As India watches its current account deficit widening with no short-term hope of it being checked on account of worsening credibility of rupee, the upscale energy cooperation treaty with oil-rich Iraq is a welcome thing. India may hope to have some long term benefit from this treaty especially when its longstanding friendly nation, Iran is getting alienated thanks to UPA's short-sighted diplomacy.
The energy cooperation treaty between India and Iraq was formally signed on Friday in New Delhi in the presence of Prime Minister of India, Manmohan Singh and the visiting Prime Minister of Iraq, Nuri al-Maliki. This pact will give the energy companies of India some hope of serving their interests in the exploration of Iraqi oil and in setting up of refinery projects. The treaty is beneficial for Iraq as well at a time when it is trying to reconstruct its economy and nation after the ravage of prolonged war and insurgency in the aftermath of the US invasion following adventures of former Iraqi president Saddam Hussein.
In recent times, Iraq has framed laws conducive to foreign investment, which was not the case in Saddam Hussein days. With Indian oil industry claims to be bleeding and thriving mainly on government's support, this treaty could open a new range of opportunities in an oil rich territory.
On the other hand, Iraq hopes that it will sell more crude oil to India after this treaty. Iraq became India's biggest supplier of crude oil this June pipping out Saudi Arabia. The oil import from Iran has declined due to sanctioned imposed on Iran and India's diplomatic stance.