Monday 3 September 2012

Clueless and visibly uneasy in Tehran (Sunday Times)


Prime Minister Manmohan Singh, with NSA Shivshankar Menon, addresses the media onboard his special flight to Delhi after attending the XVI NAM Summit in Tehran on Friday. PTI
ay this for the World Bank and the IMF, both institutions know how to permeate those that work there with the belief that the only prescription to be followed is obedience to the nostrums served out by the US, the UK, France and the few other civilised countries that have put boots on the ground in Iraq and Afghanistan and lightened up the Libyan skies with airpower. Whether those that have worked at the Bank or the Fund come from India or Burundi, a few years there will acclimatise them towards acceptance of the advice given by colleagues from the civilised world. That their careers in either institution are likely to be brief and unpleasant were they to challenge the views of those representing the US or the EU — the two that from the start have headed the World Bank and the IMF — presumably assists such a process of acquiescence. India is fortunate in having a Prime Minister in Manmohan Singh who relies completely on Fund-Bank products for his economic and other policies, which is why the PM seems, for example, to have backed the RBI governor in setting interest rates at levels that delight the foreign investor but which cripple domestic producers.
Strategic groups across the globe are aware of the umbilical cord linking Manmohan Singh and his closest advisors to Washington, London and Paris. Which is why they have not been surprised at the PM's visible uneasiness in Tehran, and his refusal to explore any of the many ways by which India can benefit from Iran. The World Bank and IMF types in the RBI and the Finance Ministry have dawdled and diddled for more than two years in setting up alternative mechanisms of trade in the face of US-EU sanctions on Iran that add more than $50 per barrel to the cost of oil. As the major oil companies are based within the US and the EU, which are also the major suppliers of such peace-oriented items of manufacture as combat aircraft and tanks to the oil-producing states of the Gulf, each rise in the price of oil brings more cash to them. The countries which lose out are India, China, Japan and South Korea. Of course, unlike the other three, China is already developing a robust export trade in military items, although still a considerable distance away from the $66 billion that the US exported last year, more than half of this to a single state, Saudi Arabia, whose media is filled daily with scare stories on the theme "The Iranians are coming". That Iran is much more likely to be invaded than invade has obviously eluded both edit page writers and defence procurement teams within the GCC.
Iran represents a huge opportunity for India in the context of energy security. Some years ago, Mani Shankar Aiyar (who seems never to have darkened the doors of the Bank or the Fund) sought to craft an energy diplomacy for India that would make more secure this country's energy economy. Had he been allowed to remain as the Petroleum Minister, he would almost certainly have taken advantage of the present situation to firm up long-term (and low-priced) contracts with Iran for oil and natural gas. But this tendency to look at issues from the point of view of Indian interests is probably why he was dropped from the portfolio and later the Union Cabinet by Manmohan Singh. The induced hysteria about Iran has had the effect of sending up oil prices and promoting defence sales to the GCC. More ominously, the wall of hostility that Tehran is encountering will make it more rather than less likely to go the North Korea path and acquire nuclear weapons. The example of Saddam Hussein and Muammar Gaddafi shows what happens to those who decide to surrender their WMD in the belief that such an action would win them the goodwill of NATO.
In the 1990s, Manmohan Singh was instrumental in preventing Narasimha Rao from conducting a nuclear test, because he believed the Fund-Bank voices, who warned that such a move would result in sanctions that devastate the economy. 1998 showed how false such warnings were. These days, those preventing India from taking advantage of unexpected opportunities in Tehran similarly predict disaster from US-EU sanctions. The reality is that both are so weakened by economic problems that it would be suicidal of them to impose sanctions on major economies such as China, India, South Korea or Japan. Sadly, Delhi, Seoul and Tokyo seem to have taken the bait, while Beijing has called the bluff.

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