The dramatic covert and overt operations by Israel in Lebanon, culminating in the killing of Hezbollah leader Hassan Nasrallah, have further increased tensions in the Middle East. While the war against Hamas rumbles on in Gaza, Israel’s operations have proved more effective on its northern frontiers. Israel has also simultaneously targeted Iranian individuals and several proxies, including the Houthis in Yemen. Iran has responded with missile strikes against Israel.
For India, the recent developments raise twin concerns. The first are the short-term – primarily economic – effects. These include the consequences of regional tensions for oil prices and sea lines of communications. For India, still heavily dependent on energy imports, global oil price fluctuations will have important implications for subsidies in government budgets and might contribute to inflationary pressures just as these had been steadily decreasing, in part as a consequence of careful macroeconomic management. Furthermore, Houthi attacks on shipping in the Red Sea and Gulf of Aden had earlier impeded commerce and required Indian military operations, often in collaboration with partners. Another increase in the tempo of Indian naval operations might yet be in the offing.
But there is a longer-term concern for India. For many years now, India had attempted to maintain and strengthen relations simultaneously with three power centers in the Middle East. The first, and most important at least in material terms, were the Gulf Arab states led by the United Arab Emirates and Saudi Arabia. India’s relations with these countries have grown to encompass energy, a massive Indian diaspora, strategic alignment, trade and transshipment, intelligence cooperation, institutional investment, and space, science, and technology collaboration. It has also contributed to stronger Indian relations with other Gulf Cooperation Council (GCC) countries, including Oman and Bahrain, as well as countries such as Egypt and Morocco.
The second major regional relationship for India concerns Israel. Theirs has grown from a quiet but important defense partnership to a much more multi-faceted relationship, important for economic, technological, and social reasons as well. The Abraham Accords – involving the normalization of Israel’s relations with several Arab countries – presented an opportunity for India to deepen these ties simultaneously. These diplomatic breakthroughs opened the prospect for an India-Israel-UAE-United States economic partnership called I2U2 that involves collaboration on energy and food security, space, and business ties. Last September, several countries jointly announced plans for an ambitious India-Middle East-Europe Economic Corridor (IMEC), although its fate remains subject to normalized relations between Israel and Saudi Arabia.
The third major leg of India’s approach to the Middle East involved Iran. In practical terms, this relationship has become relatively less important, with a decline in Indian energy imports from Iran and somewhat weak trade and people-to-people links. Nonetheless, Iran retains its importance for India due to its geography, as a conduit for North-South trade, and for tactical coordination in Afghanistan. More importantly, India has helped ensure that the Iranian use of proxies to its west – including in Yemen, Lebanon, Syria, and Iraq – has not extended to its east.
The recent developments in the Middle East complicate both India’s tactical economic objectives and its longer-term strategic goals. Anticipating a period of heightened tensions and intensified proxy conflicts will be necessary as India continues to deepen engagement with various power centers in this contested region.
Dhruva Jaishankar is Executive Director at ORF America.