Does US road to better relations with Iran pass through India?

When Secretary of State Hillary Rodham Clinton unveils an anticipated US-India strategic partnership with her Indian counterpart in New Delhi Monday, she'll be six years behind India's signing of a similar cooperation pact with another power in the region: Iran.

India's deep and established ties to Iran were already cause for an occasional stumble in otherwise expanding US-India relations under the Bush administration.

Now, continuing resentment in Washington over the warm Delhi-Tehran connection – primarily in Congress – could still unsettle a new partnership the Obama administration envisions with one of the emerging powers of the 21st century.

Specifically, some in Congress see India as a key enabler of the Iranian regime – Indian exporters provide about 40 percent of the gasoline that keeps Iran moving – and are proposing measures targeting those Indian exporters but designed to hit the Iranian economy.

But at the same time, President Obama's preference for diplomacy over confrontation to address differences with Tehran, especially concerning its advancing nuclear program, earns the Obama administration high points in New Delhi.

Obama's stance has effectively pulled the wind out of the sails of forces in Washington alarmed over the India-Iran ties, some regional experts contend.

"Clearly the Obama administration is trying too find some way to reach out to Tehran, so when you have that going on the issue of India's ties to Iran just doesn't have the urgency that it once might have," says Karl Inderfurth, a former assistant secretary for South Asian affairs, now at George Washington University in Washington.

In particular, some diplomatic experts say that, if Mr. Obama's invitation to dialogue is ever accepted by Tehran, India could act as a trusted facilitator by both sides – and especially in the eyes of a range of policymakers in Washington, since India has also developed strong security ties with Israel.

India has fostered its economic and commercial ties to Iran for decades, but the preponderance of trade between the two countries is in the energy sector, with Iran providing India, a huge energy importer, with a large portion of its petroleum and natural gas needs. Several major pipeline and liquefied natural gas (LNG) port projects would deepen relations.

At the same time, Indian refining companies provide Iran, which lacks refining capacity, with the finished petroleum products its economy needs.

That said, India has demonstrated through a series of key votes in recent years against Iran in the United Nations Security Council and at the International Atomic Energy Agency, the UN's nuclear watchdog, that it does not favor the emergence of another nuclear-armed power in the region.

Still, it is India's commercial and energy-sector ties to Iran that capture the attention of some in the US Congress. In particular, several congressmen have authored legislation targeting India's Reliance Industries, a mammoth conglomerate that refines gasoline for Iran but also has close dealings with US companies.

"Unfortunately for Reliance, it's become the poster child for this whole effort" to punish Indian and other international companies with ties to Iran, says Richard Sawaya, director of USA*Engage, part of a consortium of organizations advocating expanded trade opportunities and conditions for US companies.

The pro-trade groups say they support international efforts to stop Iran from developing a nuclear weapon. But they oppose as self-defeating laws and other measures aimed at foreign ties to Iran but which in the end would affect US companies and their international partners most – while having less impact on Iran's dealings with countries like India or China.

"The issue here is that the action we take ends up blowing back on our own people," says Ed Rice, president of the Coalition for Employment through Exports, "while it misses the intended mark."

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