What started in 2015 as a policy of containment from any further conflict in an already conflict-ridden arena, has now escalated into a full-blown war of sanctions, with increasing US sanctions and Iran’s irritation with the same.
We take a look at the US-Iran deal, its tenets and effects - simplified.
Source- Getty Images
The US-Iran Nuclear Deal, or officially the Joint Comprehensive Plan of Action (JCPOA), was signed in 2015 by Iran and the P5+1 group of world powers (United States of America, United Kingdom, France, Russia, China and Germany). The deal ensured lifting of economic and trade sanctions against Iran, provided it agreed to limit its sensitive nuclear activities and allow in international inspectors.
Prior to this deal, the US had imposed heavy sanctions or trade barriers on Iranian products like oil and services like banks and commerce. Since 1979, the US and Iran have been in a standoff that involved not guns and wars but money and economic starvation of Iran.
In 2012, the international community found out about Iran’s covert program of uranium enrichment, essential for developing nuclear fuel for power if low-enriched, and nuclear weapons if highly enriched. Under the JCPOA, uranium stockpile was reduced by 98%, and Western Europe and the US decided to cut ties and investment with any nation/corporation that dealt or invested or did business with Iran or its corporations. This dramatically starved Iran’s economy and decimated its currency.
Nuclear Reactor at Bushehr, Iran. Source- AFP
However, the 2015 negotiations served as a thaw in US-Iran diplomatic relations, where although seen as bullying, Tehran was relieved with the provisions of the deal, especially those that lifted the sanctions. Some provisions of the JCPOA included a lowered stockpile of uranium and plutonium, converting nuclear reactors in Fordo and Arak to redesign them into technology centres.
Next, the oil embargo that prevented the import of oil from Iran was removed. The U.S. and EU lifted oil and trade-related sanctions. Foreign companies began to purchase oil from Iran, US companies located outside the U.S. were authorized to trade with Iran, and imports of selected items from Iran were permitted. Simultaneously, financial sanctions on Iranian banks and financial systems were lifted, allowing the immediate release of around $100 billion frozen in Iranian bank accounts.
The Iran negotiation was a diplomatic landmark for the Obama administration, and won points to his regime. There was, however, opposition to the deal, intriguingly by the US’s closest ally, Israel. Given the power balances, and imbalances in the Middle east, it was no surprise that Benjamin Netanyahu, the Prime Minister of Israel, was not in favour of the deal, stating that it “paves Iran’s path to the bomb.” However, international opposition did not demotivate the Deal.
President Trump in his election campaign scorned the brittleness of the Deal, skewed in favour of Iran, and promised to repeal it. Not surprisingly, he went through with it as well, when he refused to renew the deal within the 90 days renewal provision. The motive of this move was to stop the threat of nuclear war in the region. BBC report three key reasons for Trump’s decimation of the deal: Scrapping the Obama legacy, closer ties with Israel, and new influencers in the White House.
Right from the beginning of his term, Trump has pulled back from major Obama-era treaties and agreements, including the Paris Climate Summit and the Deferred Action for Childhood Arrivals (DACA), all important Obama-regime foreign policy agreements.
Trump’s increasing cosiness with Israel- shifting the US embassy to the city of Jerusalem, a point of major contention between Palestine and Israel- and Israel’s obvious animosity with Iran further impacted Trump’s decision, the report stated. Lastly, new replacements in the White House that matched Trump’s instincts - an innate distrust of multilateralism in general and Iran in particular - appear to have been enthusiastic supporters.
Most of the world has condemned Trump’s decision, with co-signatories “deeply regretting” USA’s decision. China's special envoy to the Middle East, Gong Xiaosheng, said that the Iran agreement promoted peace and that “having a deal is better than no deal. Dialogue is better than confrontation." Russia too declared its continued support for JCPoA.
The break-up of this deal has impacts larger than imagined. For India, particularly, oil sanctions on its third largest supplier would mean a spike in prices in India, and further devaluation of the rupee. Moreover, sanctions against Iran will disrupt India’s strategic move to develop berths at the Shahid Beheshti port in Chabahar to sidestep Pakistan’s block on trade with Afghanistan.
India also has trade and developmental programs of which Iran is a major stakeholder. One such initiative is the International North-South Transport Corridor, aiming at increasing connectivity and radically decreasing transport time for trade by 30%. After 2015, when sanctions were lifted, plans for the corridor zoomed. Now that the US has declared “the highest level of economic sanctions” on Iran, the project might take a hit, especially if other countries on the route decide to adhere to the sanctions.
On an ethics ground, India has always conducted multilateral commitments with a sense of responsibility and a rules-based order in mind. It’s trust in International organisations stems from the faith that multilateral consensus can be achieved only through these organisations. Now that Trump has unilaterally changed a major component of international relations and trade, while also exhibiting a flipped stance toward international organisations and institutions, India will have to rethink its stance vis-a-vis the US.
While the dropping of the Iran deal may seem like an event far from home and unrelated to India in any way, any and every outcome of changing state behaviours and relations has serious impacts on the larger web of international relations. We may want to brace ourselves in these drastically changing times.
By Ishita Srivastava