwinds in its interaction with the region. The outcome of the forthcoming US Presidential election would indicate the future US trajectory in this region.

Security Vulnerability

China’s expanding footprint in the Indian Ocean is of serious concern to India. The growing presence of PLA Navy ships and submarines has been flagged by successive Chiefs of the Naval Staff. China’s ambitious port and infrastructure development programme, the Belt and Road Initiative (BRI) has effectively encircled India ( a larger String of pearls) and a presence in Iran with access to Iranian ports , particularly those located off the Straits of Hormuz like Jask will provide China the leverage to jeopardise the security of India’s energy supplies from the Gulf which constitutes a major portion of India’s oil and gas imports. Although India is attempting to diversify its sources of crude oil and gas, a fair portion of it will continue to be sourced from the Gulf.

Instability in West Asia either through conflict, internal tensions or insurgency has a direct impact on the large Indian diaspora living and working in the region whose remittances to India contribute handsomely to India’s foreign exchange reserves and supports India’s large import bill. The exodus of Indian nationals who have lost their jobs due to the economic slowdown in these countries as a consequence of the pandemic will have a telling effect on the Indian economy in the medium to the long term.

India’s Maritime Security Challenge

The Indian Navy is the most powerful navy in the Indian Ocean and has a distinct edge over the PLA Navy in these waters, notwithstanding the latter’s superiority in overall numbers. However, the PLA Navy is adding 20-25 major warships and submarines to its fleet annually whereas the Indian shipyards have not been able to deliver a single destroyer or frigate to the Indian Navy in the last three years. China’s growing investment in its maritime power is leading to a widening asymmetry between the two navies which will have a definite impact on India’s maritime security. China has established a base at Djibouti at the western extremity of the Indian Ocean and will soon be in full control of the Gwadar port on Pakistan’s Makran coast. If India indeed loses the advantage in Chahbahar and the Iran -China relationship leads to Chinese naval presence there, the security of India’s oil supply from the Arabian Gulf can be seriously jeopardised as the PLA Navy would be able to control the Straits of Hormuz through which all tankers entering and exiting the Gulf have to pass. India would then be forced to deploy its warships to escort its tankers with the additional hazard of a possible escalation in the face of provocation. In fact, China and Iran together could block all traffic to and from the Gulf ( which Iran has threatened to do in the past but has refrained from doing so). Any disruption in India’s oil supplies will have an adverse effect on India’s economy and would therefore definitely elicit a response from India.

It is not only the safe passage of tankers from the Gulf which will be of concern. The port of Gwadar in Pakistan is located barely 76 nautical miles from Chahbahar and 250 odd nautical miles from Bandar Jask, which will also have a Chinese presence once the China-Iran deal goes through. The PLA Navy will, therefore, be able to effectively exercise sea control over a large part of the north and west Arabian Sea and be in a position to disrupt India’s important Sea Lines of Communication (SLOC) and its commerce. Combined with its other Belt and Road port development projects across the Indian Ocean, it will be able to monitor and even interdict global shipping transiting through the Indian Ocean.

Conclusion

West Asia remains a simmering cauldron of instability and continues to be exploited by extra-regional powers through their state and non-state proxies. Poor governance, ideological differences and domestic tension fuels further unrest. India, which has traditionally had good relations with this region is in danger of losing out to China as the latter seeks a greater strategic presence in the region through economic largesse and political leverage. It is likely to formalise its ‘comprehensive strategic partnership’ with Iran promising tangible outcomes thus leaving India out in the cold in Chahbahar and the INSTC. This will not only have an adverse impact on the historic India-Iran relationship but also affect India’s strategic presence and influence on the region besides threatening India’s energy and maritime security.

(The author is Vice President Indian Maritime Foundation. Views expressed are personal).