The Obama administration’s claims about an Iranian government plot to assassinate Saudi Arabia’s ambassador to Washington could have serious implications for US-Iran relations and for other players in West Asia, including India. There are several questions about the chain of claims being advanced by the US. And Washington hasn’t yet backed these up with solid evidence. Irrespective of their veracity, these allegations are likely to raise the temperature in the region.

US President Barack Obama began his term in office with the intention of bringing Iran to the negotiating table by a combination of exhortation and confidence-building measures. But this approach was abandoned in favour of a dual-track policy of bringing pressure to bear on Iran while professing willingness to negotiate. Conciliation gave to way to coercion, as the US pushed for tough economic and financial sanctions on Iran, and shored up its military alliances in the region.
In the wake of the recent allegations, Mr Obama has called for “toughest sanctions” against Iran. But it is not clear that the existing ones have brought about any change in Iran’s policy. The main impact of sanction has been to reduce investment by Western oil and gas companies in developing Iranian petroleum and natural gas fields. According to a recent estimate, Iran is getting only $3 billion in such investments against the projected requirement of $10 billion. The sanctions have also complicated currency transfers for Iranian energy exports, resulting in cash flow problems for its firms. These are difficulties Iran could live with as long as its exports continue to boom. And they are unlikely to result in any significant change in Tehran’s policies and behaviour.
In any case, the US ability to orchestrate tougher sanctions remains in question — not least because of the need to persuade Russia and China at the United Nations Security Council.
Equally problematic is the timing of Mr Obama’s decision to raise the ante with Iran. The course US-Iran interactions over the Iranian nuclear programme has been marked by numerous flip-flops by both sides.
But recently, the Iranian President held out a conciliatory proposal. Speaking at the United Nations, Mahmoud Ahmadinejad offered to stop all uranium enrichment beyond the five per cent level (used in civilian power plants), if Iran was able to purchase specialised fuel enriched at 20 per cent for use in its research reactor that produces medical isotopes for the treatment of cancer. The Obama administration could have seized the opportunity and at least moved forward to test whether Iran was indeed willing to do so. Instead, by launching a public offensive on the alleged assassination plot, it has not only squandered a chance but probably strengthened the position of
the nuclear hawks within Iran.
Indeed, recent developments within Iran suggest that serious differences have cropped up amongst the ruling elite. Mr Ahmadinejad has evidently fallen out of favour with the supreme leader, Ayatollah Ali Khamenei. The problems between them have resulted from a series of political developments; but the key issue is the longstanding tension between the clergy and the elected politicians that runs through the Iranian polity. Renewed tensions with America at this juncture will likely lead to greater posturing by Iranian leaders, spurred by the desire to be seen as standing up to the old enemy.
What’s worse, all this is playing out at a time of sharpening geopolitical rivalry in West Asia. The “Arab Spring” has already placed at loggerheads Iran and Saudi Arabia along with their respective allies and proxies. Bahrain and Syria are the two most important flashpoints in this growing rivalry, but tensions could spill over into other countries as well. The claims about the assassination plot may well bring the tensions between Iran and Saudi Arabia to the
boil in the months ahead.
These developments could pose at least three significant challenges to Indian foreign policy. First, they could complicate New Delhi’s attempts to craft a more strategic relationship with Tehran. In the past year, there has been a flurry of official visits and the two sides have worked at ironing out wrinkles in the relationship. Perhaps the most important of these was the resolution of the problem in settling accounts with Iran for oil imports. The American push for additional sanctions could make financial transactions even more difficult, and so place further strains on ties with Iran.
Second, India has been trying to strike a careful balance in its dealings with Iran and other Gulf countries. During the payments crises, for instance, India had to rely more heavily on Saudi Arabia for its oil imports. Renewed tension over Iran could not only accentuate this trend, but also present more difficult political choices in dealings
with Iran and Saudi Arabia.
Third, as the Western coalition prepares to pull out of Afghanistan in two years’ time Iran will assume a more important role there. It is not clear how the US hopes to leave behind a reasonably stable set-up in Afghanistan without Iran’s cooperation. The deterioration of American ties with both Iran and Pakistan portends greater instability in Afghanistan in the run up to 2014. A better working relationship with Iran will be important to preserve India’s interests in Afghanistan.
Prime Minister Manmohan Singh recently met Mr Ahmadinejad at the United Nations and reportedly accepted an invitation to visit Iran. There has been no prime ministerial visit to the country in a decade. It may be imprudent to put it off any longer.

The writer is a senior fellow at the Centre for Policy Research, New Delhi