Energy Security in the Gulf and the Growing Importance of "the East"

Please note that this event was originally off the record. The transcript has been approved by Ambassador Bodine and Professor Gill.

• Introduction
• Remarks
• Questions and Answers

Introduction

JOANNE MYERS:Good afternoon. I'm Joanne Myers, Director of Public Affairs Programs. On behalf of the Carnegie Council I'd like to thank you all for coming out on this beautiful Spring afternoon, and I know you won't regret it.

We have a very dynamic panel, and they will be discussing a very compelling topic: Energy Security in the Gulf and the Growing Importance of "the East."

In recent years, energy security has come to dominate the news, political debate, and business planning in radically different ways. As nations, particularly those in Asia, develop economically, they find themselves in competition with Western countries for limited resources.

While concerns for energy security have long been central to geopolitical interests, today, because of Asia's dramatic economic growth, energy demands have escalated. Consequently, we are beginning to see Asian countries urgently seeking to forge closer ties with oil- and gas-producing nations in order to secure their countries' needs. As a result, across many parts of Asia, especially in China and India, we are seeing a new strategic tapestry developing. It is one that is being woven with threads of oil, gas, and petrochemicals flowing east from the Gulf; and cheap consumer goods, new technologies, and migrant labor who are building infrastructure for energy and transport, flowing west.

The new economic symbiosis is having an increasing impact in other areas as well. As Asian strategic and economic relations become more significant, new political and military ties are also emerging, which have led some to speculate and ask whether in fact we are seeing the beginning of a new dynamic which is a political alternative to the Gulf's dependent relationship with the United States. And if this is so, does this mean that our influence in the region is on the wane?

Our panel this afternoon will draw on a workshop recently convened at MIT [Massachusetts Institute of Technology], which focused on the prospect of the Gulf oil states looking east to India and beyond for markets, trade, and security. This process seems well underway, especially if we consider that the very first trip outside the Middle East that Saudi Arabia's King Abdullah took six months after ascending to the throne in August 2005, was to China and India.

The panelists are:

John Tirman, who I would like to thank for bringing these speakers here today. Currently, he is the Executive Director of the MIT Center for International Studies. Ambassador Barbara Bodine, whose fascinating career in the Foreign Service you can read about in her online bio. Currently, she is a Wilhelm Fellow at MIT. Jack Gill's c.v. is also available in online. You will see that he has spent many productive years in the military. He is now teaching at the National Defense University and at the Center for Strategic Studies in Washington.

I will begin with John, who will say a few words, and then each of our panelists will speak for about 10-15 minutes, and then we will open the floor to discussion. Thank you all for coming.

Remarks

Thank you, John.

JOHN TIRMAN: Thank you, Joanne. It's very good to be here again. This is the second panel that we have mounted here. We had one last year on Iran.

I will just say a word about the Center for International Studies at MIT. You are welcome to visit our website, which has a lot of our papers and other information.

The Center is 55 years old. It has been the main locus of international studies, training, and research at MIT. Within that we have a program called The Persian Gulf Initiative. We have done now seven workshops, commissioned studies and papers, published a number of things, and will continue to do so, including some of the products of this workshop that was held last week.

The workshop was organized by Ambassador Bodine. We are particularly delighted to have her at the Center as a Robert Wilhelm Fellow for this calendar year. Her work on this issue and the conference that she convened last week was really intellectually very stimulating, and I'm sure we are going to be able to draw out some of the things from that workshop today.

We are also delighted to have Professor Gill here today. Jack Gill was in the conference last week. As you can see—I won't go over the bios again—he has extensive experience in South Asia and through his long career in the U.S. Army.

As Joanne pointed out, the reason for our workshop last week and for this panel is to really explore these emerging relationships of the Persian Gulf States, the oil-producing states in particular, and India. All of these states are now looking east for markets for their petroleum products. But also, there are very large trade traditions between these two regions, labor migration, and now, increasingly, strategic interests, military cooperation potentially, and other manifestations of this emerging relationship. So it is a very important and very exciting development, which I think has not been explored adequately in this country.

That is what we are going to do today. We'll begin first with Ambassador Bodine.

BARBARA BODINE: Thank you.

I'd like to thank the Carnegie Council for the invitation to speak with you all this afternoon. I also want to thank MIT and John Tirman. Being a Wilhelm Fellow this year at MIT has been a wonderful opportunity for me to sit back and think about a career in the region and try to think forward on some of the emerging policy issues.

The genesis of the workshop, and the focus of our discussions last week, was the need to look at our current security posture and our current national interest in the Persian Gulf in the context of the Iraq War. One option in the public debate on post-war scenarios is to redeploy our forces from Iraq to existing bases and facilities around the Persian Gulf. We currently have army, air force, naval and headquarters facilities in all Arab Gulf states. One assumption behind this option is that our military presence in the Gulf is immutable and unchallenged, i.e., that we have always been the dominant military power and therefore can expect to be in the foreseeable future, and that our presence is both necessary and welcome. Looking back over the history of the Gulf, I felt that these assumptions were badly flawed. It is equally possible that as a consequence of the Iraq War, neither we nor our friends in the Gulf will accept a major US military presence as either necessary or welcome.

Taken one step further, if the United States does draw down its military presence—either by our choice, out of "Gulf fatigue," or if our friends among the Gulf States find the very considerable American military footprint politically untenable—who steps in as the new security guarantor of the Gulf? Who has comparable national security and economic interests, who has the capability, the force projection capacity? The answer came down to India. But at this point, this was my assumptions and analysis only. I could find no writings on this subject.

MIT agreed to host a three-day workshop of scholars and practitioners to examine whether or not these assumptions and this anaylsis are valid and what does this possible shift mean for the United States. Is this a threat, a benefit, an inevitability, and to what degree can the United States dictate or will the decisions be taken in capitals beyond Washington. This afternoon, Professor Gill and I will review the discussions and some of the conclusions from that workshop. I will take it from the Gulf point of view, and my colleague, Jack Gill, will look at it from the Indian point of view.

Someone described the India/Gulf relationship as "the camel and the cow linked by the dhow." The Persian Gulf area is best understood as a place where three major cultural tectonic plates come together—Persian Iran, Arab Middle East, and India—with kaleidoscopic shifting patterns, to mix metaphors. There has almost always been at least one major outside military power, and for the last several decades that has been the United States.

These relationships do go back millennia, not just decades. The earliest trading between the Tigris and Euphrates and the Indus Valley went along the Gulf. If you look at the various Gulf cities along the coast, they are all one-dhow-sail day apart.

Fast-forward a couple of thousand millennia, and the British established protectorates along the Arab side of the Gulf in the 18th century in order to protect their trade routes. Up until the end of the Raj, the Gulf was administered out of Delhi by the British, and it remained a British naval preserve until the 1970s.

The U.S. presence in the Gulf goes back to about 1938, when Aramco, the Arab-American Oil Company, was established in Saudi Arabia. During World War II, we maintained an air base in Dhahran and the US Navy has been in Bahrain since 1945. But really, up until the 1970s, it was a British lake and we were there in a clearly secondary role.

When the British decided in 1970 to pull out "East of Suez" our first effort at regional equilibrium—and this is about when I began to work on Gulf affairs—was what we called the "Twin Pillar" program, the "Twin Pillar" policy. The stability and security of the smaller Gulf States, the free flow of oil and international shipping, would be guaranteed by the Shah's Iran and Saudi Arabia. Whether it was ever a viable policy option—some of my friends from the smaller Gulf States described it as the hawk and the fox in the chicken coop at the same time—it collapsed in a few years.

One of the most significant years in Gulf history was about 1979. There was a major shift in all the tectonic plates. The Iranian revolution ended the reign of the Shah to be replaced by a revolutionary Islamist Iran. The Soviets invaded Afghanistan. And there was Soviet-backed turmoil and instability in Yemen and the Horn of Africa. What President Carter's National Security Advisor Brzezinski then called "the arc of crisis." It wasn't just the Straits of Hormuz but also the Bab-el-Mandeb at the other side of the Arabian Peninsula, two major shipping choke points.

President Carter, in reaction, established the Rapid Deployment Force (the precursor to U.S. Central Command) and promulgated the Carter Doctrine, which formally declared that the Persian Gulf was an area of vital U.S. national interest. The three major elements of the Doctrine were: to deny access to and influence in the Gulf to any hostile power; to ensure the free flow of oil and that the sea lanes remained open; and ensure the security, the stability and territorial integrity of the Gulf States.

U.S.-Middle East policy, in the minds of most Americans, defaults to the Arab-Israel-Palestinian issue. While that conflict plays a central role in our national policy, and we certainly have an abiding moral commitment there, a critical look at where our vital economic and strategic interests are, where they are most directly threatened, shows that it is squarely in the Gulf. And if you look at where our time, our treasure, and our blood have been dedicated over the last 40 years, 50 years, it has also been in the Gulf.

I am not entirely sure where the math came from, but one of the participants in the workshop calculated that over the last 24 years there have been 26 US military engagements in the Gulf, including most notably the protection of international tankers and shipping in 1988-89, the liberation of Kuwait in 1991, the No-Fly Zone over southern Iraq, airstikes on Iraq in 1998, the toppling of the Taliban and the on-going war in Iraq.

The increasingly obscure two-year tanker protection regime at the end of the Iran-Iraq War was a critical component of a chain of engagements. With the navies of 17 countries and the cooperation of all of the Arab Gulf states, it was the first multinational coalition of the willing in the Gulf. The mission was specifically to fulfill again the three basic Carter Doctrine criteria, which were shared by the majority of the international community: to deny a hostile power (in this case Iran); to keep the oil flowing (counter Iranian mines and patrols); and certainly to protect the security and the stability of the oil-producing states.

The second major shock, in 1990, was of course the invasion of Kuwait by Iraq. In this case, 35 countries, including most members of the Arab League, joined a coalition to expel, again, a hostile power (Iraq) that was threatening the free flow of oil, and certainly the survival of two Gulf states (Kuwait and the United Arab Emirates), and possibly a third, Saudi Arabia.

1990 was also the year of the end of the Cold War and the end of the Soviet Union, and the end of the Soviet occupation of Afghanistan.

The invasion of Kuwait, woke up a number of states, India in particular, to the vulnerability of their oil supply. While this would have been a problem before the 1990s, as India increasingly became a major economic power, with two-thirds of its energy resources from the Gulf, the question of vulnerable resources increasingly became a major strategic issue.

Also at the time of the invasion, India was badly embarrassed by its halting response to the evacuation of its citizens, more the 300,000. out of Kuwait. And so the question of force projection, as well as the security of oil, became a growing issue.

Since the turn of the millennium, since 2000—and I love going through about 3,000 years of history in ten minutes—are a series of reinforcing fundamental strategic shifts. India is now a mature democracy, a free-market economy, and, significantly, has been acknowledged as a strategic partner. The Gulf States, because of the sharp increase in oil prices, are now awash in funds, much of it going into the private sector. There is far greater liquidity and also greater risk-taking in investment.

The United States' perception of India has changed. Unfortunately, there has not been a corresponding shift in our perception of the Gulf. Specifically, we have also not fully understood, I believe, that since 2003 we have destroyed the existing security equilibrium in the Gulf, the one first crafted by the British, confirmed by the United States and supported by the international community and the states of the Gulf themselves, risking a vacuum.Whatever public perceptions, India is far more than a chapati shop and a call center, and the Gulf is far more than just a gas station. There is a convergence of interests between India and the Gulf, and between these two parties and the United States to maintain the security and the stability. But how?

"Why India? Why not China?" China certainly has the same energy interests, it has many of the same strategic interests, but the role of India and the role of China in the Gulf are fundamentally different.

The Gulf is India's "near abroad." The Gulf States see India as not "other," but as us. India has the capacity to project forces just over the horizon, where the Gulf States have preferred them to be.

The Gulf States need stable markets just as consumers need stable supplies. We see it as an issue of security and stability of access to oil. To the Gulf States there is an equal imperative of stability of markets.

The Gulf States have the money, but they need assistance to create the infrastructure, they need intellectual capital, they need technical capital. India and the Gulf are two regions that increasingly recognize and accept their mutual dependence..

The question is going to become—and I will now end—what is going to be the role of the United States in this very changing, evolving Gulf dynamic.

JOHN GILL: Thank you, Barbara.

Thank all of you for coming this evening. Thanks especially to Joanne for hosting us here. I want to offer my particular gratitude to Dr. Tirman and Ambassador Bodine for this very valuable conference on what I see as an extremely important topic that I look forward to talking about with all of you.

I have to start with a standard disclaimer. Although I retired from the U.S. Army, I am still a U.S. government employee, so my comments are my own. They don't reflect the U.S. government viewpoint at all. These are my own thoughts. Indeed, I will be reflecting mostly what the conferees at our discussion mentioned.

Let me build on Ambassador Bodine's remarks, but sail a bit further to the east and offer a couple of themes looking at the Gulf from the perspective of the Indian Ocean and India as a basis for the discussion.

In the first place, this is a very important topic, and one, as our previous speakers have mentioned, that is fairly well neglected, at least on these shores.

Which leads me to my first point, and that is that the topic of India and the Gulf, in my view, tends to fall in the interstices of U.S. government policy apparatus. That is to say, if you are in the State Department or in the various parts of the Pentagon, if you deal with India, your view kind of ends at the Straits of Hormuz. If you deal with the Gulf and the Middle East, then maybe you see as far as someplace into the middle of the Arabian Sea and that's about it. So the way the government is structured, thinking about this topic is not necessarily the first default position of any of the strategists or desk officers in the State Department or in the Pentagon. And likewise, the operational military also falls, as most of you probably know, into two commands—the Central Command in Florida, the Pacific Command in Hawaii—that divide this very interesting topic. So, because of this discrete compartmentalization in the government, understandable as it is, these connections are not often made.

But, despite the bureaucratic impediments on the U.S. side, obviously, as Ambassador Bodine has pointed out, there is a very deep historical linkage between these two regions, and one that has only become more important in our globalized, interconnected, and very energy-thirsty world. So, therefore, it is very useful for us to study this, look at it, make policy recommendations, et cetera, which is why I think this is such a great idea for the topic of our conference.

The second theme I'd like to highlight is this very importance, and hence my appreciation. If we look at it from India's standpoint, as Ambassador Bodine has discussed, and from the Gulf angle, I'll use the word "vital" to describe India's interests as it looks at the Gulf. I don't use the word "vital" by accident. When U.S. government officials talk about "vital" interests, it has a very important meaning and is a very powerful, loaded word.

Which is to say that, because the government of India has placed a very high priority on economic development for its own future security and prosperity, this economic development that has been so dramatic in the past several years is not possible without access to energy on a steady and fairly stable basis. So this is the most prominent aspect, the need for oil and gas that's essential to India's economic progress. Some 70 percent today of India's fuel supplies come from the Gulf region. That's likely to go up to 90 percent in the next 20 years or so.

Moreover, there is an extremely large expatriate work force. Ambassador Bodine touched on this. The number approaches four million Indian citizens who work in the various Gulf countries, almost two million in Saudi Arabia alone. So (1) that provides for the Indian government obviously a concern, a national interest, that it has to be aware of and protect for its citizens; and (2) also, they provide an important input to the Indian economy, something to the tune of $10 billion a year in remittances. The Gulf also serves as an important market for Indian goods and the source for Indian foreign investment capital that will also help to drive the Indian economy.

Less obvious perhaps is that the Gulf, and we mustn't forget that it includes Iran, is important to another element of India's policy, and that is access to Central Asia and Afghanistan. There are important construction infrastructure projects going on between India and Iran to create links between the Gulf and Afghanistan and then on into Central Asia. This is an important part of India's foreign policy.

On the preventive side, if you will, there are obvious counter-terrorism concerns that India has for dangers emanating from the Gulf and linked to—particularly in India's perspective because of some of the terrorism events that have taken place on Indian soil—international criminal organizations that have bases, if not headquarters in some cases, in Gulf States. So it is a way to help to inoculate India against extremism of a religious variety coming out of the Gulf and, to some degree, to vitiate Pakistani influence among Muslim states in the Middle East and the Gulf region.

So given all these vital interests, the key Indian objectives include access and continued regional stability to ensure the supply of oil and gas.

This is also important for the United States. Given the prominence of India in U.S. foreign policy in the Clinton Administration, and then vastly accelerated in the current Administration, and the inherent centrality of the Arabian/Persian Gulf for U.S. security, it is beneficial—indeed, I think one could say fairly imperative—to seek opportunities where the United States and India can harmonize their interests and mutually reinforce one another.

So convergence, then, between the two countries and their interests is the starting point. There are several critical areas where U.S. and Indian interests overlap.

In the first place, for the United States as well as for India, regional stability and prosperity in general are critical, very important national interests, specifically the access to oil and gas resources, but also the access to markets and the promotion of support of free trade. Countering terrorism, diluting religious extremism, are interests that Washington and New Delhi also share. And, by the way, stability and reconstruction in Afghanistan has a second-order effect for stability in the Gulf. Moreover, the United States has a great interest in seeing India succeed. Given the importance of the energy resources of the Gulf for India's economic success, that too is a U.S. interest.

On the other hand, as one of our conferees mentioned, there are hazards to navigation. And we have to be aware of those so that we can try to minimize them or avoid them, at least incorporate those into our calculations.

The most salient among these, of course, is Iran. There is certainly no interest in India in seeing a nuclear-armed Iran or any export of Iran's revolutionary inclinations. On the other hand, the Indians have made very clear in statements from the Minister of External Affairs and the Prime Minister that they do not see military solutions as being viable when dealing with Iran. So a diplomatic or political answer is the preferred course from New Delhi's perspective.

India has had long and cordial ties with Iran, and there are a lot of future prospects. They have very close relations today, and there are a lot of prospects for them in the future to work together on economic, diplomatic, and military topics. So it is a mutually beneficial relationship that the government of India would like to preserve. India has no interest in alienating either Tehran or Washington, so it has to walk and balance its policy very carefully.Additionally, from the Indian perspective, the centrality of what is often termed its "strategic autonomy" is absolutely bedrock. So India will maintain its own course and will collaborate with other countries as fits its interests and as it balances its own concerns, but this strategic autonomy will be a central piece of its foreign policy.

There are also some important constraints, in addition to interests, that operate when we look at things from the Indian angle. I will briefly outline some of these and we then can then talk about them in discussion, if that's of interest to you.

In a general sense, India will endeavor not to endanger its economic progress; but also its foreign relations with the United States; with Iran; with the Gulf Cooperation Council States, since those are the source of much of its energy supplies; or its relations with Israel, for that matter, which is a major source of military technology and equipment. India has managed to walk a very careful line, balancing its relations with Israel, with the Arab States, with Iran, and with the United States in, to my mind, a very careful fashion, and quite successfully.

Before I move to the other one, we also need to keep in mind that India is also very aware of its interests in other parts of the world. We are focused here on looking to the Persian Gulf, or Arabian Gulf, but India also has important interests in South East Asia, with China, and further into North East Asia, and it will keep those in mind as well as it considers its security interests with the Gulf.

Finally, India currently has some important physical and financial restrictions on capacity to act in the Gulf. It can complement, as one of our conferees pointed out, but not necessarily replace, the United States. So there is good reason for us to cooperate, since so many of the interests overlap.

It is clearly in our interest, as this Administration has pointed out, to see India's capacity grow in the future. So even if India finds itself somewhat limited in some respects at present, that could change in the future. Again to cite one of our conference participants, the Indians in this delicate web of Arab-Iranian relations have managed to walk a very careful and fairly successful line.

Let me conclude by highlighting again the importance of strengthening, in my view, the areas of convergence and complementarity between the United States and India in a region that is of vital interest to both. We need dialogue to harmonize policies and try to avoid, or at least minimize, disagreements. The United States should be trying to avoid asking India for things it can't provide or that would force it into uncomfortable positions, and the two of us should be looking for areas where we can have policies that match and complement each other. The security of this region is obviously of key interest to both Washington as well as New Delhi.

John, I'll turn it back to you. Thank you.

JOHN TIRMAN: Thank you.

BARBARA BODINE: Do you want me to say anything further?

JOHN TIRMAN: Well, there is one point that was made during the conference last week that we had a good deal of discussion on. It has been mentioned, but I think it is worth perhaps a little elaboration. That is this pipeline that is being built from Iran to India, a natural gas pipeline. It is a very important issue for these two countries. It is also an important issue for the United States. How the United States acts on this emerging deal will say a lot about the U.S. view of the future of the Gulf, I think. It is one of those events or policy issues that in some ways encapsulates an entire range of issues for the Gulf, for India, and for the United States.

Perhaps our two scholars here could just very quickly elaborate their views on this.

BARBARA BODINE: How we respond on the pipeline represents many of the issues in a microcosm. It brings up, I think, a very important distinction in the discussion on energy and the Gulf.

One is a question of energy access vs. energy security. There is a distinction there. One is political, diplomatic, and economic. Energy security, however, is more of control, and can slide toward discussions of militarily securing resources.

The policy of the Indians so far, and I think for the foreseeable future, is much more on, "How do we ensure stable access at stable prices?" The pipeline is part of this. Their ability to navigate between Iran, the Gulf States, and us, and their concerns about Pakistan are all part of this energy access dynamic. As I said, it very interestingly, not surprisingly, mirrors the question from the Gulf States side of stability of markets as well. The pipeline addresses that.

If you look at other pipelines that have been built—if you also look at one paper that we have commissioned from the workshop to be called "Pipelines and Pipedreams"—pipelines are seen, not always correctly, as a a way of bypssing political issues to ensure unimpeded access to energy.

JOHN GILL: This is a very sensitive topic and has generated a great deal of controversy. A number of my friends who are energy experts—I am not—see this as indeed a pipedream, as something that is very unlikely to ever come to fruition. But there is also a body of opinion that argues quite strongly that this is a very important element in Indian economic development and would bring tremendous benefits economically to Pakistan as well.

So from the U.S. government's perspective, as many of you have no doubt seen, because of the Iranian connection the United States has expressed, shall we say, displeasure—

BARBARA BODINE: We have harrumphed.

JOHN GILL: Harrumphed, yes, mightily, in looking at this pipeline.

But there has been some nuance in that too, and it will be interesting to see how that develops as the U.S.-India relationship deepens. This will be a topic of dialogue between the United States and India as we discuss the very broad interaction that the two countries have developed.

There are certainly a lot of problems standing in the way, both financial and physical, as well as the danger of instability in the southern parts of Pakistan through which such a pipeline would have to pass. Even if somehow you wipe out the Iranian aspect of it as a problem for U.S. policy, there are some other practical problems as well. But this is clearly high on the agenda when senior U.S. and Indian leaders get together.

BARBARA BODINE: If I could just put in one little footnote, one country that we have touched on but not really focused on—and it's very important when you are looking at how India and the Gulf look at each other and how Iran fits into this—one of the common threads is Pakistan. What you have is a great deal of concern in India about Pakistan, its stability, the extremism that may or may not be coming out of it. It is a concern that is shared by Iran. This is actually one place where they have very similar views.

Interestingly, the Gulf States, even though again you have an Islamic connection, also triangulate on this issue of Pakistan. One of the elements of the Saudi-Indian dialogue as well as the Indian-Iranian dialogue is where Pakistan fits in, and how do you contain Pakistan, how do you blunt its impact, how do you try to mitigate any destabilizing forces that might otherwise be coming out of there.

Questions and Answers

QUESTION: Ambassador Bodine, you just touched on the question of China. You talked about the fact that India is very important because of all the historical connections with the Gulf States. But all the economic reasons and strategic reasons that you talked about in terms of the importance of this area to India are also true about China. And China, of course, has military forces much greater than that of India. Won't they inevitably get involved in the whole question of the Gulf States and energy issues there? And won't the United States and India in their mutual relations have to take into account what China will be doing?BARBARA BODINE:Yes. Again, one of the things that prompted me to try to put together this workshop is that I had been at a conference where they talked about India-and-China and the Gulf—and India and China were one word—as if they shared exactly the same interests, capabilities, that they were joined at the hip. I think they are long-term competitors far more, and actually they are actually short-term competitors as well.

China has the economic and strategic interests that India has, absolutely. And the Chinese are there, absolutely. But when you are looking at which of the two the Gulf States are going to look to to be a guarantor, which one do they feel more comfortable with, who is going to be able to have an ease of access of dealing with both the Arab side of the Gulf and the Iranian side of the Gulf, it's India. China is wholly "other." There is no tradition of contacts there at all. So yes, you are going to have investment, you are going to have trade, you are going to have other things, but you don't have that core that distinguishes the Indian relationship.

On military forces, it's location. India is right next-door to the Gulf; the Gulf is its "near abroad." India is putting a great deal of money into its navy. Its navy is going to be either the third or the seventh largest, but certainly in the region it is going to be overwhelmingly the major naval power. China cannot replicate that. Even if China develops a navy, it is still going to be that far away; it is not going to be able to project into the Gulf.

Interestingly, much of the naval assistance that we are giving to India is force projection type of vessels.

So I'm not discounting China, but if you look at the two as to who in the long term is going to be the dominant one—to a very large extent, the Gulf Arabs have looked at the two and said, "If we're going to be putting six eggs in one basket and four eggs in another basket, we are going to go with India."

They also see India as a place they're more comfortable with. They feel more comfortable with its political system, with its legal system. They are more comfortable with it as a democracy and its rule of law. It's a fit that the Chinese simply don't have.The Gulf Arabs also look at something as basic as the depth of the middle class, the strength of the economies of the two. They see it as "The Tortoise and the Hare." The Indians may be the tortoise, but we know the end of that story.

They have a wonderful way of describing it. They see China as an apple and India as an orange when it comes to the middle class. With China, it is very bright and shiny but very thin. With India, as the orange, it may not be quite as shiny but it is much thicker and much stronger. So they are definitely looking at that, not mixing apples and oranges.

QUESTION: I heard someone on TV who is—I can't remember his name, but he is a general at the Hudson Institute. His view on Iran was that we really basically have two choices: we could have an Iran with nuclear energy that's hostile to us; or an Iran with nuclear energy that wasn't hostile to us. Of course, he came very strongly on the side of not hostile to us.

In looking at this area, besides that we share with India a desire for stability, we're also competitors, because there is going to be less and less energy, and China and India need more, and we're going to want it.

So looking at the whole package in oranges, how do you feel about our relationship to Iran; and, if we improved it, how would it impact with Saudi Arabia? What's the wisest course for us?

BARBARA BODINE: As to a nuclear-energy/hostile versus nuclear-energy/not-hostile—I always go for not-hostile. I'm a diplomat. We do not-hostile.

I think it is possible to have a non-hostile relationship with a nuclear-capable, if not nuclear-weaponized, Iran. They are further from the weaponization than some of the more extreme pundits would lead you to believe. We probably have more opportunity to do what somebody calls "regime evolution" than we do to try to stop the development of nuclear weapons. And to the extent you try to stop the nuclear weaponization, you are actually fostering it, because you are a threat.

Interestingly, one of the reasons that the Iranians say they want nuclear energy—not weapons, energy—is that they want to be able to export more of their oil. So, in a sense, we should be encouraging them to have a nuclear energy capacity because it actually frees up more oil for the international market. It also gives them more money if they can do it that way.

This is a place where, again, I think India has some interesting roles it can play. They are a nuclear weapons state, but they have also moved to an internationally acceptable nuclear power and have demonstrated very dramatically that if you are a responsible nuclear state and a non-Western state, you can be accepted; that there are rules, but that if you play by them you will be accepted as a reasonable adult power. India can play that role with Iran. I think India can also help us deal with Iran.

It is certainly not in India's interests, or anyone else's, that we have a hostile Iran, that we have a dysfunctional Iran, or that we have military action in Iran. So I think they can help on that.

JOHN GILL: We should point out that, as I mentioned, this difference between the United States and India on Iran is something that the United States has to take into account as it is formulating its policies vis-à-vis Iran. We don't want to damage the relationship with India by pushing too hard in some other part of the world that infringes on our relations with New Delhi, since that is clearly for this Administration, and I think for any foreseeable administration, going to be a very high priority.

QUESTION: It's an interesting scenario that you point out, but my question really revolves around this: India and Pakistan, Hindu and Islamic countries, have been at odds for quite some time. Why would the states of the Middle East that are Islamic in nature then depend upon a Hindu state to provide security for them against a fellow Islamic state?

JOANNE MYERS: To whom are you asking the question?

QUESTIONER: Anybody.

BARBARA BODINE: First of all, India is the second-largest Muslim population in the world. There are 150 million Muslims in India. Sorry I'm going off into Professor Gill's territory. I'll turn it around and take it from my point of view.

From the Gulf point of view, the fact that India is a—I'm not going to call it a secular state, I would say a pluralistic, nonreligious state—in some ways makes it easier for India to serve as an honest broker and a security guarantor. They are a (relatively) neutral party. The fact that India is able to operate comfortably with the Shia Iranians, the Sunni Arabs, with Israel, with us, is their strength.

And it's interesting that, coming from the other side, the Arab Gulf states are in a position, and have actually shown that they are willing, to help India resolve its problem with Kashmir. The Saudis have offered, and I believe have begun to take steps to work with the Pakistanis to try to pull them into a resolution of Kashmir. Instability in Pakistan is as much a threat to the Gulf States as it is to India. In that sense the Indians benefit directly from their relationship with the Arab states and the Arabs, specifically the Saudis, may help resolve this longstanding problem.

JOHN GILL: Depending on whose figures you count, India is either the second- or third-largest Muslim country in the world. In fact, the top four Muslim countries in the world are all east of the Straits of Hormuz. So it has a huge Muslim minority, a very important piece of the Indian social fabric and polity.

QUESTIONER: It's only one-tenth of the Indian population.JOHN GILL: About 12 percent. But nonetheless it is very huge in terms of overall numbers.

But, as Ambassador Bodine pointed out, as a secular democracy, India has an appeal that a fellow Muslim state might not, in that if you bring Muslims from Pakistan, you can import Sunni-Shia problems, other frictions, and difficulties that maybe you don't want to import into your small Gulf monarchy.

BARBARA BODINE: Just to play off of that, one of the other reasons that many in the Gulf look to India as an interesting demonstration model is that India is a fully functioning, non-Western democracy. For those who are trying to figure out how do you democratize without necessarily having to Westernize and how do you not look as if you're just playing along with the Americans, the Indians have a demonstration effect that almost no one else in the region has. And so you have, particularly reformers in the government and non-government in the Gulf, who see bringing India in as a way of being able to bring this in as well.

JOHN GILL: There's also a human capital issue. I think, in addition to unskilled labor, there is a demand for middle-class, educated people to fill in niches all through the Gulf. India is a very good source, given its education system, for that kind of human capital that is very appealing for other countries.

BARBARA BODINE: It's interesting, pre oil, many Gulf Arab families sent their sons to to India for education. Today, the Indians, in developing their technical schools, are actively recruiting Gulf Arab students. Our visa restructions encourage this trend.

Further, India can serve as a demonstration model of a pluralistic, mature, non-Western democracy, something China cannot, with a free-market economy that appeals to the Gulf Arabs.

QUESTION: I have a question regarding nuclear energy and the pipeline. With the sort of revolution that's going on with nuclear energy, the research and development, and the new contracts that are coming out in China, plus the new direction the United States wants to take, how is that going to affect U.S. interests in the Gulf States with their oil, and how would that possibly affect the pipeline or the interest in the pipeline? In the next 20 years, we want to have a stronger focus in nuclear energy, more interest in nuclear energy, and steer away from the fossil fuels.

BARBARA BODINE: Right. I think the question that was brought up earlier is that there is a finite amount of oil and an increasing demand. There are sectors where you can use nuclear energy instead of oil, and then there are some places where you still have to use oil.

But if you come up with, maybe not alternative fuel, but complementary fuel sources—and again, this is why the Iranians are looking at it and also the Indians—there is no reason that that has to be an either/or.Funding for the development of alternative fuel sources comes from oil states. They recognize the importance of promoting non-fossil fuel power/energy sources, including nuclear power.

It is going to come down to this question of how comfortable we are with states like Iran and others having a nuclear capacity. Do we think that there are ways of being able to control how far it goes, and are we comfortable with those regimes, and are we going to make a choice between the benefits of nuclear energy and our concerns about nuclear proliferation?

One of the things that I know a number of Arab Gulf oil people said when someone asked them, "Well, why are you investing in alternative power sources?" is, "We didn't wait until we ran out of rock before we ended the Stone Age. We have to start thinking beyond."

There is also as sense of having a responsibility to use the oil in a smart way and not in a profligate way. This again goes into finding alternative sources.

JOHN GILL: I think there's also a time factor. In India's case, the percentage of electrical power generated from nuclear plants is very, very small at present. One of the arguments in favor of the U.S.-India civil nuclear deal is that it will help India draw more of its electrical power from nuclear sources.

But that's going to be a long time coming. So those who would argue in favor of the pipeline would say that, regardless of how well and how quickly and efficiently we progress in nuclear energy, there is going to be some gap that has to be bridged between economic development and the energy coming from nuclear sources. So those in favor of that pipeline proposal—or other pipelines, for that matter, in other directions—would argue, I think, in that arena.

QUESTION: Thanks. This is a most interesting discussion, and a little bit new, I have to say, to me. I think maybe in your workshop you have gone further than perhaps many of these articulations have gone in India. I find myself agreeing with a lot of what both Ambassador Bodine and Jack Gill have said this evening. But I would like to just make a few random points.

One is that India has stayed out of any form of military engagement in the Gulf. I think that is rather important in terms of how we [Indians] think of ourselves, as not seeking military dominance or any other form of dominance in the Gulf. You know that it was a complicated process, staying out of going in with some military or police into Iraq.I think we certainly have the very strong historical links that you spoke about. We have civilizational links with the Gulf and with Iran. These are really quite important. For anyone who has visited India, particularly North India, you would see that the architecture, the food, even the languages are full of words out of Arabic and Persian.

So it is really a part of our self-image, if you like, this relationship.

We do have a very large percentage of the population which is Muslim. I don't know why Ambassador Bodine wouldn't call us secular, but that is how we think of ourselves. We have a constitutional democracy, which requires that all religions enjoy equal respect. Like any other country, we have problems, we have tensions, but the way the institutions have developed they do keep religion out of the governance.

I think that there are other aspects which are really quite important. Certainly, access to energy sources will remain very important, because as it happens at present we are in a sense blocked on both the east and the west. So it is not just a question of whether the pipeline from Iran has to come through Pakistan, but, for instance, the discussions that we had with Myanmar regarding the import of gas. The pipeline needed to either come through Bangladesh for its most efficient and economically viable route, or alternatively we would build—and it is part of the considerations—a pipeline that encircles Bangladesh so to speak. It goes up all the way through the northeast, alongside of Bangladesh, through India's northeastern states. So access to oil is certainly very important.

And I think it is also correct that at present we produce only about 3 percent of our power from nuclear sources, and the projection as of now is that we hope to go up to 10 percent, but only by 2020, by which time certainly we hope the economy will continue to grow rapidly. But we are already short of energy, and this is really rather important.

The understanding with the United States on civil nuclear cooperation has at its heart India's requirement for energy, but also the quite severe pollution that is coming out of our use of coal. Even though India has a lot of coal, it is really very poor-quality coal with a high fly ash content.

So I would say that we certainly have vital interests in the Gulf. There are many convergences here with the United States. But we are not actually seeking dominance. That has not been the historical relationship, and it is also not the relationship that India's projections and plans seek.

I would also just take issue with Ambassador Bodine characterizing as embarrassing the evacuation of Indian workers in the first Iraq war, because I think we really did rather well. In two months we evacuated almost 300,000 people through Kuwait, most of them by air and some with ships, without any assistance from anybody at all. So I don't know why that would be an embarrassment. We tend to think of that as a successful operation carried out using, of course, pretty much every kind of aircraft that we possessed, including having to bring the civil airlines into play.

I would say that maybe in understanding what will happen in the Gulf, it is actually quite important to bring in the perceptions that India has of itself and of the Gulf, and not just looking at it from concepts that the United States has evolved in terms of its own presence and relationship with the states there.

Thank you.

BARBARA BODINE: I didn't mean to imply—and I don't think it really was implied in the conference either—that when we were talking about vital interests and seeking ways to ensure them, guarantee them, and protect them, that it is a military dominance issue. In fact, I think that should be the very last thing. I personally think that our relations with the Gulf States have gotten badly skewed in the last several years, where we see everything through military domination only.

One of our conference participants raised the importance of cross-investments, of economic relations, of what Harvard Professor Joseph Nye calls "soft power." That is where the real access and the real role are.It is, I think, an important point, the growth of the Indian navy and its ability to project, and I think that this is something that is to the good and needs to be incorporated. But this whole question of India's role and influence and interests and capabilities is far, far broader than just a question of military dominance or not. That's not the issue, no, not at all.

JOHN GILL: I think it's very interesting that, first off, the new Indian Navy Chief's first visit was to the UAE [United Arab Emirates], which was just, I think, in February.

But also, if we look back last year to the crisis in Lebanon, it was not highlighted dramatically in the U.S. press, but there happened to be four Indian navy ships in the eastern Mediterranean at that time on a goodwill cruise. Those ships participated in evacuating Indian citizens from Beirut. Not only were they evacuating Indian citizens, but also other South Asian nations asked the Indians to help them. So Sri Lanka, Nepal, Bangladesh turned to New Delhi and said, "Could you help our citizens as well?" This is an indicator of the kind of assistance, the kind of use of military force, even in a small way, that can be sort of a harbinger for the future, but certainly not in the sense of dominance or that kind of thing.

JOANNE MYERS: I just have one question, and maybe you could take a moment to answer it. You didn't talk about whether or not the United States' influence in the Gulf is on the wane because of these new strategic relationships. I was just wondering if you could maybe just say something briefly about that.

BARBARA BODINE: I do think that it is shifting. There is no question that the Iraq war has been a major element in that. The way that we have portrayed the democratization, which has come across as very heavy-handed, has actually been probably one of the bigger problems for Gulf reformers. This is a massively unpopular Administration in the Gulf, as it is in an awful lot of other parts of the world.

So yes, our influence has waned, but it has waned in other ways more than just the war, and this is where I think it is important. The Gulf's economic relations are much broader than they were. We were talking about the amount of money that is in there, the growth of the private sector, the investment. A lot of them are looking at other places to invest. I think we can all remember the Dubai ports fiasco. So they are looking for other places to invest their money. They are looking for other places to educate their children.

The idea that the American presence was going to be the protector against Iran and Iraq, and even sometimes Saudi Arabia—they now worry if we are actually going to be the precipitator of action that is going to put them in a difficult position.

We are not about to get thrown out. This is not a hostile relationship. Our roots and our relationship in the Gulf are very, very deep and very strong, and I think that ultimately they will prevail. But the overwhelming dominance that we have had in the energy sector, in the economic sector, in trade, and in security, I think that that is over.

It is a multipolar world. It probably was before and it is going back to one. The issue really is not so much is our influence waning, is this necessarily bad, but that there are other major states, India being one of the primary ones, where we have shared interests, where we have convergent interests, and where we can share these things.So it is not an either/or; it's not we're dominant or we're out. It's a question of a shift, a maturation of other relations, but getting it away from strictly the military.

JOANNE MYERS: Jack, do you have any comments?

JOHN GILL: No, not on that anyway.

JOANNE MYERS: John?JOHN TIRMAN: Just one very quick addendum to what Barbara was saying. That is that we need to continuously pay attention to the economic relationships in these parts of the world because it's very dynamic and very much in flux. While I would not say that the military relationships or the strategic thinking follows in some mechanistic way from the economics, it is nevertheless a very important thing to keep our eye on.

Just one little example is that there has occasionally been talk of changing oil pricing from the dollar. I don't think that is on the horizon anytime soon. But you could imagine how that would change the U.S. economy, for one thing, at least a temporary shock. But it also drives relationships, significantly relationships mainly really with China, which holds so many dollars, but also in the Gulf particularly.

So economics matters very much in all these relationships. Even when we feel like the relationship is overwhelmingly military or driven by war, instability, keep your eye on the economics.

BARBARA BODINE: If I can even add an addendum to both what John and I said when we are pondering whether or not our influence is waning and is this good or bad and how do we cope with it, we have to be aware of some of the signals that we also send. You know, we talk about how we are going to end our dependence on Middle East oil; we don't want to be dragged into their disputes anymore; we talk a great deal about leaving the Gulf. I think we need to be aware of the signal that we are sending to the Gulf States and to the region, that we want out.

Now, I personally think there is a lot more political hyperbole in that than there is rational economics, but we have to understand that we in a sense are saying that we want to reduce our presence, our role, and the political relationship. And so, in a sense, we send a signal saying: "We don't want to have the role that we had before." And so we just need to be aware of that too.

JOANNE MYERS: I'd like to thank you all, especially John for organizing this, and thank you for joining us.