Iraq crisis: Economic, political challenge infront of Indian Government

The recent Iraq crisis has brought the new Narendra Modi Government to a litmus test as far as its foreign and economic policy is concerned. The Government's prior responsibility is to bring back safely all its citizen trapped in Mosul, Baghdad, Tikrit and other cities of Iraq. Government's of various States like Andhra Pradesh, Telangana, Punjab, Kerala, Himachal Pradesh, Uttar Pradesh, Tamil Nadu, Haryana, Jammu & Kashmir have requested the Centre to ensure their safety passage to their native places, who are currently stranded in strife-hit Iraq. The State Governments has also written letters to the External Affairs Ministry seeking rescue of the stranded people.

According to Amnesty International, hundreds of Indian workers are stranded in Najaf as their employers had refused to return their visas. The kidnappers are from Sunni militia -ISIS(Islamic State in Iraq and Syria) and the violence in the country has killed hundreds of Iraqi soldiers. According to news reports, over 10,000 Indians in Iraq are located in either Shia-dominated area of Baghdad or in Kurdistan which is extreme north-eastern part of the country. The ISIS wants to execute Shias and release Sunnis as they believe that Shias are apostates and must die in order to forge a pure form of Islam.

What is ISIS? How did the group emerged and what they want?

ISIS (Islamic State in Iraq and Syria), founded in 2006 under the name of ISI (Islamic State in Iraq), which overran towns and cities north and west of Baghdad over the past week is an unrecognised State and Jihadi militant group in Iraq and Syria influenced by the Wahabi movement. It was established in the early years of the Iraq war and pledged allegiance to Al-Qaeda in 2004. However, Al-Qaeda cut all ties with ISIS in February 2014, after a power struggle.

ISIS has gone from strength to strength since 2006 by launching attacks with the strategy to seize resources like weapons, oil wells and money. Their aim is to erase boundaries - not for peace and love - but to establish an Islamic State governed under Islamic laws. ISIS is believed to be more dangerous than Al-Qaeda as they can be compared to terrorists groups like Boko Haram who are active in African States.

ISIS wants to execute Shias and release Sunnis

In a bid to establish Islamic States, they have different strategies for different nations. In Shia majority Iraq, ISIS have used Sunnis' disappointment with the Government to gain strength. In Syria, it has seized territories already not under control of the Government.

That it is growing faster is evident from the fact that it was known in 2006 as ‘Islamic State in Iraq', now as ‘Islamic State in Iraq and Syria' and also alternately known as ‘Islamic State in Iraq and the Levant'. Levant is a region which includes Syria, Lebanon, Israel, Palestine, Jordan, Cyprus and Hatay. Levant is described as the crossroads of western Asia, the eastern Mediterranean and northeast Africa. Their fast growing strategies indicates intentions of establishing Islamic world dominion. One of their maps of ‘world dominion' includes parts of northern and western India, including a part of Gujarat.

Impact of Iraq crisis on the world and India

With Iraq being the world's second largest crude exporter after Saudi Arabia, the ongoing crisis will have significant surge in oil prices. US President Barack Obama has warned that the crisis may spill over into other countries.

"Iraq is a concern for us... The impact (of violence in Iraq) on oil prices and supplies," a top Indian Government source said.

Crude oil prices have shot up to a nine-month high of over USD 115 per barrel. Since India imports 79 per cent its oil and subsidies fuel, higher oil prices are particularly painful for Asia's third-largest economy.

A spurt in oil prices may widen India's CAD(current account deficit) to 2.3 per cent of GDP due to rise in oil prices.

"If the Iraqi crisis prolongs and oil price moves up from the present level of USD 111 per barrel, and the rupee depreciates to 62 per dollar, CAD (Current Account Deficit) would widen to USD 50.6 billion, or 2.3 per cent of GDP," SBI said in its internal research report 'Ecowrap'.

The ongoing civil war in Iraq had resulted in Brent crude oil price in the international market hit a nine-month high of USD 114 per barrel recently.

India imports nearly 80 per cent of its oil demand, out of this close to 2 million barrels per day comes from Iraq, making it the second largest source of fuel for the country after Saudi Arabia.

Role of USA

The Prime Minister of Iraq Nuri al-Maliki has conceded that political measures are needed to fight Sunni insurgents and has also appealed to US for air strikes against militants. US is playing safe this time and the secretary of State John Kerry has ruled out any military strike as long as sectarian tension prevails in Iraq.

"There's no Government, there's no backup, there's no military, there's nothing there that provides the capacity for success," Kerry said.

Challenges infront of Modi Government

The Government should immediately ensure that all Indian stranded in Iraq return their home safely. With ongoing Iraq crisis leading to surge in oil prices and the Government already overburdened with weak monsoon creating drought-like condition and high food inflation, Prime Minister Narendra Modi have to face various tests to meet the expectations of the people. The general budget is around the corner and the Government's top priority is to check inflationary pressure due to rise in global crude oil prices.