The Hindu Business Line : Challenges and change in Persian Gulf

With West Asia in a ferment after the invasion of Iraq, India needs to have a policy that looks west too, both to be wary of any looming threats and to take advantage of opportunities, says G. Parthasarathy.

MILITARY INTERVENTION in Iraq could well prove to be a historic blunder for the United States, resulting from setbacks like those it faced in Vietnam, Lebanon and Somalia. Claims that Saddam Hussein was a menace because of his insatiable desire for weapons of mass destruction have been rejected.

Assertions that he was hand-in-glove with the Al Qaeda have similarly been proved baseless. American international credibility has been so badly eroded by the arguments put forward to justify military intervention in Iraq, that any claim that Iran is on the verge of acquiring nuclear weapons will evoke scepticism, even within the US. Around 2000 American lives would have been lost in Iraq by the end of this year. Domestic opposition to the American involvement there is growing.

The Pentagon recently claimed that the war against insurgency in Iraq is being won. Insurgents made up of erstwhile Baath Party supporters of Saddam Hussein and Wahhabi-oriented foreign fighters from Saudi Arabia and elsewhere in the Arab world continue to pose a potent challenge to the American forces and to the newly-recruited Iraqi security forces under the Prime Minister, Mr Ibrahim Jaafari.

The Americans were hoping that they could devise an exit strategy by getting the Iraqis to adopt a new secular constitution. They have found that the ethnic and sectarian divide between the Arab Sunnis who constitute around twenty per cent of the population, the Shias who constitute over 60 per cent of the population and the Kurds who constitute around 20 per cent of the population is so wide that evolving a national consensus for a future constitution is a daunting task.

On August 28, the Iraqi Parliament accepted a draft constitution that provides for a federal set up in which the Shia and Kurdish minority areas in Northern and Southern Iraq would enjoy considerable autonomy. These regions will control revenues from all future oil and gas projects.

The Sunni minority that has ruled the country for centuries finds these provisions unacceptable, as they would be denied the revenues from the vast, untapped resources of oil and gas located in Kurdish- and Shia-dominated Regions in Northern and Southern Iraq. Led by the Grand Ayatollah Ali al-Sistani, the Shias realise the benefits of democratic governance and have organised themselves accordingly.

While the Americans have secured provisions in the Constitution that will give their oil companies a role in the future exploration of the vast oil and gas resources of Iraq, they have endorsed provisions that will give the Shia clergy an important say in national affairs. Iraq could face serious divisions if the current differences between the Shias and Sunnis are not effectively addressed.

The emerging changes in Iraq will inevitably have a profound impact on developments in its Arab neighbours in the Persian Gulf — Saudi Arabia, Kuwait, Oman, Qatar, Bahrain and the United Arab Emirates — all members of the Arab Gulf Cooperation Council (GCC). The oil-rich Eastern Province of Saudi Arabia has a Shia majority that has for long been discriminated against and treated as "Kuffar" (Kaffirs).

Shias constitute 30 per cent of the population of Kuwait and are a majority in Bahrain. The empowerment of the Shias in Iraq will inevitably lead to a situation where countries such as Saudi Arabia can no longer ignore Shia aspirations.

More important, Saudi Arabia's policies of insulating the monarchy against Wahhabi extremism by funding and promoting such extremism across the world are becoming difficult to sustain. The Saudi monarchy itself is today a target of the supporters of Osama bin Laden and faces pressures for democratisation and representative governance.

How do these developments affect India?

First, over 70 per cent of our oil imports are from the Persian Gulf countries. With increasing dependence on imported oil and gas to meet our growing energy needs, stability in this region is crucial for our welfare and well-being.

Second, around 3.7 million Indian nationals live in the six GCC countries. They remit back around $8 billion annually to India. These remittances are crucial in making our balance of payments position and foreign exchange reserves comfortable. While there have been exchanges of high level visits with these countries, there has been no significant investment in India by them.

Even projects in such crucial areas as gas and fertilisers with friendly countries like Qatar and Oman take years to finalise. No Prime Minister after Indira Gandhi has developed a personal rapport with the rulers of GCC countries.

With oil prices pushing $70 a barrel, the GCC countries will accumulate large surpluses and also commence higher spending on domestic development. This could, however, be jeopardised if the violence now engulfing Iraq and growing in Saudi Arabia, escalates, or spreads.

According to the US National Energy Policy released in 2002, the Gulf Region will supply between 54 per cent and 67 per cent of the world's crude oil by 2020. Saudi Arabia's production capacity will rise from its current level of 9.4 million barrels per day (mbpd) to an estimated 22.1 mbpd in that period. Iraq's oil production, currently at less than 2 mbpd, will exceed 10 mbpd in the same time.

While the Western world today consumes around 60 per cent of Gulf oil production, 75 per cent of this production will be consumed in Asia by 2015, with China and India emerging the fastest growing importers of oil from the Gulf. India thus has a vital stake in stability and cooperation with the countries in the Gulf Region.

While the foreign and security policies of GCC member-states are significantly influenced by their close relations with the US, it is not clear how the new Iraq will view its international relations, after the American military presence there winds down. The resurgence of Shia assertiveness will also inevitably affect the politics of the region.

Further, while the prospects of some improvement in Iran-US relations cannot be ruled out, historic Persian-Arab rivalries and suspicions will continue in the Gulf region. These rivalries are so strong that Indian diplomats refer to the region as the "Arab Gulf" when talking to Arab States and as the "Persian Gulf" in dialogue with the Iranians. To avoid controversy, the Ministry of External Affairs describes it merely as the "Gulf" Region.

Given its human, oil and gas resources and civilisational strengths, Iran will be a dominant power in the region. New Delhi, therefore, has to strengthen its strategic partnership with Iran in a nuanced, diplomatic manner that takes into account existing power equations in the region.

Oil imports of the US from the Gulf today constitute only around 11 per cent of its overall imports of crude.

Washington will, however, continue to maintain a strong military, diplomatic and economic presence in the region, where American companies have a firm foothold.

China is emerging as a rival to the Americans, with its growing investments in the development of oil and gas in Iran and its readiness to supply weapons including missiles to prospective buyers.

A possible Chinese naval presence through base facilities in the Pakistani port of Gwadar, strategically located at the entrance to the Persian Gulf, cannot be ruled out in the long term.

A major achievement of the P. V. Narasimha Rao government was its introduction of a new "Look East" policy that has promoted cooperation with our eastern neighbours. The time has perhaps come for us to fashion a new and more pro-active "Look West" policy as well, to deal with the challenges that we now face to our west.

(The author is a former High Commissioner to Pakistan.)

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