February 18, 2020
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Oilman Cometh?

A confused New Delhi needs to reconsider its options

Oilman Cometh?
When Iraqi Vice-President Taha Yassin Ramadhan arrived in New Delhi on an eight-seater Jordanian aircraft on November 27, New Delhi shied away from terming it a state visit. Though Ramadhan declared his "mission successful" and a "turning point" for identifying the principles of a framework for future cooperation, the hype, it seemed, had exceeded the substance.

Among other documents India and Iraq signed were an oil exploration and refinement deal in Iraq. Under the aegis of ficci, Indian companies entered into a clutch of agreements. There was also an understanding in principle for an oil-for-wheat arrangement. While the Iraqis saw a "strategic" dimension to the relationship, the official spokesman of the government, Raminder Jassal, was rather guarded: "We will engage in consultations with the UN sanctions committee (unsc) regarding the implementation of this understanding in the context of the sanctions regime."

This abundantly cautious formulation more or less killed any expectation that India was embarking on a path that could be seen as going against the sanctions. Indeed, minister of state for foreign affairs Ajit Panja, who recently drove down from Amman to Baghdad to meet Saddam Hussein and give a fillip to ties with Iraq, told Outlook that the "quantity of wheat and oil have not yet been decided" and the details would take time to work out. When asked if there was a chance that the proposed counter-trade deal would fall foul of the sanctions regime, he said: "It was analysed. It appears that all these activities will be within the four corners of the UN resolutions." Panja has insisted that India's participation in the food-for-oil programme will go up from the present 3 per cent to 15 per cent next year.

Apparently, the Iraqis wanted a more robust political component to the relationship (a gesture that flouts the sanctions) and were of the opinion that the evolving engagement should not be confined to economic aspects alone. But Panja is confident that "the political aspect will gradually develop and will follow the economic aspect". If the Iraqi delegation was disappointed at the immediate lack of political bilateral grandstanding, they did not show it. But, says Dr Arshi Khan of the Centre for Federal Studies, Hamdard University, Delhi, "India should have been more categorical and assertive against the sanctions regime. The original purpose of the sanctions was to force Iraq to withdraw from Kuwait and to follow UN resolutions and to dismantle the weapons of mass destruction. These have already been met and therefore continued sanctions have no legitimacy."

Diplomatic sources also point out that the Indian formulation that "we support the lifting of sanctions in tandem with Iraq's compliance with unsc resolutions" is now "meaningless". Indeed, sources say that Iraq, with its second largest known oil reserves in the world and an unknown quantity of gas, had earlier made attractive offers which called for political forthrightness. But these could not be taken up because the government felt circumscribed by the fallout of the Pokhran blasts.

Now, a decade after Iraq's misadventure in Kuwait, the sanctions regime is dying a natural death. America's dual containment policy of Iran and Iraq is no longer effective. While Syria, Egypt, Turkey, Iran and some other Arab states are engaging in political dialogue with Iraq, Gulf states like Oman, Qatar, the uae and Bahrain have re-opened their embassies in Baghdad.

Diplomatic sources point out that India is in a bind over adopting a bold Iraq policy."India cannot be seen as breaking the unsc as well as alienating Kuwait and Saudi Arabia," they say. Before the Gulf War, Iraq was India's number one supplier of oil (Basra Light) to the tune of six million tonnes per annum. This is now supplied by Saudi Arabia. (Iraq could now supply this volume at much more competitive rates.) Analysts also say that the large Indian workforce in the two countries is also a factor in policy-making.

But despite that, there's a strong rationale for India to think afresh. This goes beyond Indian participation in the reconstruction of Iraq and to the heart of India's energy security requirements. Says Panja: "Our petroleum production is only 30 per cent of our total need. With much of Iraq's oil still unexplored, it might soon transpire that they may well have the largest oil reserves in the world." That's something India cannot afford to ignore.
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