Indian Prime Minister Narendra Modi and Iranian President Hassan Rouhani in Ufa, Russia, July 2015. 
BRICS / SCO Photohost / RIA Novosti / REUTERS

For decades, India’s commitment to nonalignment has granted it close relationships with states that are at odds with one another. During the Cold War, India refused to ally with either the Western capitalist countries or the Soviet-led Communist bloc, making use of its postcolonial legacy to nonviolently push for cooperation among the countries of the so-called Third World. Today, in the Middle East, India has successfully maintained ties with Iran, Israel, and Saudi Arabia—three countries that are locked in competition.  

Given that the rivalry among those three states could eventually lead to war—endangering India’s interests in the Middle East, where it sources most of its energy and where millions of Indian emigrants live—New Delhi must carefully navigate the growing divide in the Persian Gulf. If it does so successfully, it can avoid getting entangled in regional tensions and consolidate its position as a key player in the Middle East. 

CAUGHT IN THE MIDDLE

The modern rivalry between Iran and Saudi Arabia began just after the 1979 Iranian Revolution, when Iran called on Muslims across the Middle East to replace their governments with theocratic regimes like its own. Tehran’s zeal for revolution rattled Saudi Arabia, which began to back Sunni groups to counter it. By bankrolling Iraq’s bloody invasion of Iran in 1981, the Saudis and their Arab Gulf allies set the tone for the bitterness that has lasted to the present.

Today, Saudi Arabia is waging a war against Iranian-backed Houthis in Yemen; in Syria, Iran supports the regime of Bashar al-Assad against Saudi-funded Sunni fighters. In June, a Saudi-led coalition imposed a blockade on Qatar, which Saudi officials claimed had cozied up to Tehran and supported terrorist groups—a move to consolidate Riyadh’s regional status and isolate Iran from its neighbors.

A Saudi soldier near the border with Yemen, April 2015.
Faisal Al Nasser / REUTERS

The competition between Iran and the Saudi-aligned Gulf states is a dilemma for India, because it has deep interests on both sides of the divide. Trade is the first among these. India’s trade with the Gulf Cooperation Council—a bloc comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates—rose from $5.5 billion in 2005 to $137.7 billion in 2014–15, making the GCC India’s largest trading partner in the Middle East. (India’s trade with China, in comparison, amounted to some $70 billion in the same period.) India’s trade with Iran, meanwhile, came to $16 billion in 2014. It is set to grow further, thanks to the removal of nuclear-related sanctions on the country.

A direct conflict between Iran and Saudi Arabia could shatter these ties, in part by cutting off the shipping lanes on which regional trade depends. India would suffer by backing either side. If it cut its economic ties with Iran, it could lose some $30 billion in trade and economic commitments in areas from infrastructure to oil and gas. The costs of ending relations with the GCC would be even greater.

India’s massive diaspora in the Gulf is another reason that it cannot afford a conflagration in the Middle East. Some 5.5 million Indians live in the six countries of the GCC. Between 2015 and 2016, they sent nearly $36 billion of their earnings home as remittances. A Iranian-Saudi war would require India to evacuate many of those citizens—far more people than it pulled out during the Gulf War, when it airlifted around 100,000 Indians from Kuwait.

The Gulf War also interrupted oil production, driving up prices and pushing New Delhi to the brink of bankruptcy. India still gets most of its energy imports from the GCC countries, drawing some 750,000 barrels of oil per day from Saudi Arabia alone. If a war suddenly disrupted those supplies, it would deal a blow to critical sectors in India’s economy, such as manufacturing, refining, and transportation. In 2016, oil provided more than 25 percent of India’s energy and accounted for over 40 percent of the power in its transportation sector. Together with gas, oil is crucial to India’s drive to modernize its military and increase its wealth. That helps explain why India’s 2009 Maritime Doctrine, a naval strategy document, declared the Persian Gulf and Arabian Sea areas of vital importance.

Whether India will become a leading power depends partly on its ability to compete with China’s influence. Beijing has become a major investor on both sides of the Persian Gulf, most recently through infrastructure projects under its One Belt, One Road initiative. Indian officials regard those efforts as attempts either to encircle their country or to sideline its economic interests.

This, too, shapes New Delhi’s approach to the Iranian-Saudi split. India is particularly keen to ensure that Iran does not fall into China’s orbit, because Iranian ports offer India access to the Persian Gulf and Central Asia that bypasses Pakistan. (Last year, India signed a deal with Afghanistan and Iran to develop the port of Chabahar, on the Gulf of Oman.) New Delhi is unlikely to limit its ties with Tehran even if the United States and GCC countries pressure it to do so.

Israeli Prime Minister Benjamin Netanyahu and Indian Prime Minister Narendra Modi on the beach near Hadera, Israel, July 2017.
Kobi Gideon / Courtesy of Government Press Office / GPO / Handout via REUTERS

NAVIGATING THE DIVIDE

All of these constraints mean that India will probably hedge its relationships in the Middle East, maintaining strong ties with states on both sides of the Iranian-Saudi split but eschewing binding alliances with any of them. New Delhi has already demonstrated a penchant for this strategy. In the past 18 months, Modi has made official visits to Saudi Arabia and Iran, pledging to cooperate with both states on issues from counterterrorism to trade and investment. And India responded carefully to Saudi Arabia’s spat with Qatar, issuing an official statement that implicitly challenged Riyadh’s blockade by calling for “non-interference in the internal affairs of other countries.”

The Iranian-Saudi rivalry could also give India the chance to deepen its ties with Israel. In recent decades, India has been reluctant to publicly acknowledge its growing relationship with that country, for fear of angering Indian citizens and Middle Eastern governments sympathetic to the Palestinian cause. Today, however, the governments of Saudi Arabia, the United Arab Emirates, Bahrain, and Kuwait care more about curbing Iran’s influence than about resolving the Israeli-Palestinian conflict. Like the Gulf states, Israel wants to prevent Tehran from establishing a land corridor toward the Mediterranean through Iraq, Lebanon, and Syria—and that means that Israel can sell weapons to India without jeopardizing its relations in the region. Indeed, Modi did not publicly mention the Israeli-Palestinian conflict during his visit to Israel in July, breaking from a long tradition in Indian-Israeli diplomacy.

As New Delhi seeks a leading role in Asia in the decades ahead, it will continue to develop its ties with Israel—and to turn to the wider Middle East as source of energy and trade. To do so successfully, India will have to strengthen its traditional partnerships with Iran and the GCC even as it forges a new bond with Jerusalem. With luck and careful diplomacy, it can do all three. In the Middle East, it is on this basis that India will seek to realize its vision of becoming a pragmatic, durable world power.

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  • BHARATH GOPALASWAMY is Director of the South Asia Center at the Atlantic Council.
  • AMIR HANDJANI is a Senior Fellow at the South Asia Center at the Atlantic Council and a Fellow with the Truman National Security Project.
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