IN LATE JUNE, NIKKI HALEY, the United States ambassador to the United Nations, came for a high-optics two-day tour in India. A brief media advisory issued by the United States mission to the UN slated the visit as diplomatic, designed “to underscore the United States’ shared values and strong alliance with the people of India.” The trip was a whirlwind: she met with Prime Minister Narendra Modi, students, industry titans, politicians, and members of various religious communities. Journalists snapped photos of her alongside her kids and husband at various temples and gurdwaras. The 46-year-old American ambassador, who often calls herself “the proud daughter of Indian parents,” also received a rockstar welcome as India’s prodigal daughter, returned.
Haley has been to India only twice since the age of two—both times for diplomatic reasons. This time, Haley returned to deliver tough news. In May, the president of the United States, Donald Trump, exited the watershed Iran-United States nuclear non-proliferation deal forged under his predecessor, Barack Obama, in 2015. Signed by Germany, the European Union and all five permanent members of the UN Security Council, the treaty stipulated that Iran curtail its nuclear ambitions for up to 25 years and be subject to close monitoring by external bodies. In return, the United States lifted a 12-year embargo that had crippled the country’s economy. These moves allowed Iran to participate freely in the global market once again, particularly in the export of oil. Making good on an election promise, Trump announced his country’s withdrawal from the deal, declaring, “We will be instituting the highest level of economic sanction.” However, he could not isolate Iran alone. “Any nation that helps Iran in its quest for nuclear weapons could also be sanctioned by the United States,” he added. Washington demanded that all foreign companies introduce a total embargo on Iranian oil by this November.
This announcement put India in a bind. India and Iran share major regional interests. In 2017, Iran sold 471,000 barrels of oil to India daily, making it the country’s third-largest oil supplier. Purchasing oil from Iran is currently cheaper for India than from Saudi Arabia, and even a dollar increase in crude-oil prices is likely to increase the country’s total annual import costs by roughly Rs 823 crore—around $130 million. India also has a strategic interest in building up the Chabahar port in Iran, which would open a gateway into Afghanistan, allowing Indian traders to bypass Pakistan. In February this year, the Iranian president, Hassan Rouhani, visited India to sign deals boosting trade, investment and regional connectivity between the two countries. For those reasons, among others, the external-affairs minister Sushma Swaraj retorted in a press conference, “It is our clear stand that we abide by UN sanctions, not country-specific sanctions.”
On the other hand, relations between the United States and India have strengthened since the turn of the century. The trade in goods and services between India and the United States totalled nearly $115 billion in 2016—and it has only increased since. However, friction between the two countries grew as the United States postponed its “2+2 dialogue” for defence and security cooperation—a bilateral engagement agreed upon during Modi’s visit to Washington last year—for a third time. Many Indians interpreted this as an Iran-related snub. In a media interview, KC Singh, a former Indian ambassador to Iran, argued that the delay was a pressure tactic by the United States, to see whether India would fall in line apropos Iran. Under the threat of American penalty, India’s oil ministry reluctantly warned its refiners, “There could be drastic reduction or there could be no import at all” of Iranian oil.