The West Asia region for long recognised as a geopolitical hot spot. The region is once again at the center of global attention due to recent escalations in conflict between two perennial enemies Israel and Iran.
It is one of the most disastrous wars and it has the potential to further escalate and expand if it will not be stopped as soon as possible. Iran and Israel at least since 1979 have been indulging in this mutually assured destruction syndrome considering one another as an existential threat and are competing with each other essentially through arms and ammunition, asymmetric warfare and clandestine warfare. This is the first time in the last one and a half years that they have indulged in direct attacks on one another even though they don’t share a common land boundary.
They are about 1300 kilometers apart and therefore this is mostly going to be aerial or naval warfare. Of course, Israel has great air superiority over Iran. But Iran has tried to compensate for it by having more long range ballistic and hypersonic missiles. This conflict has the potential to cause the biggest dislocation and destruction in the region which is further complicated by the fact that the United States has more than 25 bases in the region with over 15000 their armed forces. Before the direct conflict Iran has been supporting its proxies in the guise of the cause of Palestine through Hamas, Hezbollah and Houthis. These organizations are its so-called asymmetric arms to provide a certain kind of an advantage against any regional power as well as against Israel.
This war has been going on since October 7, 2023. Israel has been engaged in decimating Iranian proxies Hamas, Hezbollah, and Houthis. But now Israel decided directly to take on Iran. The reason was very simple that they do not want Iran to acquire the nuclear parity with them is the only issue.
Unfortunately, diplomacy has been given a pass in recent times. We have seen that there is no international order that is really effectively and efficiently operating today. Since Iran will be supported by China and Russia. Besides, some Arab countries are standing with Iran as they feel that if Iranian sovereignty could be breached with such ease they may not be far behind. That’s why many of the Arab countries are together plus they don’t want to become collateral in the bargain.
Both US and Russian Presidents Trump and Putin can jointly use their leverage over Israel and Iran as these leaders have good hold on the respective leaders of the two warring countries. Indian Prime Minister Modi and EAM Dr S Jaishankar have been talking to world leaders. Israeli PM Netanyahu directly called Prime Minister Modi. India has been asking for dialogue and diplomacy and in Croatia the Prime Minister says that the solution cannot be found on the battlefield and dialogue and diplomacy are the only ways. India has offered to mediate and be a facilitator for a dialogue between the two sides for stopping the hostilities. On the economic front the effect of the ongoing conflict is palpable and the World Trade Organisation has revised its global trade growth outlook downwards due to the West Asia crisis.
Despite Israel being the strongest military in the region the Houthis have taken the lead and even the Americans and no one else could really contain them despite the fight. Americans got to deal with them. The Haifa port of Israel has been badly damaged now with Iran attacking the Haifa port. That will also impact the trade as in return Israel will attack the Iranian ports and the oil producing facilities. That will also impact on the supplies of oil. If Iran further takes action against various countries in the region who are hosting the American bases it’ll add a new dimension to the already fragile West Asian region. The West Asia conflict has multiple fallouts for India too. It will affect India dearly as it increases the cost of trade insurance as a big bulk of Indian trade is passing through that region. Disruptions in critical shipping routes like the Red Sea and other choke points in the region have multiple effects on the global supply chains as logistics cost will increase and affect the livelihood of common masses.
Since the Russia Ukraine war, the European countries started importing a lot of oil from West Asia. India started importing about 40 per cent of its crude at discounted rates from Russia and that helped us maintain the stabilized prices. Still India remains dependent on West Asia for about 60 per cent of its oil requirements and therefore if there is a disruption that will not only raise the costs but also affect supply chain facilities too. That will have a cyclical impact on Indian energy, industry and our growth. That’s why India needs to have alternative markets and connective routes which are immune from it for a certain period of time. Many Asian economies which are oil dependent on the middle east like Japan and South Korea will be affected as those are dependent on the Middle Eastern oil markets. The impact will not only be immediate, but it will be a midterm and even long-term effect.
India’s reliance on the INSTC (International North South Transport Corridor) and other alternative routes has been highlighted amid disruptions. It is being postulated how India will recalibrate its trade strategy to reduce dependence on conflict prone corridors.
Indian project of Chabahar port which is a very critical port for Indian access to Afghanistan, Iran, and Central Asia countries. India is also planning to have a free trade agreement (FTA) with some countries of the Middle east like UAE and Oman which will also come under cloud due to the Israel-Iran conflict. The conflict has impacted Basmati rice exports and created payment delays with Iranian buyers. At one time with the Iranians, India was buying oil from them and the trade balance was vastly in their favour. As India was importing about 12 % of our oil from Iran but then due to the sanctions by the USA this has virtually come down to zero.
About 40 per cent of our energy requirements are coming from Russia. We’ll have to start looking elsewhere. As far as choke points are concerned India will have to deploy more of our navy in the region to secure
commercial shipping. Besides, India will have to identify new sources of energy. India is increasing its renewable energy production to a great deal. India is one of the fastest growing countries in production of renewable energy. Nuclear energy and other forms of energy so that the dependency on transit routes could be minimized to a great extent but that’s not so feasible, not at least for the next 30 years.
