THE United States recently took the Iran-sanctions monkey off India’s back: it granted India an exemption from Iran-related financial sanctions in exchange for significant cuts in Indian purchases of Iranian oil. Nevertheless, Iran continues to cast a pall over an otherwise brightening US-India relationship.From India’s perspective, Iran is an important neighbor with which it can ill afford to rupture its relationship. Indeed, India already seems locked geographically in an arc of failing or dysfunctional states, confronting it with external threats from virtually all directions.If India joined the US containment strategy against Iran, it would have to bear serious strategic costs. For starters, it would lose access to Afghanistan via Iran, which has served as a conduit for the substantial flow of Indian aid to Kabul. Moreover, containment would undermine India’s energy interests.Few countries are as dependent on the Persian Gulf region’s hydrocarbons as is India, which imports almost 80% of its consumption. Iran is the world’s third-largest net oil exporter (with the world’s second-largest natural-gas reserves as well), and it is a strategically located gateway to other energy suppliers in Central Asia and the Middle East.Iraq and Iran used to be India’s principal oil suppliers. But the first fell prey to a long US occupation, and the second currently faces a US-led oil-export embargo designed to throttle it financially. As a result, America’s efforts to give international effect to its new Iran Sanctions Act constitute a double whammy for India.First, it threatens to sabotage India’s energy-import diversification strategy by making it overly dependent on the Islamist-bankrolling oil monarchies – including Saudi Arabia, the United Arab Emirates, and Qatar – which have managed to ride out the Arab Spring. Second, further isolation of Iran will make it very difficult for India to play a more active role in Afghanistan at a time when the US is hastening its military disengagement there and seeking to cut a deal with the Taliban.India, one of the largest aid donors to Afghanistan, has no contiguous corridor to that country and must rely on Iran for access. Both countries share a common goal in Afghanistan – to ensure that the Pakistan-backed Taliban does not return to power. If the already-unstable situation there deteriorates after the end of US-led combat operations, India and Iran may be compelled to revive their strategic cooperation of the 1990’s. It was the Northern Alliance, backed by India, Iran, and Russia, that overthrew the Taliban regime in Kabul in late 2001 with the help of America’s air war.For the US today, containment of Iran is dictated by several geopolitical considerations. One consideration is the need to neutralize the strategic advantage that Iran gained from the US overthrow of Saddam Hussein in neighboring Iraq – a development that helped to empower Iraq’s Shia majority. President George W. Bush called Iran part of an "axis of evil,” yet his decision to invade and occupy Iraq benefited Shia-dominated Iran above all.Moreover, regional geopolitics pits the powerful "Sunni Crescent,” led by Turkey, Saudi Arabia, Qatar, and the UAE, against the beleaguered "Shia Crescent” states – Iran, Iraq, Syria, and Lebanon. The US has profited from a longstanding alliance with the Sunni bloc. In addition to the strategic advantages, America’s close ties with the oil sheikhdoms – which are among the world’s leading holders of foreign-exchange reserves – contribute to propping up the dollar.It is against this background that the Iranian nuclear program has come to symbolize the larger geopolitical tensions underlying the confrontation between the US and Iran. Indeed, the nuclear issue has served to rationalize the face-off, with Iran’s leaders playing to their domestic audience by whipping up nuclear nationalism and the US playing to the international audience by harping on the proliferation threat.India should seek to play the role of honest broker to defuse the threat of military hostilities, which would most likely shut down the world’s most important oil-export route, the Strait of Hormuz (a danger that Iran has said is also implicit in an oil-export embargo against it). But, far from being able to play the role of bridge-builder between the US and Iran, India is being forced to walk a policy tightrope, and its desire to chart a neutral course has annoyed both sides.Every time a senior Indian delegation visits Iran, or vice versa, the US warns India that its cozying up to Iran "raises obstacles” to building a closer strategic partnership. Yet, by voting against Iran at the International Atomic Energy Agency’s governing board meetings in 2005 and 2006, India invited Iranian reprisal in the form of cancellation of a highly favorable 25-year, $22 billion liquefied-natural-gas deal.The Iran issue, in effect, has turned into a diplomatic litmus test: Will India stand up for its strategic and energy interests in the region, or will it be co-opted to serve the short-term interests of its friend, the US? The US, for its part, must reconcile its Iran-related pressure on India, which is likely to continue, despite the sanctions waiver, with the imperative to build deeper defense ties with India, thereby giving strategic heft to its declared "pivot” to Asia.Brahma Chellaney, Professor of Strategic Studies at the New Delhi-based Center for Policy Research, is the author of Asian Juggernaut and Water: Asia’s New Battleground.Copyright Project-Syndicate.org