US Sanctions against Iran: Geopolitical impact on India and China

US-President Trump’s unilateral sanctions on Iran have one useful side-effect: they shake other big players of world politics so much that their national strategies become visible to a wider audience of observers, either by way of being redefined or by way of confirmation. We look at India and China.

India, which does so little to impose itself on world affairs according to its potential, appears in new power equations as a possible core element of strategic networks. India is Iran’s second most important buyer of crude oil, partly for consumption, partly for re-export as refined products. So, Iran’s business is also part of India’s business. In addition, Iran is becoming essential for India’s outreach to land-locked Central Asia, including Afghanistan, from which India is separated by the land barrier of hostile Pakistan. Iran’s South Eastern port of Chabahar is India’s port of entry on its way North by-passing thus Pakistan. But it is also the link to the larger project of the International North-South Transportation Corridor (INSC). The purpose of the INSC, among others, is to serve Russia’s interest as a more direct access to the Indian Ocean. Somehow, the INSC resembles China’s Belt and Road Initiative (BRI) in its segment running through Pakistan to the Indian Ocean. But China, too, is involved in the development of Iran’s transportation infrastructure. India’s and China’s outreach to Iran provide Iran with the precious asset of becoming essential for two major powers of the region.

The strategically ill-conceived American move to isolate Iran tries to damage its economy with heavy sanctions. The US-President expects the world to join him against national interests of other members of the international community. That is the dilemma, in which it puts China and India: Which price are they prepared to pay for resisting America’s claims of global dominance? China seems to have chosen. It sees in Trump’s policy to destroy whomever he wishes to a strategic opportunity to enhance its own impact on world affairs. Trump wants to prohibit trade in Iranian oil; China assures Iran that it will buy all oil if necessary. Trump wants to prohibit the sale of high-tech industrial goods to Iran; China will develop its trade relations with Iran by providing more and more of machinery needed for Iran’s development. China seems to have recognised that it has nothing to win by acceding to American claims, but rather a lot to win by resisting America’s anti-Iran policies. China is the most probable strategic winner of the show-down triggered by the US-President: it will enhance its share in world trade and its political influence in world affairs; in short, it will strengthen its strategic position in view of challenging America’s global domination.

India, on the other hand, finds itself in a more complex situation, i.e. a genuine dilemma. For almost two decades, India has been developing its relationship with the US into a strategic partnership so dear to India’s current Prime Minister Modi. This would indicate an assumed inclination to be accessible to American sanctions against Iran. But India has assured Iranian leaders that it is determined to continue buying Iranian oil. As a sign of recognition of American power, however, the Indian government is on the one hand seeking wavers from US sanctions for parts of its oil purchases. On the other hand, and in a demonstration of old inclinations to play its political role somehow “between the big powers”, India has signed large military procurement contracts with Russia. This makes sense if India is serious in seeking equidistance to other big powers. Betting on the International North-South Transportation Corridor linking Russia to the Indian Ocean, India will also considerably strengthen Iran, the main transit route of this strategic corridor, and of course Russia, the other main profiteer of the project.

In any case, both, China and India, will strengthen Iran’s strategic position in the region by making it more relevant for outside powers competing for regional influence. The European powers, which are openly opposed to Trump’s Iran policies, are also in principle determined to resist American pretensions, but find themselves also in a dilemma when it comes to finding the effective tools for their resistance. How Europe and India, these two unequal, but similarly important powers for the future of world affairs, might join forces in balancing the rules of international domination, has not been addressed by governments yet. New US sanctions against Iran have at least the merit to trigger new challenges to American world domination and compel governments to rethink their strategic choices and, where necessary, to redefine them. Possibly, the US President’s decision to launch a war-like economic aggression against a regional Asian power will appear, in hindsight, as a historic moment when the international order started to be restructured.