Opinion | All That India May Lose If Middle East Plunges Into A Full-Blown War

When Prime Minister Narendra Modi came to power in 2014, it was clear that India's West Asia policy needed a facelift - even a reset. He made multiple official visits to the region over the next few years and managed to forge strong bilateral ties with the UAE, Saudi Arabia, Iran, and Israel. It is fair to say that he struck a fine balance between the Arab countries and Palestinians on the one hand and Israel on the other, though some might claim - without credible evidence - that he has tilted slightly towards Israel. The proof of his deft West Asia foreign policy is that India enjoys the goodwill of both sides.

However, Israel's campaign in Gaza in response to Hamas's October 2023 attacks overshadows Modi's Middle East policy. With the spectre of a wider war looming over the region, stiffer challenges are likely. The Middle East has been teetering on the brink of chaos as India watches holding its breath. 

A Brazen Act 

It is believed that Iran and its regional armed groups, the so-called "Axis of Resistance", are preparing to respond to the assassination of Hamas chief Ismail Haniyeh. Though Israel has not commented on the assassination, Haniyeh's killing is being attributed to it; in any case, Israel has claimed responsibility for killing a senior Hezbollah leader in Beirut last week. 

Targeting a special guest of Iran in the heart of its capital barely hours after he had attended a ceremony to inaugurate the country's newly elected President, Masoud Pezeshkian, was an act as daring as it was provocative. It also proved to be extremely humiliating for Iran and its powerful Islamic Revolutionary Guards (IRGC), the force chiefly responsible for the country's security.

Iran In A Quandary

Iran is under compulsion to take action. But it doesn't appear to be interested in escalating the crisis. If it doesn't do anything, the country will be in danger of losing respect and prestige among its supporters. If it takes action, tensions may escalate and spiral out of control. Regardless of these complexities, the rhetoric for revenge is running strong within Iran. "This crime of the Zionist regime will face a harsh and painful response from the powerful and huge resistance front," the IRGC said in a statement. Iran's Supreme Leader, Ayatollah Ali Khamenei, described Haniyeh's killing as a provocation to escalate the conflict in the region and said that it was his country's duty to avenge the assassination.

More than the timing of Iran's retaliation, it will be the scale of its attack that will determine Israel's response. According to Axios, a security analysis group, "US officials expect any Iranian retaliation to be from the same playbook as their April 13 attack on Israel, but potentially larger in scope, and it could also involve Hezbollah in Lebanon". Iran had on April 13 fired more than 200 missiles at Israel in retaliation for an airstrike in Syria that killed a top Iranian general. This was the first time Iran had attacked Israel from its soil. The latter retaliated, but it was a limited response.
However, Haniyeh's killing is different, and his assassination under the protection of the powerful IRGC has embarrassed Iran deeply. Both a response and a non-response can prove to be costly. 

How India Will Be Affected

It is nearly certain that the war in the region would unleash a maelstrom of consequences, threatening to upend India's economy, energy security, and strategic partnerships. With its 9 million-strong diaspora, trade ties, and its geopolitical interests deeply entrenched in the region, India cannot afford to remain a bystander.

Despite diversifying its energy purchase, India continues to rely heavily on the Gulf countries for its oil imports. They account for more than 50% of its oil needs. Disruptions in supply chains because of war would push the price up, which, in turn, would adversely affect India's economy. The instability could increase import costs, reduce economic growth, and create inflationary pressures, thereby undermining India's energy security. 

The region is a vital trading partner for India. The bilateral trade with the UAE and Saudi Arabia alone amounts to over $100 billion annually. A widening conflict could disrupt both exports, such as textiles and machinery, and imports, notably oil and fertilizers. These disruptions would negatively impact India's GDP growth, employment in export-oriented industries, and the balance of payments. All of this makes for a substantial economic challenge.

Diaspora And Remittances

India currently receives the largest remittances sent to any country by its overseas population. According to the World Bank, remittances to India in 2023 crossed $120 billion, with 18% of it coming from Indian workers based in the UAE alone. If you add Saudi Arabia, Kuwait, Bahrain, and Oman, their contributions go up to 30%. Escalating conflict could reduce these remittances and force many expatriates to return to India. This migration would strain India's social and economic infrastructure, creating additional challenges for the country's economy. Heightened border security concerns, and the potential for a refugee influx, all pose significant threats to India's stability. The humanitarian challenges would include providing adequate food, shelter, and medical care, as well as ensuring the safety and security of both the refugees and the host communities. 

Global trade and economic disruptions stemming from potential escalations would also affect India's economy as it would lead to reduced trade and investment and increasing economic uncertainty. These factors could exert recessionary pressures on India's economic landscape, complicating its growth prospects. In the longer term, it could also affect India's progress towards becoming the world's third-largest economy.

Strategic Partnerships

Under Prime Minister Narendra Modi's leadership, India has emerged as an influential partner of various Middle Eastern countries, such as Iran, Israel, the UAE, and Saudi Arabia. Conflicts in the region could impact energy cooperation, defence and security partnerships, and regional diplomatic efforts, potentially destabilising these strategic relationships.

Last year during the G20 summit in Delhi, the India-Middle East-Europe Corridor (IMEC) was announced ostensibly to counter China's Belt and Road Initiatives. But the project's future now appears to be in jeopardy. With tensions rising in the region, it might be difficult to take the programme forward. Its declared aim was to establish a seamless trade route connecting India, the UAE, Saudi Arabia, Jordan, Israel, and Europe. The idea was that it would enhance economic integration, trade, investments, and cooperation. But for now, the priorities of the partner countries have shifted.

India Has Been Here Before, But That's Not Enough

India has the experience of dealing with crises emanating from wars in the region. During the Gulf Wars, India's handling of refugee crises and the airlifting of its citizens from Kuwait showcased its capacity for large-scale evacuation and crisis management. In 1990, following Iraq's invasion of Kuwait, around 1,70,000 Indians were stranded in Kuwait and Iraq. India undertook a massive airlift operation to evacuate its citizens, coordinating with airlines and using military and civilian aircraft. This operation, spanning nearly two months, became one of the largest civilian evacuations in history, demonstrating India's logistical and diplomatic capabilities. 

During the 2003 Iraq War, although the scale was smaller compared to the first Gulf War, India was again proactive in evacuating its nationals. The government, through its embassies in the region, provided support and facilitated the return of Indians. The evacuation efforts were undertaken with an express need to ensure the safety of Indian citizens, providing necessary travel documents and arranging transport back to India.

Modi's huge investment in West Asia diplomacy and increased engagements may come unhinged if tensions spread and engulf the region in a wider war. For now, India and the global community should hope that the crisis passes over soon. For that to happen, the ceasefire in Gaza could be a big first step.

(Syed Zubair Ahmed is a London-based senior Indian journalist with three decades of experience with the Western media)

Disclaimer: These are the personal opinions of the author