On every conceivable front, Indian pundits are obsessive about drawing comparison with China. But there is almost total silence when it comes to ‘energy diplomacy’ which ultimately ‘fuels’ growth. The contrast couldn’t be sharper than that on a week the Iranians apparently served notice on Delhi that its longstanding oil trade with India is going to be terminated in August unless Delhi finds a way to pay for the purchases, Beijing celebrated the commissioning of what is billed as the ‘world’s longest gas pipeline (8700-kilometre long) connecting the great gas fields of Central Asia with the Yangtze River and Pearl River deltas of China’s southwestern region, which has been identified for accelerated economic development.
Now, that is a fine example of how foreign policy works as an extension of national policies. Central Asia is a region that was steeped in virulent anti-China dogmas of the Soviet era, and Beijing has done remarkably well in putting the past behind and transforming the region into a friendly powerhouse for the Chinese economy. India’s foreign policy performance has been exactly in the opposite direction — destroying a traditionally close and friendly relationship with Iran systematically through the UPA- government era and turning its back on Iran supplying energy for the country.
The Chinese pipeline project will traverse 15 provinces and supply them with Central Asian gas. This could have been the grand scope of a gas pipeline project connecting India with Iran. And this is of course only part of the story. The Central Asian gas pipeline is expected to bring 30 billion cubic meters of gas to China. But the two other gas pipeline projects under discussion with Russia will bring to China another 68 bcm from Siberia and the Far East. The 1-trillion dollar (not billion, but trillion) 30-year China-Russia deal is expected to be wrapped up by end-2011. In comparison, India’s foreign policy mandarins should have aimed at realising the Iran pipeline as well as the Turkmenistan pipeline.
The Chinese practice of economic diplomacy is revealing. The deal with Russia was supposed to have been concluded during Hu Jintao’s visit to Russia on June 15-18. Hu seemed to have personally intervened to get the deal through but the two sides kept haggling over the prices. People’s Daily subsequently wrote a fascinating commentary full of plain-speaking that “It’s [China's relations with Russia] all about business” and the two countries’ priority to develop ties with the US does not - and should not - come in the way of their mutual cooperation. In India’s case with Iran, on the contrary, the reverse seems to be happening; our leadership is inserting what the Chinese commentary calls ‘ideology’ and ‘Cold War mindset’ into inter-state relationship with Iran.
Is it that the Indian government prioritises shale gas and does not want to create competition from Iranian gas for the technology that Reliance and its US partners may some day bring to India? But China, too, has shale gas. The US Energy Information Agency estimates that China’s recoverable shale gas reserves amount to 36.1 trillion cubic meters [cu m], which is significantly higher than US’s 24.4 cu m, which is the next largest. Indeed, like Reliance, China is also buying into US oil shale operation. Big Oil is already in China - Royal Dutch Shell PLC has started drilling the first evaluation well at the Fushun shale gas block in Sichuan covering some 4000 sq.kms. China hopes to increase the annual shale gas production to up to 30 bcm by 2020.
But China still remains focused on natural gas as a major energy source in the coming decades, given the imponderables about the extraction of shale gas. Therefore, China assiduously built up its ties with the Central Asian region bilaterally and within the framework of the SCO. China point blank refused the US ploy to have Saudi Arabia replace Iran as its oil supplier; it shall have both Riyadh and Tehran as partners. Beijing spurned the US overtures and insisted that it is not for Washington to prescribe its ties with Tehran. There is much here for India’s mandarins to ponder over. Even if the leadership in Delhi is ‘ideological’, the mandarins shouldn’t be.