The Hindu Business Line : The Persian Gulf Imbroglio

Having rejected the NPT, New Delhi would be well advised to stop preaching its virtues to Iran. It would be better advised to work with the Arab neighbours of Iran, to enable them to cooperate with Teheran on their proposals to make the Persian Gulf a nuclear weapons free zone.

Iran's former President Hojatoleslam Mohammad Khatami was in Delhi last week. Those whom he met were fascinated by his candour on such issues as Islamic Jurisprudence where he acknowledged that Islamic laws had to be amended to meet the imperatives of modernity, his commitment to the rights of women and belief that the future of mankind lay not in a "Clash of Civilisations", but a "Dialogue amongst Civilisations". Khatami spoke with pride of Iran's historic contributions to human civilisation and progress, in its pre-Islamic days.

But when the discussions turned to Iran's nuclear programme, the normally soft-spoken Khatami asserted that surrendering Iran's rights and forsaking national pride was unthinkable for any self-respecting Iranian.

US' good turns to Iran

Iran has many reasons to be satisfied with actions of the US President, Mr George Bush, which have led to its emergence as the dominant power in the Persian Gulf. The ouster of the Taliban in Afghanistan (which persecuted the country's Shias) and the invasion of Iraq, which led to the end of the secular, but Sunni-dominated Baathist regime there, have resulted in a situation where Iranian concerns about its border security have been largely assuaged.

Iran's Arab neighbours, led by Saudi Arabia, which are members of the Gulf Cooperation Council (GCC), are now left with the difficult choice of either recognising Teheran's strategic importance, or facing the prospect of restive Shia populations and growing Iranian popularity amongst Arab masses.

It is in this context that one has to see recent Saudi initiatives such as the Kingdom's effort to broker a peace between the Fatah and Hamas in Palestinian territories and King Abdullah's unprecedented comments at the Arab League Summit in Riyadh, where he described Iraq as being "under the shadow of an illegitimate foreign occupation".

The seizure of 15 British military personnel patrolling the contentious Shatt-al-Arab waterway at the mouth of the Persian Gulf was another example of Iranian muscle-flexing. Many would, however, argue that the seizure was a response to American and British attempts to destabilise the clerical regime in Iran.

UN Action

These developments have arisen just after the UN Security Council unanimously adopted Resolution 1747 banning Iranian arms exports (that are insignificant in any case), freezing the overseas assets of 28 additional officials and institutions linked to Iran's nuclear and ballistic programme, and restricting financial aid and loans to Iran. The Resolution gives Iran 60 days to comply with UN demands to suspend uranium enrichment, or face further "appropriate measures".

China's Permanent Representative to the UN, Guang Ya, said that Beijing supported the resolution because it was concerned about nuclear proliferation. (This was clearly a case of Satan rebuking Sin, given China's transfers of nuclear weapons technology and designs to Pakistan, its characterisation of the nuclear Non-Proliferation Treaty (NPT) as an instrument of "hegemony" for over two decades and its readiness to cooperate with Iran on nuclear enrichment till 1995, when American pressure forced it to back off.)

The passage of Resolution 1747 demonstrates the growing assertiveness of Russia and China to protect their respective national interests. China imports 13 per cent of its oil requirements from Iran. In November 2004, China was given a 50 per cent stake in Iran's Yadavaran Oilfields and has concluded a Memorandum of Understanding to buy 250 million tonnes of LNG (liquefied natural gas) estimated at $100 billion from Iran, over 30 years. China would thus, not countenance any UN sanctions that undermine its energy security interests.

Russia, China Interests

The Russians have emerged as major weapons suppliers to Iran and Russian firms have a keen interest in the development of Iran's gas and oil resources. Russian companies have shown considerable interest in building an Iran-Pakistan-India gas pipeline. Thus, while Russia and China may pay lip service to nuclear proliferation, they will not back any proposals for UN sanctions that hurt their interests. What remains to be seen is how Iran stands up to American pressures on international banking and financial institutions to desist from lending to Iran. There are indications that these measures are increasingly pinching Iran and a number of European and American banking and financial institutions are becoming wary of dealing with Iran and in many cases, cutting back on their involvement in Iran.

There is no provision in the NPT that debars Iran from enriching uranium under the International Atomic Energy Agency safeguards. Under its earlier safeguards agreement with the IAEA, Iran was under no obligation to report the existence of its uranium enrichment facility at Natanz to the IAEA, while it was still under construction. On October 21, 2003, pursuant to negotiations with the European Union (EU), Iran agreed to suspend its nuclear enrichment and permit the IAEA more intrusive inspections under an Additional Protocol. In return, the EU explicitly recognised Iran's right to undertake its nuclear programme under the NPT.

The EU shifted the goalpost in August 2005 and demanded that Iran end its enrichment programme. Iran retaliated by resuming enrichment. Subsequent discussions in the IAEA and the Security Council have led to a standoff, with Iran refusing to suspend its nuclear enrichment (still under IAEA inspections) as a precondition for a comprehensive dialogue with the US and the EU.

Indian Concerns

Iran appears determined not to buckle under American pressures to end its uranium enrichment programme. Development of nuclear weapons by Iran will, however, evoke concern among its Arab neighbours and have a profoundly destabilising impact in the Persian Gulf, from where India gets 70 per cent of crude oil and from where some 3.8 million Indians remit back over $15 billion annually.

Any American military action against Iran will have disastrous consequences, which would make the American misadventure in Iraq seem like a picnic. Any diplomatic solution will, therefore, have to involve recognition of Iran's right to have uranium enrichment facilities, with an international equity stake in these facilities and strict controls on the levels and quantum of enrichment, under IAEA safeguards. Iran, in turn, will have to stop acting as spoiler in the West Asia peace process and cooperate with the approach of its Arab neighbours and by eschewing support for extremist groups.

India should not be deterred by external pressures on its energy and other cooperation with Iran. In January 2005, Iran agreed to supply LNG for a 25-year period and gave India stakes in the development of its Yadavaran and Jufeir oilfields. Under these arrangements India is to have a 20 per cent stake in the development of Iran's largest oilfield in Yadavaran, where the Iranians have a 30 per cent stake and China a 50 per cent stake. India has also secured a 100 per cent stake in the Jufeir oilfield, with an estimated production capacity of 300,000 barrels per day.

Iran is now dragging its feet and refusing to implement these agreements. It has demanded renegotiation of the agreement for supply of LNG. India should make it clear that unless the Iranians honour existing commitments it would unrealistic for Iran to expect conclusion of any new agreement.

Baluch problems

With Pakistani pipelines being blown up daily in Baluchistan, building an Iran-Pakistan-India gas pipeline is a recipe to promote energy insecurity. India should agree to the pipeline only after the Pakistani President, Gen Pervez Musharraf, addresses Baluch aspirations and peace is restored in Baluchistan. Further, having rejected the NPT, New Delhi would be well advised to stop preaching its virtues to Iran. It would be better advised to work with the Arab countries neighbouring Iran, to enable them to cooperate with Teheran on their proposals to make the Persian Gulf a nuclear weapons free zone.

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