//US friendly Oil Minister replaces Mani Shankar Aiyar

US friendly Oil Minister replaces Mani Shankar Aiyar

India appoints U.S.-friendly oil minister – analysts

NEW DELHI (Reuters) – India has moved to secure the fate of a rickety nuclear deal with Washington by replacing its pro-Iranian oil minister with a reformist seen as having close U.S. contacts, analysts say.

Murli Deora was handed the key post on Sunday in a surprise move, pushing aside Mani Shankar Aiyar who was a strong supporter of a projected gas pipeline from Iran – something which the Indian foreign ministry was not comfortable with and which is opposed by the United States.

Ruling Congress party sources say Deora, who currently co-chairs a India-U.S. parliamentarian forum according to his Web site (www.murlideora.com), is known to have "deep contacts" in the U.S. Senate and business circles. With his pro-reformist image, analysts say Deora will take energy-starved India further Westwards in oil diplomacy.

The change comes days before the International Atomic Energy Agency (IAEA) meets to discuss Iran’s nuclear programme, seen by the West as a front to build weapons. Tehran denies the charge. Although India is planning to abstain if there is a vote on the issue, officials said, in the long run, India would continue to oppose Iran’s controversial nuclear programme and side with the United States.

Political analyst Mahesh Rangarajan said India was faced with a difficult choice between siding with an old friend in Iran and a new, powerful handshake with the world’s only superpower. "The timing of his removal is significant, coming days before the IAEA vote," he said.

"One must recognise that the government and the corporate sector see the U.S. as a very important partner. It’s a clear case of a choice between Iran and the U.S. and the stakes for India are much higher in keeping ties with the U.S., especially energy."

SHIFT IN ALLEGIANCES

India surprised its historic ally Tehran last September when it sided with the West after the IAEA declared that Iran had failed to comply with its international obligations. The body meets again on Thursday and India’s position is being keenly watched.

In a bid to pressure New Delhi to toe the U.S. line, Washington’s ambassador to India David Mulford warned last week that if India did not vote against Iran, a landmark deal on civil nuclear energy could "die".

Mulford later said his remarks had been quoted out of context but the Indian foreign ministry summoned him. The U.S.-India nuclear deal, announced during a visit by Prime Minister Manmohan Singh to the United States last July, is seen as a path-breaking turnaround in U.S. foreign policy.

It seeks to end a 30-year ban on supply of civil nuclear fuel and technology to India, which has tested nuclear weapons.

The deal is a result of the changing geopolitical dynamics in Asia, where India and China are competing as giant, fast-growing economies and where Washington is keen to use New Delhi to balance China’s growing clout in the region.

Aiyar, meanwhile, was made minister for rural bodies and sports affairs — a clear demotion. "Aiyar’s pet theme was an Asian oil and gas grid with China and Iran. His removal will completely alter the balance of power in the region," said foreign policy expert Prem Shankar Jha. "The Iran gas pipeline is now dead."