Column

As one of the founders of the original Non-Aligned Movement, India has often found itself standing
between opposing camps, trying to keep from becoming entangled in the disputes that divide them.
In the current environment, however, with a globalized economy and a shrinking, interconnected
world, the feat of staying out of international conflicts poses especially complicated and potentially
costly challenges. That is most evident as India tries to navigate its important trade relationship with
Iran, while continuing to expand its valuable commercial, diplomatic and strategic links with the U.S.
and Israel.

The difficulty of maintaining relations simultaneously with bitter geopolitical antagonists became
dramatically clear a year ago, when someone attached a bomb to the car of an Israeli diplomat in
New Delhi. The explosion injured a driver and two bystanders, and it nearly killed the Israeli
diplomat, who was hospitalized with serious liver and spinal injuries. Israel immediately blamed Iran,
pointing to a series of attacks against Israelis around the world, several of which had been linked to
agents connected to Iran and its Lebanese ally Hezbollah. But the Indian government took a
diplomatically measured stance and said it would allow the investigation to unfold.

Back then, I predicted India would come under increasing pressure to choose between the two sides,
and that the government in New Delhi would do its best to preserve links with both Iran and Israel,
not to mention the U.S.

A few months after the attack, the Times of India reported that the bombing investigation had linked
five members of Iran's Revolutionary Guard to the attempt to kill the Israeli diplomat. Interpol issued
arrest warrants for four Iranian suspects, two of whom were also wanted by police in Thailand in
connection to a similar plot to kill Israelis.

Still, New Delhi has tried to keep the incident from affecting relations with Tehran. One year later,
India continues to walk that wobbly tightrope, trying to preserve trade ties with all sides despite the
growing economic sanctions imposed by world powers to pressure Tehran to stop what they are
convinced are efforts to develop a nuclear weapons capability.

Iranian officials' assiduous efforts to court New Delhi have helped keep the relationship alive. But
despite both sides' mutual desire to expand trade, the commercial links between Iran and India are
starting to become visibly frayed. At the same time, India's ties with the U.S. and Israel are growing.

Indian Foreign Minister Salman Khurshid recently said he wants to use New Delhi's good connections
with Washington and Tehran to act as a bridge between the two. And Indian President Pranab
Mukherjee told a delegation of visiting Iranians that India and Iran should promote economic ties.

Tehran has made the same point, with recent visits by its nuclear negotiator, Secretary of the
Supreme National Council Saeed Jalili, and the speaker of the parliament, Ali Larijani. They have
made a strong case that the two countries need each other in order to deal with regional challenges,
such as Afghanistan and the rise of China, among others.

More than anything, the interest is economic; that is both the strength and the weakness of the
relationship. India is oil-rich Iran's second-biggest customer, and New Delhi has kept on importing
large quantities of Iranian oil even as sanctions have tightened. But the transactions are becoming
increasingly complicated.

India's oil imports from Iran are collapsing, already down 22 percent in the commercial year ending
this month, and India says it expects a cut of another 10-15 percent starting in April.
New Delhi still receives about 270,000 barrels of Iranian oil every day, but sanctions are making it
difficult for India to pay for the crude. The Turkish bank that handled part of the payment has bowed
out under international pressure. India is paying partly in rupees, which are not fully convertible.
And the two countries are looking for products that Iran could receive from India as payment in kind,
so far with little success. The latest headache comes from the Indian tanker operator, Mercator
Lines, which just announced it will no longer transport the crude.

By contrast, Indian trade with Iran's nemesis, Israel, and with the U.S. is booming, as are other
bilateral links. India's trade volume with Israel is projected to triple once the two countries sign a
free trade agreement, probably by the end of this year. Israel is also selling India billions of dollars'
worth of military equipment, as military-to-military and other high-level visits become
commonplace.

The two countries just completed a meeting of the India-Israel Joint Working Group on Counter
Terrorism, and are actively discussing other areas of cooperation.

In addition to security-related commerce, India and Israel share a booming trade in agricultural and
pharmaceutical products, joint projects in water management, and trade in textiles and precious
stones. Trade now stands at $5 billion, still about half of the value of India's trade with Iran.

The magnitude of trade with the U.S. is much larger, with India running a huge surplus, exporting
more than $40 billion to the U.S. in 2012, while importing some $22 billion in American goods.

On the diplomatic front, India is trying to maintain a neutral position on the surface, but New Delhi
is, in fact, siding with the U.S. Relations with Tehran are cordial, and the commercial imperative is a
strong motivation to keep them that way, but the bottom line is that isolated, economically
pressured Iran needs India more than India needs Iran. New Delhi opposes Tehran's nuclear
aspirations, and has generally been supportive of Washington's efforts to contain them. India has
voted with the world powers against Iran at the International Atomic Energy Agency, and it has
worked to find other sources of oil to replace Iranian imports.

As the standoff between Tehran and world powers continues, India will try to maintain a semblance
of normalcy in its relations with all sides. Behind the scenes, however, the sense of normalcy in
relations with Iran has already disappeared.

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By Frida Ghitis