The Cost of Capitulation |
As the United States and Israel escalate toward war with Iran, India faces catastrophic consequences from its strategic alignment with Washington and Tel Aviv. The Modi government’s embrace of Benjamin Netanyahu – a war criminal wanted by the International Criminal Court – and its comprehensive surrender through the recent trade agreement have positioned India on the wrong side of a conflict threatening its energy security, economic stability, regional relationships and geopolitical standing.
The costs compound across dimensions: immediate economic devastation from oil price spikes; geopolitical isolation as Arab states turn away; permanent strategic subordination; and complete moral bankruptcy from supporting genocide and now war against Iran.
Energy insecurity: the immediate economic catastrophe
India’s energy vulnerability constitutes the most immediate threat. Importing 85% of its crude oil, predominantly from the Gulf, India has already lost the advantage of Iranian oil at competitive prices with rupee-denominated transactions by complying with American sanctions.
War devastates this precarious situation. Iran can disrupt the Strait of Hormuz, through which 21 million barrels per day flow – one-third of seaborne oil trade. Iran’s missile, drone, naval and proxy capabilities can attack tankers, facilities and terminals across the Gulf. Sustained disruption would send oil prices from $80-90 per barrel to $150-200 or higher.
At $150 per barrel, India’s annual import bill increases by $75-100 billion, placing massive pressure on its current account deficit and forex reserves. Inflation could reach the double digits, devastating purchasing power. The RBI faces impossible choices: raise rates, killing growth; or allow inflation to spiral.
India’s crude stockpiles last only 20-25 days. War disrupting Gulf supplies for weeks means not merely high prices but actual shortages – fuel rationing, industrial cuts, power failures, economic paralysis. Manufacturing, aviation, transport, power and agriculture would face a crisis. The informal economy would be devastated. Fiscal deterioration would force cuts in development and welfare. Foreign investment would flee.
India’s alignment with US-Israel makes catastrophe more likely. By positioning with war prosecutors rather than maintaining neutrality, India eliminated its diplomatic options. Iranian retaliation has targeted states aligned with India. Arab producers watching India embrace Netanyahu have less incentive to prioritise Indian needs. India has no leverage because it subordinated foreign policy to American priorities.
Geopolitical isolation: losing the Arab world
War accelerates geopolitical realignment, with India on the losing side.
In public perception, the US strike against Iran while negotiations were ongoing is just the arrogance of a bully, as Trump is increasingly seen to be. There is absolutely no justification for this war. The killing of Iran’s Supreme Leader Ayatollah Ali Khamenei and the top political and technology leadership is resented across the Muslim world and beyond. The killing of 165 schoolgirls and staff in US bombing is an act of abominable cruelty.
This might trigger a wave against the US-Israel axis, setting in motion new geopolitical reconfiguration. Because if you feed a bully, you are potentially risking your own safety.
Saudi Arabia and the UAE, having pursued a détente with Iran to reduce tensions and focus on development, will find prolonged war incompatible with their interests. Infrastructure destruction, trade disruption, refugee flows and conflict expansion threaten development goals.
China’s mediation of the Saudi-Iran rapprochement demonstrated Gulf states diversifying from a sole reliance on Washington. Prolonged war will accelerate this, with Gulf states positioning themselves as neutral or as mediators rather than American allies.
For India, this is disastrous. Over eight million Indian nationals work in GCC countries, sending home remittances that make up a sizable share of the $135 billion (2024-25) annual total, supporting millions of families. India depends on Gulf states for a majority of its energy imports. Trade with the GCC stood at around $180 billion (2024-25). Gulf sovereign wealth investments are crucial for........