The controversy over the ongoing Non-Aligned Movement (NAM) summit has shone the spotlight on an organisation that tends to be seen as an anachronism. Even before the Cold War formally ended, the NAM was struggling beneath the weight of its own contradictions.
In recent years, it has sought to cast itself in a new mould, focusing on global governance, environmental issues and food security. But in so doing, it has had to compete for space and attention with numerous international forums that focus on these issues.
The current summit is in the news thanks to its host, Iran. In the context of Iran’s ongoing face-off with the US and its allies, both sides have imputed greater importance to the summit than is perhaps warranted. Tehran claims that it is a show of solidarity against Western attempts to isolate it. For much the same reason, the US has publicly opposed the UN Secretary General’s decision to attend the summit.
India has historically had a leading role in the NAM. The 120-member grouping continues to be important to India — primarily for the opportunity it affords to demonstrate leadership on a global stage. On this occasion, though, there are more immediate interests at stake.
BILATERAL TRADE ISSUES
This is the first prime ministerial visit to Iran in over a decade. And there is a range of important issues that Prime Minister Manmohan Singh will want to take up in his one-on-one meetings with President Mahmoud Ahmadinejad and the Supreme Leader, Ali Khamenei.
For a start, there are bilateral economic issues. Iran remains a key source of energy for India. It accounts for about 11 per cent of India’s total oil imports, amounting to over $12 billion a year. But US sanctions on Iran have complicated bilateral trading relations.
Following the closure of the Asian Clearing Union mechanism for payments, India and Iran reached an agreement earlier this year on a rupee payment mechanism for 45 per cent of the oil imported by India. This not only facilitates the import of oil, but could also open up new opportunities for Indian exports to Iran. In 2011-12 these amounted to a mere $2.5 billion of the total trade of $15.9 billion. India’s largest export item to Iran is rice. We can surely do better. A political commitment at the highest level will give much needed impetus to this process.
Another problem related to Indian imports of Iranian oil is insurance. With EU sanctions coming into force in July, European firms have refused to offer insurance cover for ships carrying crude from Iran. Indian insurance companies have stepped into the breach to a limited extent.
Recently, New India Assurance and United India Insurance extended a total cover of $100 million to an Indian ship that ferried 85,000 tonnes of crude oil for Mangalore Refinery. This amounted to only a tenth of the cover usually offered by European companies. In the longer run, this can be neither a satisfactory nor a sustainable arrangement. Iran, for its part, has also offered insurance of ships carrying its oil. Indian officials will want to explore this in greater detail during interactions with their Iranian counterparts.
SYRIA FALL-OUT
Third-party effects of American sanctions are unlikely to cease any time soon. StanChart’s recent run-in with American financial authorities shows that the US is more than willing to use the “exorbitant privilege” afforded by the dollar being the international reserve currency.
Bilateral issues apart, an important trilateral question is likely to come up for discussion between India, Iran and Afghanistan. This relates to the port of Chabahar and its connectivity with Afghanistan. Given the fact that the overland trade route to Afghanistan and Central Asia through Pakistan remains practically closed to India, the route via Chabahar has assumed great importance.
Iran has its ideas for industrial development in and around Chabahar and for establishment of rail links with Afghanistan. India has done a feasibility study of its own. All these are likely to be discussed at the officials’ level. Here, too, it would be helpful to have agreed political directives.
Finally, there is a basket of regional issues pertaining to the situation in West Asia. These are bound to come up in the bilateral meetings as well as the summit. The most pressing one, of course, is Syria. India has simultaneously criticised gross abuses of human rights by all sides in the conflict and insisted that a transition must be led by the Syrians and not imposed by external players.
This is likely to sit well with the NAM’s collective thinking on this issue. But India should also use this opportunity to consult extensively with other regional players and ponder its options in the event that the crisis rapidly spirals downwards. A related concern is the intensifying proxy war between Saudi Arabia and Iran, both of whom are supporting their clients and allies in Syria. The sectarian overtones of this conflict could hold grim consequences for the rest of the region. Equally concerning is the possibility of a military strike on Iranian nuclear facilities by Israel. Tel Aviv has tried to ratchet up the pressure on Iran throughout the summer.
AVOIDING CONFLICT
A military stand-off between Iran and its adversaries, let alone actual conflict, would threaten Indian interests throughout the region. The most important of these is the presence of six million Indian expatriate workers. Further, a crisis involving Iran could jeopardise shipping through the Straits of Hormuz. Even if the Straits are kept open, insuring the ships would become rather difficult.
It is in India’s interest, then, to use this opportunity to urge restraint on all sides. India’s equities in West Asia span the sharpening divide between Iran on the one hand, and Saudi Arabia and Israel on the other.
New Delhi must ensure that it is not placed in a position where it has to make avoidable choices. This was one of the central objectives of the idea of non-alignment as conceived by Jawaharlal Nehru. The NAM’s contemporary relevance may be dubious, but non-alignment remains central to Indian foreign policy.
(The author is Senior Fellow, Centre for Policy Research.)