India, Afghanistan and Iran have signed the Chabahar Agreement to operationalise the strategic port. The agreement envisions trilateral cooperation for access to the sea for Afghanistan, inter alia for Afghanistan’s trade with India.

The timing of the agreement assumes significance because of Modi’s attempts to strike a fine diplomatic balance between Saudi Arabia and Iran.

Iran and Saudi Arabia are sworn rivals. India wants to court both Iran and Saudis for different reasons without getting entangled in their rivalry. Saudi Arabia’s ties with Pakistan and India’s links with Iran have remained two important factors affecting the India-Saudi Arabia relationship.

Modi’s visit to Saudi Arabia last month was marked by two developments: Saudi Arabia spread a red carpet and exceeded the expectations by conferring on Modi the highest civilian award of their country.

Second, lest it should sweep us off and push sulking Pakistan into Iran’s arms, Saudi Foreign Minister Adel al Jubeir stated during his visit to India that while “India is a strategic partner, Pakistan is a strategic ally and will remain so.”

Actually when Saudis were showering encomiums on Modi, India rather quietly sent its Petroleum Minister Dharmendra Pradhan to Iran in order to show undiminished commitment. While Riyadh feels uncomfortable with India’s growing relationship with Iran, India expects the Kingdom to restrain its ally, Pakistan, from allowing its territory to be used by terrorists targeting India.

Despite being a strategic ally, Pakistan has consciously preferred Iran to Saudi Arabia to the extent of annoying the latter. Pakistan refused to join Saudi Arabia’s war coalition against Iran-backed Shia rebels in Yemen.

Traditionally, India has maintained close economic cooperation with both Saudi Arabia and Iran, the rival poles in regional geopolitics. Even when New Delhi warmed up to Israel in the 1990s as part of the country’s efforts to diversify its diplomatic engagement in the post-Soviet world, it was careful not to jeopardise its good relations with Muslim countries. Ties with Iran, however, were overlooked during the sanctions regime, when New Delhi, arm twisted by the US, cut its energy cooperation significantly, despite Iran’s vitality and huge energy potential, and embraced Saudi Arabia tight.

Modi’s visit to Riyadh last month was a step further down the road. This approach, while not entirely giving up the tri-directional framework, is tilted more towards the Saudi camp and Israel than Iran. Modi is expected to travel to Israel this year, the first visit by an Indian Prime Minister to the Jewish nation. Many see Modi’s trip to Riyadh last month as part of New Delhi’s balancing act between the Saudis and the Israelis. Dharmendra Pradhan’s visit to Teheran, followed by Foreign Minister Sushma Swaraj’s and Prime Minister Modi’s own visit, are similarly being seen as part of India’s balancing act between Saudi and Iran.

While the Chabahar port agreement is a futuristic policy plan, bilateral relations between India and Iran have gone from strength to strength. The bilateral relations have extended from economic ties to strategic ties, pushing both countries to open new vistas in security cooperation.

Modi’s main focus of his trips to both the UAE and Saudi Arabia last month was counter-terrorism. In June 2012, Saudi Arabia deported Zabiuddin Ansari (Abu Jundal), an accused terrorist wanted for his involvement in the Mumbai attacks. Despite Ansari carrying a Pakistani passport and Pakistan’s pressure to not deport him, India succeeded in achieving his extradition. Since then, many suspects, including A Rayees and Fasih Mohammad, have been deported by Saudi Arabia for their involvement in terror financing and radicalization.

Modi is clearly giving a Pakistan spin to the ‘Act West Asia’ policy. His intention is to build a “counter-terror narrative” in diplomatic engagements with Pakistan’s close allies in order to complicate the latter’s foreign policy. India would also not like to stay low when China is raising its profile in West Asia. Chinese President Xi Jinping recently visited Egypt, Saudi Arabia and Iran. The relationship between Beijing and Teheran is going particularly strong.

Saudis have their own calculations behind embracing India. The kingdom is facing economic strain in the wake of weak oil prices. The US is no longer as dependent on the region for energy as it used to be, thanks to the shale boom. Being a “free rider” in this region on the back of security provided by the United States is no longer possible since the US has made known its disappointment with the leaders of the Middle East in general and that of Saudi Arabia in particular. When asked, Obama described US-Saudi relations as complicated, according to an interview published in The Atlantic.

Recently, the Saudis also tried to blackmail the US by threatening to sell off their properties if the US court were to indict Saudis in the trial of 9/11. Demand from China is also receding. Besides, competition in the oil market is expected to tighten with a sanctions-free Iran entering the global economic mainstream without any bars. In this context, India is a vital market for Saudi Arabia. Islamabad is preferring Teheran to Riyadh.