Mentor’s Comment
- Give an idea about the ongoing conflict between the USA and Iran.
- List down impact on the Middle East and India’s interest
- Write down the suggestion that will serve India’s Interest and also balance relations with both of them.
The Joint Comprehensive Plan of Action, commonly known as the Iran deal, was signed on July 14, 2015 between Iran, the U.S., China, France, Russia, the U.K., Germany and the European Union. It was considered a landmark deal which would eventually bring peace and harmony to the turmoil-stricken Middle East. However, President Donald Trump recently decided to unilaterally pull the U.S. out of the Iran nuclear deal and to re-imposing nuclear sanctions against that country. Since then, due to various cascading events, tensions have soared between the two nations and it has raised the heat in the Middle-East.
Impact on geopolitics of the region:
The United States pulling out does create more than a few uncertainties for regional security, for non-proliferation, and for American credibility more generally.
Undermining it despite no clear evidence of Iranian violations could hasten an arms race or outright regional conflict.
The JCPOA is a model for what diplomacy can accomplish its inspections and verification regime is precisely what the United States should be working to put in place with North Korea.
Indeed, at a time when world is rooting for diplomacy with North Korea to succeed, walking away from the JCPOA risks losing a deal that accomplishes with Iran the very outcome that world is pursuing with the North Koreans.
Keeping the deal’s constraints on Iran’s nuclear program will also help counter Tehran’s aggressive regional behaviour.
A number of French firms have signed billion dollar agreements with Iran since the nuclear accord was signed in 2015.
Aside from Airbus, they include French oil giant Total and the car makers Renault and Peugeot. Companies would have to wind up investments by November or face US sanctions.
Implications for India:
Oil and Gas:
The impact on world oil prices will be the immediately visible impact of the U.S. decision.
Iran is presently India’s third biggest supplier (after Iraq and Saudi Arabia), and any increase in prices will hit both inflation levels as well as the Indian rupee.
The negotiations on the Farzad-B gas field remain stuck, with both sides blaming the other for shifting the goalposts. It was remained on paper because of Iranian unhappiness over India’s stand in the IAEA.
Chahbahar port:
India’s moves over the last few years to develop berths at the Shahid Beheshti port in Chahbahar was a key part of its plans to circumvent Pakistan’s blocks on trade with Afghanistan.
India has already committed about $85 million to Chabahar development with plans for a total of $500 million on the port, while a railway line to Afghanistan could cost as much as $1.6 billion.
INSTC:
Beyond Chahbahar, India has been a founder of the International North South Transport Corridor (INSTC) since it was ratified in 2002.
It starts from Iran and aims to cut right across Central Asia to Russia over a 7,200-km multi-mode network, cutting down transportation and time taken by trade by about 30%.
New U.S. sanctions will affect these plans immediately, especially if any of the countries along the route or banking and insurance companies dealing with the INSTC plan also decide to adhere to U.S. restrictions on trade with Iran.
Shanghai Cooperation Organisation:
India joined the SCO along with Pakistan last year, and both were formally admitted in June 2018, when Prime Minister travelled to the Chinese city of Qingdao for the SCO summit.
Chinese officials say they will consider inducting Iran into the 8-member Eurasian security organisation.
If the proposal is accepted by the SCO, which is led by China and Russia, India will become a member of a bloc that will be seen as anti-American, and will run counter to some of the government’s other initiatives like the Indo-Pacific quadrilateral with the U.S., Australia and Japan.
The move may also rile other adversaries of Iran, like Saudi Arabia, UAE and Israel, with whom the government has strengthened ties in an effort to balance its West Asia policy.
Rules-based order:
India has long been a proponent of a “rules-based order” that depends on multilateral consensus and an adherence to commitments made by countries on the international stage.
By walking out of the JCPOA, the U.S. government has overturned the precept that such international agreements are made by “States” not just with prevailing governments or regimes.
Way forward for India:
Allowing Indian investment in rupees and initiating new banking channels to go ahead with oil trade.
The near-term developments in its neighbourhood are a priority for Tehran even as India tries to find a balance with his stated preference to develop closer ties with both the U.S. and Israel.
India and Iran are looking to swiftly conclude a preferential trade agreement and a bilateral investment treaty.
Newly relaxed visa norms announced by Iran in addition to India’s proposal for Indian businesses to invest in rupees in Iran are all moves in the right direction.
Nonetheless, they may be insufficient to cement commercial ties if USA sanctions do return.
India should give its full support for the effective implementation of the JCPOA. Only successful implementation of the JCPOA over a period of time can create the political space for additional negotiations.
Both the nations can take leverage of their historical and civilizational relations to steer ties so much. The visit proved to be a much-needed reality check to the India-Iran partnership.
