Iran's Energy Policy and India's International Orientation

1 Journal of South Asian and Middle Eastern Studies Vol. XXXIV, No. 1, Fall 2010 Iran’s Energy Policy and India’s International Orientation Mahnaz Zahirinejad* Introduction Iran is a major player in the world energy (hydrocarbon) market. It is estimated to hold 11.1 percent of the world oil reserves (132.0 billion barrels of oil), and 15.3 percent of the world’s natural gas reserves (970.8 trillion cubic feet).1 This provides the country with a strategic leverage in defining world hydrocarbon regime. The Iranian state draws 42.5 percent of its revenues from oil resources, accounting in turn for 80 percent of its exports.2 Although Iran enjoys distinct status in the hierarchy of world hydrocarbon exporters, it remains critically dependent thereby vulnerable to the world hydrocarbon regime because of its rentier character. Iran has not only become a net importer of petro products but it faces serious challenge to retain its export supplies as well. This clearly means that the country might loose its global energy leverage despite its huge energy resources. Iranian state thus needs a friendly global hydrocarbon regime to augment its energy power. The emerging Asian energy market does have potential to contribute to the recovery of Iranian energy power. Iranian state is looking proactively towards the Asian countries especially India. *Mahnaz Zahirinejad was recently awarded a PhD degree from the Centre for West Asian Studies, International Studies, Jawaharlal Nehru University, New Delhi, India. The area of her research concentrates on critical study of the Middle Eastern Countries particularly Iran and Iraq’s foreign and energy policies.mzahirinejad@gmail.com 1 BP Statistical Review of World Energy 2005, http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_ publications/statistical_energy_review_2008/STAGING/local_assets/2010_downloads/statistical_review_of_world_energy_full_report_2010 .pdf( 15 May 2010). 2 ECO; Trade and development Bank, Iran Country Partnership Strategy, (2009-2010): 3-9. http://www.etdb.org/StrategiesAndResearch/Countries/CSPReports/ReportsLibrary/ IRAN.pdf (14 October 2010). 2 However, Iran’s energy relation with India has been influenced by the new orders that are ruled by the powers particularly the United States. With attention to the new world order, the present study is an attempt to analyze the implication of the new world politics on Iran-India energy relation. Theoretical Structure With the reunification of Germany, the collapse of the Warsaw Pact and disintegration of the Soviet Union, the traditional bipolar military structure in the world was brought to an end, realists started to describe new world politics. Based on the realism approach the rise of new European powers and rampant nuclear proliferation across Europe was predicated. However, two decades after the end of the Cold War, most Central and Eastern European (CEE) states have joined the democratic European Union (EU). There has been no arms race and instead of a group of powers competing over European spoils, the EU has become the common, peaceful project for Western and CEE states alike.3 Thus, the pessimistic assessment of the post-Cold War future of CEE states by realists has been proven wrong. In these circumstances, some liberal philosophers started to challenge realism. Joseph Nye and Robert Keohane were among them. Keohane argues that “…realism is particularly weak in accounting for change, especially where the sources of that change lie in the world political economy or in the domestic structure of states.”4 Thus, theory of complex interdependence came out as a result of changing the world during the 1970’s, by Joseph Nye and, Robert Keohane. Theory of complex interdependence provides a better understanding of changing security concerns of the states.5 Keohane and Nye, in their book “Power and Interdependence”, have highlighted the current interdependence feature of the world politics. The initial assumption of Keohane and Nye in the era of interdependence is that the very nature of international relations is changing. The world has 3 Dylan Kissane, “Realist Theory and Central & Eastern Europe after the Cold War,” Paper presented at the’3rd CEU Graduate Conference in the Social Sciences’ conference. Central European University. Budapest. Hungary, (2007):25-27. 4 Robert ,Koehane, Seven Theory of World Politics: Structural Realism and Beyond (New York Press, 1986), 159. 5 Hüseyin, Isiksal, “To What Extent...