With China Breathing Down Its Neck, What Has India Won and Lost in Iran?

Bilateral relations with both India and China are long-standing and significant in different ways to Iran. Under pressure because of economic sanctions imposed by the United States while also being locked in conflicts of varying intensities with its Arab neighbours as well as Israel, Iran has few countries it can bank on for political and economic succour. India and China have filled this role occasionally and the difference really has been in terms of who has been able to do it for longer stretches and to greater effect.

One sign of who was winning this contest came in late June when Iran announced that it was close to entering into a long-term strategic partnership agreement with Beijing involving some $400 billion worth of Chinese investment in the Iranian energy and financial sectors among other things. In exchange, the Chinese would receive Iranian oil at a heavily discounted rate for the next 25 years. The contrast in India’s fortunes with Iran was highlighted in subsequent reports that the Indians had lost an important rail project along the Iran-Afghanistan border over concerns about unmet commitments.

Iran is, however, no passive actor in this contest and is capable of playing the two sides against each other. As a civilisational power that considers itself no less than either India or China, the Iranians possess the self-perception and long tradition of statecraft that make them ambitious and formidable negotiators with an eye on the longer term.

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