Topic : US –IRAN CRISIS
Topic in Syllabus : General Studies Paper 2: International Affairs
The US will impose “major” additional sanctions on Iran in a bid to prevent the country obtaining nuclear weapons.President Donald Trump said economic pressure would be maintained unless the leadership in Tehran changed course. It comes after Iran announced it would exceed internationally agreed limits on its nuclear programme.
Recently there are increased tensions between US and Iran. The escalation began when USA pulled out Iran from the nuclear deal in May 2018. Now neither of the sides are ready to back off which has led to more tensions in the region.
- Recently, Iran and the United States came dangerously close to a direct armed conflict, with U.S. President Donald Trump reportedly ordering and then cancelling air strikes against Iran, after it shot down a high-tech U.S. drone over the Strait of Hormuz.
- As a matter of fact, a closer look at tensions between the two countries would make it seem as if the Iranian authorities were the ones attempting to escalate a regional crisis while avoiding a full-blown war with the U.S.
- Crucially, for the Trump administration, it has been about being careful not to be drawn into a West Asian conflict and having the loss of any U.S. service personnel on its conscience.
Iran-USA nuclear deal
Iran had cooperated with the U.S. in the past. Post September 11, 2001 attacks, it assisted the U.S. war in Afghanistan. It played a critical role in the formation of the first post-Taliban Afghan government. But thereafter, the U.S. turned hostile to Iran, with President Bush lumping the country together with Iraq and North Korea as the “Axis of Evil”.
With help from the European powers and Russia and China, President Obama got the Iranians to the table. After months-long painstaking diplomatic engagement, in 2015, Iran agreed a long-term deal on its nuclear programme called the Joint Comprehensive Plan of Action (JCPOA) with a group of world powers known as the P5+1 – the US, UK, France, China, Russia and Germany.
Commitments set out in the JCPOA are
Uranium enrichment Iran’s uranium stockpile will be reduced by 98% to 300kg for 15 years (until 2031). Iran had two facilities – Natanz and Fordo. Under the JCPOA, installing of centrifuges were limited to no more than 5,060 of the oldest and least efficient at Natanz until 2026. It must also keep the stockpile’s level of enrichment at 3.67%. By January 2016, Iran had drastically reduced the number of centrifuges installed at Natanz and Fordo, and shipped tonnes of low-enriched uranium to Russia.Commitments set out in the JCPOA are
- Research and development must take place only at Natanz and be limited until 2024.
- No enrichment will be permitted at Fordo until 2031, and the underground facility will be converted into a nuclear, physics and technology centre.
- A UN ban on the import of ballistic missile technology would also remain in place for up to eight years.
- Should redesign the Arak reactorso that it cannot produce any weapons-grade plutonium.
- Iran will not be permitted to build additional heavy-water reactors or accumulate any excess heavy water until 2031.
- Iran is required to allow International Atomic Energy Agency (IAEA)inspectors to access any site they deem suspicious.
- Inspectors from the IAEA continuously monitor Iran’s declared nuclear sites and also verify that no fissile material is moved covertly to a secret location to build a bomb.
- Until 2031, Iran will have 24 days to comply with any IAEA access request. If it refuses, an eight-member Joint Commission – including Iran – will rule on the issue which can decide on punitive steps, including the reimposition of sanctions. A majority vote by the commission suffices.
At the time of the agreement, then-US President Barack Obama’s administration expressed confidence that the JCPOA would prevent Iran from building a nuclear programme in secret. Iran had said that it was committed to “extraordinary and robust monitoring, verification, and inspection”. In December 2015, the IAEA’s board of governors voted to end its decade-long investigation into the possible military dimensions of Iran’s nuclear programme. Under the deal, Iran gained access to more than $100 billion in assets frozen overseas and was able to resume selling oil on international markets and using the global financial system for trade.
Iran –US conflicts.
- The limit on its stockpile of enriched uranium was set under a 2015 nuclear deal with world powers.In return, relevant sanctions were lifted, allowing Iran to resume oil exports – the government’s main source of revenue.
- But the US pulled out of the deal last year and reinstated sanctions. This triggered an economic meltdown in Iran, pushing the value of its currency to record lows and driving away foreign investors.Iran has responded by scaling back its commitments under the nuclear deal
How have US sanctions hit Iran?
- The reinstatement of US sanctions last year – particularly those imposed on the energy, shipping and financial sectors – caused foreign investment to dry up and hit oil exports.
- The sanctions bar US companies from trading with Iran, but also with foreign firms or countries that are dealing with Iran.
- This has led to shortages of imported goods and products that are made with raw materials from abroad, most notably babies’ nappies.
- The plunging value of the rial has also affected the cost of locally produced staples such as meat and eggs, which have soared in price.
- Iran has responded to the economic pressure by violating some of the nuclear deal’s commitments.It has also accused European countries of failing to live up to their promises of protecting Iran’s economy from US sanctions.
Impact of Sanctions on India
India and Iran look at each other as important regional actors who have contributed positively to stability in their respective regions. New Delhi and Tehran have maintained robust political engagements since the 1990s. At the moment, the core of the relationship lies in strong bilateral trade, crude oil imports from Iran and cooperation in the development and operationalisation of the Chabahar Port, which is considered as a gateway for its trade with Afghanistan and Central Asia. Energy is the most important component of bilateral trade and Iran contributes significantly to India’s energy security.
- Indian companies will either have to stop buying oil from Iran or resort to a Rupee payment mechanism as was done in the past.
- According to reports, as of May 2019, Indian oil companies have decided to not place further orders for oil imports from Iran due to US sanctions.
- Other than the oil sector, India is not directly affected by US sanctions on Iran though Indian companies involved in the Iranian automobile, iron & steel and mining sectors will be affected due to additional US sanctions on these sectors.
- The Chabahar Port also does not come under US sanctions and hence Indian investments and involvement in it will not be affected.
- Due to sanctions on the iron & steel sector and individuals, certain infrastructure development projects such as the Chabahar-Zahedan railway and gas pipeline, part of Iran’s plan to develop Chabahar as a transit hub between Central Asia and the world, could be affected.
- If India does indeed stop oil trade with Iran, the geo-political relationship with Tehran can take ages to repair and India may end up ruining ties with a friendly country that has done it no harm.
Challenges before India
- The bigger challenge before India is the political aspect of managing relations with the US and Iran.
- If India were to stop sourcing oil from Iran, it will affect bilateral relations.
- But giving in completely to US pressure and cutting off Iranian oil imports does not suit with India’s pursuit of an independent foreign policy and its endeavour to maintain strategic autonomy.
- On the other hand, if India were to continue to buy Iranian oil by sidestepping US sanctions, it is likely to impact the strategic relationship with the US.
- Resort to buying Iranian oil through one or more informal arrangements including devising a Rupee payment mechanism to overcome the sanctions.
- joining hands with the EU, Russia and China through the INSTEX mechanism.
- teaming up with a Shanghai Cooperation Organisation (SCO) initiative to defy US sanctions.
- India could continue negotiating with the US to either secure a formal waiver or to have an informal understanding to buy Iranian oil.
- Meanwhile India can offer to Iran chance to enhance its investments in the Chabahar Port development project as well as consider initiating other developmental and connectivity projects to strengthen linkages to Afghanistan, the Caucasus and Central Asia.
The growing tensions between the U.S and Iran and the war-like situation is bound to hurt India. Discuss.