India’s relationship with Iran has garnered headlines in the past few years, and for predictable reasons. The US’ unrelenting pressure and India’s deft diplomacy in guarding its energy security, with elements of drama built into the story, ensured that Iran got prime-time attention. But it’s time now for Baghdad to edge back into the Indian mindscape as New Delhi gears up to scale up its oil imports from Iraq and galvanise the bilateral relationship that is bound by a confluence of economic, energy and strategic interests.
Khurshid’s Visit to Iraq
And for a change, Iraq has bounced back into India’s strategic calculus. The renewed focus on Iraq will be telescoped in the June 19-20 visit of India’s Foreign Minister Salman Khurshid to Baghdad, the first visit by a senior minister from India to Iraq in over two decades.
Khurshid’s well-timed trip is set to reinforce India’s commitment to the reconstruction and resurgence of Iraq and opens up new avenues for cooperation. India remains committed to support the ongoing post-war reconstruction and development efforts in Iraq, said India’s Ministry of External Affairs said, adding that the minister’s visit will add “an impetus to our bilateral relations and elevate our ties to a higher level.”
Way back in 2005, during Prime Minister Manmohan Singh’s special envoy Chinmaya Gharekhan’s visit to Baghdad, India had pledged to help rebuild the war-ravaged Persian Gulf nation and committed US$10 million to the International Reconstruction Fund Facility for Iraq (IRFFI). India has also channelled an additional US$20 million through the United Nations.
Energy is, undeniably, the prime driver of India’s reinvigorated Iraq diplomacy, but to overemphasise this point is to miss the wood for the trees. True, Iraq has displaced Iran as the second largest source of oil supply for India, but it’s no great mystery to figure that out. Apart from the US and EU sanctions that have imbued the pursuit of Iraqi oil with an added zeal, there are also other practical reasons accounting for the shift. For one thing, Indian refineries geared to process the Iranian oil find the Iraqi oil a near-perfect substitute in terms of quality. For another, India’s energy needs, fuelled by its growing economy and burgeoning population, are seemingly limitless, and a thirsty man just has to find the nearest well to quench its thirst.
Baghdad has been more than responsive to India’s overtures, with a senior Iraqi minister promising to increase the supply of Iraqi oil to India by 30 per cent. If that happens, Iraq looks set to retain its number two position as the supplier of oil to India for many years to come. According to the US Energy Information Administration (EIA), India and the US imported 19 per cent each of Iraq’s oil production, making the two countries top destinations for Iraq’s crude oil exports.
Business with Baghdad
The oil push will also rejuvenate India-Iraq economic cooperation, which had languished in the aftermath of the second Gulf War, but has been steadily building a momentum of its own quietly in the last few years. Contract projects, the mainstay of India’s economic connect to Iraq, are showing signs of an upswing. The post-war reconstruction of Iraq requires billions of dollars and has unleashed fresh opportunities for those in the business. India’s energy hunger is matched by Iraq’s appetite for infrastructure, specially in oil exploration and refinery.
Many Indian companies have a strong track record in delivering quality projects in Iraq, which will help them to stand out amid the clutter and competition. There are encouraging developments on this front. India’s corporate giant Reliance Industries Limited (RIL) has been short-listed for development of the multi-billion-dollar Nasiriya oilfield project. Another Indian company, Jindal SAW Ltd., has garnered a $198 million contract to build and operate a factory for manufacturing oil and gas pipeline in southern Iraq. With stability returning to Iraq, Indian companies are eying Iraq afresh as a new land of opportunity and hope to leverage robust goodwill India enjoys among the powers-that-be as well as ordinary people in Iraq.
Additionally, training and capacity-building initiatives, traditionally strong points of India’s thrusts into the developing world, are poised to reinforce the soft power advantage for India in the West Asian country, which has been unabashed about its love for Bollywood films.
There are also weighty strategic reasons that will ensure that the two countries invest requisite diplomatic capital to enhance areas of mutual benefit. India and Iraq have shared concerns over terrorism and Afghanistan, and closer cooperation in these two areas suit mutual interest.
And then, there is the China factor, which can’t be dismissed blithely. It may have become a cliché to cite China as the wake-up call for India’s increased diplomatic attention to some countries and regions, but it would be remiss not to mention Beijing’s increasingly proactive forays into the West Asia region. Iraq, after all, accounted for 13 per cent of China’s oil exports last year. Indian policy-makers have taken note, but are a little wary of some analysts dragging China into everything New Delhi does anywhere. India has natural stakes in peace and stability in the West Asia region, which accounts for 70 per cent of India’s oil imports and is home to 6 billion-plus Indian diaspora, who send nearly $40 billion in annual remittances back home.
- Manish Chand is Founder-CEO and Editor-in-Chief of India Writes Network (www.indiawrites.org) and India and World, a pioneering magazine focused on international affairs. He is CEO/Director of TGII Media Private Limited, an India-based media, publishing, research and consultancy company.
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