Prime Minister Ishiba and Indian Prime Minister Narendra Modi chat on the sidelines of the G7 in Canada. (©Prime Minister's Office)
The world is heaving a collective sigh of relief now that the hostilities between Israel and Iran have ceased for the time being. That makes this an opportune time to analyze how it has impacted India and Japan.
One of the countries deeply impacted by the recent fighting is, of course, India.
India's Stake in the Middle East
Why so?
India has had a close relationship with Iran in recent times. In the past, India imported crude oil from Iran. But in the last few years, it had stopped, due to Western sanctions on that country. In addition, India has invested significantly in the Chabahar Port in Iran, which allows it access to Central Asia and Afghanistan.
Before the takeover by the Taliban in Afghanistan, India had funded the construction of the Zaranj-Delaram road in Afghanistan. That road then connects with the Chabahar Port in Iran via preexisting roads. Hence, Chabahar is crucial for India, especially as Pakistan does not allow India overland access to Afghanistan via its territory.
There are also plans to develop a railway network between Chabahar and Zahedan, which is close to the border with Afghanistan.
Countering China's Influence
It is worth noting here that the Chabahar Port is a mere 90 km from Gwadar in Pakistan. China is developing another port at that location as a part of the China-Pakistan Economic Corridor. Beijing's rapidly growing ties with China are a big worry for India, especially as seen during the skirmishes with Pakistan, when Beijing provided Islamabad with military technology.
Chabahar is also important for the India-Russia Transportation Corridor Project. That will connect Mumbai in India and St Petersburg in Russia via Iran. In the event of domestic instability in Iran, all these connectivity projects could face significant trouble. This is important since New Delhi has not participated in the China-led Belt and Road Initiative, along with countries like the United States and Japan
At the same time, India has growing relations with Israel, especially in the realm of defense. India used many defense platforms of Israeli origin (like the Barak-8 missiles and Harop loitering munitions during the recent India-Pakistan clashes earlier in May.
In addition, India has of late abstained from some resolutions in the United Nations that criticize the Israeli attacks in Gaza. India and Israel have also been cooperating in the field of anti-terror operations. Both countries have borne the brunt of terror attacks in the past.
Another challenge for India is that it has had to pull out many of its nationals who were stuck in both Iran and Israel. There is also a huge Indian Diaspora in the Gulf countries who remit large amounts of money back to India.
What Happens in the Long Term?
In the long term, New Delhi definitely has a lot to lose if the fighting reignites. If there is a regime change in Iran, India could find it difficult to develop the kind of connections it now has with the government. In addition, any instability in Iran would help Pakistan, India's bête-noire. It is worth noting here that the Shia-majority Iran does not have the best of ties with the Sunni-majority Pakistan.
If Iran blockades the Strait of Hormuz in future hostilities, oil exports from the Gulf countries heading to India and Japan would be impacted. One good news here is that India has rapidly diversified its sources of energy imports. That is the silver lining.
Also on the positive side, New Delhi could position itself as a mediator between Iran and Israel in the case of this war.
Japan's Choices
Japan is heavily dependent on oil from the Middle East. Indeed, some experts have predicted that if the Strait of Malacca were blockaded, the price of oil could jump to $120-$140 USD per barrel. According to estimates, nearly three-quarters of Japan's crude oil imports are shipped via the Strait of Hormuz. That means any disruption could deal a heavy blow to the Japanese economy.
It is important that Japan has been supporting the stand taken by its ally, the United States. That despite the fact that President Donald Trump had already imposed a 25% tariff on imports of cars and auto parts from Japan, along with a baseline tax of 10% on all other Japanese exports.
It is worth noting that Iran-backed Houthis in the past have also attacked international shipping, including Japanese-owned tankers, passing through the Red Sea. All this marks a dangerous time for the Japanese shipping companies.
Also worth noting here is Japan's increased reliance on crude oil imports. That came in the aftermath of the 2011 Fukushima Nuclear Disaster, when Japan significantly reduced its nuclear power output.
Options for Japan and India
India and Japan have few options, except to wait out the crisis and diversify their energy sources. This is important since there could be a long period of instability in the Middle East, given the tensions that started in the wake of the October 7, 2023, Hamas attack on Israel.
For Japan, too, these events come at an interesting time. It has imported oil from Russia for the first time since the Russian attack on Ukraine and its aftermath.
What is common for both India and Japan is that any disruptions in their Middle East crude oil supply could deal a big blow to their economies. Both are energy-deficient countries. Hence, it is in their mutual interest to ensure that things do not get out of hand in this restive region.
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Author: Dr Rupakjyoti Borah
Dr Rupakjyoti Borah is a Senior Research Fellow with the Japan Forum for Strategic Studies. The views expressed here are personal.
