Senior Indian government ministers are showing fresh enthusiasm for building an oil and gas pipeline to Iran, in a move likely to add further tensions to US-India relations.
Growing support for the pipeline, which would pass through Pakistan, comes as hopes fade for a hasty conclusion to a historic nuclear power agreement with the US. It had been assumed India would abandon plans for the pipeline once the nuclear deal was finalised since its energy needs would have been addressed.
Palaniappan Chidambaram, India’s finance minister, said after meeting his Iranian counterpart in Washington on Monday that the pipeline was “completely doable” and “we should do it – Iran has the gas and we need the gas”.
He added: “He asked me about our commitment to the pipeline. I said we remain committed.”
The finance minister’s comments risk irritating the administration of George W. Bush, US president, and adding to its disappointment at India’s stalled efforts to push through a bilateral nuclear co-operation agreement. Manmohan Singh, the Indian premier, last week told Mr Bush that opposition from leftist members of India’s Congress-led coalition government meant it was having difficulties implementing the deal.
People close to Mr Singh, who has twice publicly shaken hands on the deal with Mr Bush, say he is “embarrassed” by the government’s inability to move ahead. There are also a growing number of reports that he is considering resigning.
Nicholas Burns, the US undersecretary of state for political affairs, has said Washington hopes “very much that India will not conclude any long-term oil and gas agreements with Iran”.
India has been blowing hot and cold on the pipeline during the nuclear talks with Washington but Pakistan and Iran recently announced their intention to sign a memorandum of understanding on the pipeline and a related sale and purchase agreement by the end of this month.
By increasing the potential size and profitability of the pipeline, India’s participation could overcome financing obstacles at a time when Pakistan’s turbulent domestic political situation has made it difficult to attract the required $5bn-7bn in private capital.
Under the 1996 Iran-Libya Sanctions Act, the US could in theory impose sanctions on countries that assist Iran in exploiting its petroleum resources. [Picture the effect of the US imposing sanctions on India. Unthinkable?]
But New Delhi insists that its decision on whether to participate in the pipeline will be based solely on an assessment of its own national interest.
“How India handles ever-tighter US-led sanctions against Iran will determine whether a degree of strain is injected into the Indo-US strategic relationship just as it is beginning to unfold,” said N.K. Singh, a political analyst. “There are 40m Shias in India and I don’t think the political parties will be unmindful of how all this plays out in terms of the Muslim vote in general and the Shia vote in particular.”
On the other hand, here is Dr. Singh relating the challenges he faces in gaining the assent of his Communist coalition members (comrades?) on reaching a deal over nukes with the US:
Manmohan Singh, India's prime minister, has been forced to tell US President George W. Bush that his government is struggling to win domestic support for a historic nuclear agreement between their two countries.
In a telephone call on Monday, Mr Singh told Mr Bush "that certain difficulties have arisen with respect to the operationalisation of the India-US civil nuclear co-operation agreement"...
US officials said they still held out hope that Mr Singh would be able to pull off a domestic political compromise. "This is a very important, even historic, agreement," Nicholas Burns, the US undersecretary of state, who negotiated the deal, told the Financial Times.
"While we would obviously not interfere in the internal discussions in India, we will work closely with the Indian government to bring this to a successful conclusion."
But US officials privately said that India had only a few weeks to get its internal house in order before it started missing deadlines.
To implement the deal, India must negotiate a safeguards agreement with the International Atomic Energy Agency, persuade the 45- country Nuclear Suppliers Group to permit nuclear commerce with it and secure the backing of the US Congress.
"If this starts drifting into 2008 then it becomes decreasingly likely Congress will have no time to vote on it - especially in an election year," said a US official. "The next administration is highly unlikely to want to inherit a deal without -renegotiating it - and this took two and a half years to negotiate."
Analysts said India's credibility would suffer if the deal collapsed.
Advocates of the deal have expressed disappointment with the Congress-led coalition government's decision to put the agreement on hold rather than risk a confrontation with the communist parties that could have triggered an early election.
"The US will be thinking the Indians are very strange people who do not know what's in their national interest," said K. Subrahmanyam, a strategic affairs analyst and chairman of the Indian government's Task Force on Global Strategic Developments. Seema Desai, an analyst at Eurasia Group, said the sudden change of sentiment was "all the more puzzling given that a panel appointed to look into the objections of the left had not yet completed its deliberations on the issue".
The government's apparent abandonment of a confrontational approach vis-à-vis its leftist backers came after political parties in the United Progressive Alliance coalition warned Mrs Gandhi of the dangers of triggering an election.