US Pulls out of Nu­clear Deal with Iran — Im­pact on In­dia

In­ter­est­ingly, Iran’s nu­clear pro­gramme ac­tu­ally be­gan with help from the US; un­der its “Atoms for Peace” pro­gramme, Amer­ica supplied a test re­ac­tor that came on­line in Tehran in 1967 dur­ing rule of Shah Mohammad Reza Pahlavi. But post the 1979 Is­lamic Re

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In­ter­est­ingly, Iran’s nu­clear pro­gramme ac­tu­ally be­gan with help from the US; un­der its “Atoms for Peace” pro­gramme, Amer­ica supplied a test re­ac­tor that came on­line in Tehran in 1967 dur­ing rule of Shah Mohammad Reza Pahlavi. But post the 1979 Is­lamic Rev­o­lu­tion in Iran, US as­sis­tance ceased.

THOUGH IN­DI­CA­TIONS OF WHAT Pres­i­dent Don­ald Trump had in mind with respect to the nu­clear deal with Iran were grow­ing in the past weeks, in­clud­ing state­ments of lead­ers in Europe, his ac­tual an­nounce­ment of did pro­duce shock waves, sig­nal­ing ap­pre­hen­sions at mul­ti­ple lev­els; pos­si­ble eco­nomic fall­out, in­sta­bil­ity, nu­cle­ari­sa­tion and con­flict in the re­gion, given US re­sponse to nu­clear North Korea that bul­lied through to build its nu­clear ca­pa­bil­ity and threat­ened strik­ing US with nu­clear ca­pa­ble ICBMs just re­cently. Trump an­nounced US with­drawal from the Iran nu­clear deal, promis­ing to im­pose “the high­est level of eco­nomic sanc­tions” on the coun­try for pur­su­ing nu­clear weapons. He said the “de­fec­tive” 2015 deal has failed to stop that Iran from mov­ing ahead with de­vel­op­ment of nu­clear weapons. The deal was signed be­tween Iran and what’s called the P5+1- the US, Bri­tain, France, Rus­sia, China, and Ger­many. How­ever, con­trary to what Trump said, UK, France and Ger­many have is­sued a state­ment ex­press­ing their “re­gret and con­cern” and em­pha­siz­ing their “con­tin­u­ing com­mit­ment” to the deal with Iran – all amount­ing to th­ese coun­tries sig­nal­ing Iran was ac­tu­ally com­ply­ing with the deal. Opin­ion within the US on Trump’s ac­tion is also di­vided. There is need to ex­am­ine the US pullout and what im­pact it has on In­dia.

Iran’s Nu­clear Pro­gramme and the Nu­clear Deal

In­ter­est­ingly, Iran’s nu­clear pro­gramme ac­tu­ally be­gan with help from the US; un­der its “Atoms for Peace” pro­gramme, Amer­ica supplied a test re­ac­tor that came on­line in Tehran in 1967 dur­ing rule of Shah Mohammad Reza Pahlavi. But post the 1979 Is­lamic Rev­o­lu­tion in Iran, US as­sis­tance ceased. But in 1990’s Iran ex­panded its nu­clear pro­gramme, bought equip­ment from Pak­istan’s A.Q. Khan and IAEA sus­pected Iran to have re­ceived de­sign in­for­ma­tion for a bomb and re­searched ex­plo­sive det­o­na­tors. By Au­gust 2002, Western in­tel­li­gence and an Ira­nian op­po­si­tion group re­port­edly re­vealed a covert nu­clear site at the cen­tral city of Natanz. Iran has been in de­nial of all this, re­it­er­at­ing its nu­clear pro­gramme has no mil­i­tary di­men­sions.

US, un­der Pres­i­dent Obama com­menced secret talks with Iran af­ter Ira­nian Pres­i­dent Has­san Rouhani took of­fice. Iran and world pow­ers ul­ti­mately reached the Joint Com­pre­hen­sive Plan of Ac­tion (JCPOA), or the nu­clear deal, in 2015, mak­ing it im­pos­si­ble for Iran to pro­duce a bomb, in re­turn for the lift­ing of most of the US and in­ter­na­tional sanc­tions against it. Un­der its terms, Iran can only: main­tain a stock­pile of 300 kg low-en­riched ura­nium com­pared to the 1,00,000 kg of this cat­e­gory it ear­lier had, and; only en­rich ura­nium to 3.67 per cent, which can fuel a re­ac­tor but is far below 90 per cent needed to pro­duce a weapon. The deal also lim­ited the num­ber of cen- trifuges Iran can run and re­stricted it to an older, slower model. Iran also re­con­fig­ured a heavy-wa­ter re­ac­tor so it couldn’t pro­duce plu­to­nium and agreed to con­vert its un­der­ground Fordo en­rich­ment site to a re­search cen­ter. It granted more ac­cess to IAEA in­spec­tors, al­low­ing them to in­spect other sites also. The nu­clear deal, how­ever, does ‘not’ di­rectly stop Iran from test­ing or fir­ing bal­lis­tic mis­siles. It also has a se­ries of ex­pi­ra­tion dates: one, in eight and a half years Iran can start test­ing up to 30 more ad­vanced cen­trifuges; two, it can greatly ex­pand num­ber of ad­vanced cen­trifuges two years af­ter the first stip­u­la­tion of eight and a half years, and three, 15 years af­ter the deal, re­stric­tions on Iran’s ura­nium en­rich­ment and stock­pile size end.

US Pullout

The Iran nu­clear deal which was be­ing hailed as Obama’s big­gest for­eign ac­com­plish­ment, has been trashed by Trump; call­ing the deal “a disas­ter” and the “worst deal ever”. Jus­ti­fy­ing his de­ci­sion to pull out, Trump said, “We can­not pre­vent an Ira­nian bomb un­der the de­cay­ing and rot­ten struc­ture of the cur­rent agree­ment. There­fore, I am an­nounc­ing to­day that the United States will with­draw from the Iran nu­clear deal.” Ap­par­ently, his main crit­i­cism re­volves around the deal not in­clud­ing Iran’s bal­lis­tic mis­sile pro­gramme, Iran’s sup­port of groups like Hezbol­lah in Le­banon, and its sup­port and aid to Syr­ian Pres­i­dent Bashar As­sad. He also has crit­i­cized the deal’s ex­pi­ra­tion terms that “threw Iran’s dic­ta­tor­ship a po­lit­i­cal and eco­nomic life­line”. Is­raeli Prime Min­is­ter Ben­jamin Ne­tanyahu also crit­i­cized the deal and held a news con­fer­ence al­leg­ing “Iran lied” about its nu­clear weapon am­bi­tions in the 2000s. He showed the re­sults of the dar­ing Mos­sad op­er­a­tion in Iran; 55,000 pages of phys­i­cal doc­u­ments and 183 CDs hold­ing another 55,000 dig­i­tal files, which Ne­tanyahu said con­tained years’ worth of “in­crim­i­nat­ing” in­for­ma­tion on Iran’s al­leged nu­clear weapons pro­gramme. He also dis­played schemat­ics for the nu­clear war­head that Iran al­legedly planned to at­tach to a Sha­hab-3 mis­sile. How­ever, the 2011 IAEA re­port also iden­ti­fied the Sha­hab-3 as Iran’s cho­sen de­liv­ery sys­tem for a nu­clear bomb. Much that Is­rael is di­rectly af­fected by Iran’s sup­port and arm­ing of Hezbol­lah, the fact re­mains that the Mos­sad raid in Iran was be­fore the 2015 nu­clear deal, and there is no cred­i­ble ev­i­dence the Iran’s nu­clear pro­gramme is mil­i­taris­ing.

The Iran nu­clear deal had sim­ple re­cip­ro­cal equa­tion – Iran agreed to nu­clear re­stric­tions in ex­change to eas­ing of fi­nan­cial sanc­tions. But by pulling out from the nu­clear deal, Trump has re-im­posed ma­jor por­tion of the pre-deal sanc­tions regime; “sec­ondary sanc­tions” with the aim of tar­get­ing Iran’s oil sec­tor, which could be the main aim of the US pullout. How­ever, the ex­er­cise shows the US in bad light on reneg­ing on the ac­cord signed by it just three years af­ter it was signed, with­out cred­i­ble ev­i­dence that Iran is mil­i­taris­ing its nu­clear pro­gramme, and five and half years be­fore ex­pi­ra­tion of the first eight and a half year regime. But then US cre­ated the bo­gey of nu­clear weapons to at­tack Iraq and pic­tures of re­cent 100 mis­sile at­tack on Syria by US and al­lies claim­ing to tar­get chem­i­cal fa­cil­i­ties did not match up with what a post-strike pic­ture of chem­i­cal fa­cil­ity should look like.

Fall­out of US Pullout

There is lit­tle doubt that Trump’s dec­la­ra­tion of US pullout amounts to clear vi­o­la­tion of Amer­ica’s obli­ga­tions un­der the deal it signed in 2015. Though ‘Sec­ondary Sanc­tions’ don’t pun­ish Iran di­rectly, th­ese tar­get in­ter­na­tional banks that do busi­ness with Iran’s oil sec­tor; they cut off ac­cess to US mar­kets for third par­ties that want to work with Iran, forc­ing for­eign coun­tries into a choice be­tween im­port­ing large amounts of Ira­nian oil or do­ing busi­ness with the US. There­fore, it ends up pun­ish­ing close US al­lies that want to do busi­ness with Iran, as also strate­gic part­ners like In­dia. Some cross-sec­tions also feel that Trump timed the pullout just be­fore his meet­ing with North Korean Pres­i­dent Kim Jong-un; that reneg­ing on de-nu­cle­ariza­tion would in­vite sim­i­lar se­vere sanc­tions. But, de­spite wide rang­ing sanc­tions by the US and UN, North Korea re­mained up and about with con­tin­ued Chi­nese sup­port.

The con­verse view is that the US de­stroy­ing coun­tries like Iraq and Libya who did not have pr gave up their nu­clear pro­grammes, and in­abil­ity to act against

The Iran nu­clear deal had sim­ple re­cip­ro­cal equa­tion – Iran agreed to nu­clear re­stric­tions in ex­change to eas­ing of fi­nan­cial sanc­tions. But by pulling out from the nu­clear deal, Trump has re-im­posed ma­jor por­tion of the pre­deal sanc­tions regime; “sec­ondary sanc­tions” with the aim of tar­get­ing Iran’s oil sec­tor, which could be the main aim of the US pullout.

North Korea’s bla­tant nu­cle­ari­sa­tion, ac­tu­ally is in­cen­tive for Iran to go nu­clear. Of course look­ing back, US turned blind eye to China’s nu­clear pro­lif­er­a­tion to Pak­istan and Pak­istan’s AQ Khan pro­lif­er­at­ing such tech­nol­ogy fur­ther to other coun­tries. As fer de-nu­cle­ari­sa­tion of North Korea, when China con­ducted Pak­istan’s first nu­clear test on its own soil, there is no rea­son why China will not help North Korea pur­sue clan­des­tine nu­clear pro­gramme or keep North Korean nukes in China for safe cus­tody. The two meet­ings in quick suc­ces­sion be­tween Pres­i­dent Xi Jin­pig and Kim Jongun and two-day stay by Chi­nese De­fence Min­is­ter Chang Wan­quan (also dubbed ‘mis­sile man’ of China) in North Korea may be sig­nif­i­cant in this con­text.

US pullout from the nu­clear deal as a par­tic­i­pant does sig­nif­i­cantly re­duce Iran’s in­cen­tive to stay in, but the deal cer­tainly is not dead at this point of time. Tech­ni­cally, the nu­clear deal is an agree­ment be­tween Iran and the P5+1 (US, Bri­tain, France, Rus­sia, China, and Ger­many), which means the US leav­ing the agree­ment doesn’t end it. If the rest of the P5+1 keep their sanc­tions off, Iran may de­cide to con­tinue to ad­here to the deal’s re­stric­tions even af­ter the US pullout. That’s what Ira­nian Pres­i­dent Has­san Rouhani has al­ready said. The sanc­tions also could pre­cip­i­tate a ma­jor cri­sis with Amer­ica’s Euro­pean al­lies, as some of the sanc­tions could af­fect Euro­pean com­pa­nies that do busi­ness in Iran.

While the Mid­dle East pre­pares for another flash­point, China would be the hap­pi­est, Trump hav­ing pushed Iran more close to China. China has al­ready made Iran cen­ter­piece of its ‘Belt and Road Ini­tia­tive’ in the re­gion. In Fe­bru­ary 2016, the first cargo train from China to Iran ar­rived in Tehran, hav­ing passed through Kaza­khstan-Turk­menistan (10,399 km). China is also third largest im­porter of Ira­nian oil, apart from pro­vid­ing large credit lines through Chi­nese banks like CITIC. Bi­lat­eral an­nual trade is es­ti­mated to reach $10 bil­lion, up from as lit­tle as $1.68 bil­lion dur­ing the sanc­tions pe­riod. The largest com­pa­nies in Iran to­day are Chi­nese, not US. This could be another rea­son for Trump’s pull out.

If Bri­tain, France, and Ger­many don’t re-im­pose their own pre-deal sanc­tions (Rus­sia and China would def­i­nitely not), Iran may very well end up still hav­ing more ac­cess to in­ter­na­tional mar­kets than it had be­fore the deal was inked. It could thus still de­cide to stay in the deal, rather than kick­ing out IAEA in­spec­tors or restart­ing large-scale ura­nium en­rich­ment, in or­der to avoid an­ger­ing th­ese other par­ties, all of which op­posed Trump’s de­ci­sion. But the sit­u­a­tion may ag­gra­vate due to many more rea­sons, like Is­rael-Iran con­flict that is al­ready be­gin­ning. Given the geopo­lit­i­cal sit­u­a­tion, one view is that with Trump’s ac­tion, it would be sui­ci­dal for Iran ‘not’ to purse nu­clear bomb if it is be­ing eco­nom­i­cally squeezed with­out valid ev­i­dence.

French Pres­i­dent Em­manuel Macron tried in vain to per­suade Trump to try and open ne­go­ti­a­tions on is­sues of lat­ter’s con­cern while stay­ing in the deal, keep­ing Iran’s nu­clear pro­gramme in check for now. But Trump is adamant he is only open to ne­go­ti­at­ing a newer, tougher deal. Whether the other rest of the P5+1 will sup­port Trump in this is ques­tion­able. But as far as Iran is con­cerned, there is no rea­son it would agree to a new deal, when the US has re­neged on nu­clear deal signed just three years back. In­dia hopes bet­ter sense pre­vails, the MEA stat­ing, “All par­ties should en­gage con­struc­tively to ad­dress and re­solve is­sues that have arisen with respect to the JCPOA (Joint Com­pre­hen­sive Plan of Ac­tion).” The main dan­ger in case the deal fails is that Iran may go ahead pur­su­ing the bomb, with Trump left with the op­tion of ei­ther sit­ting out, like with North Korea, or go for war that would have horrendous con­se­quences for the re­gion.

Trump’s plan ap­pears plac­ing crip­pling sanc­tions on Iran, and sec­ondary sanc­tions on any­one who deals with them. When Ger­many, France and the UK is­sued a joint state­ment they would re­main com­mit­ted to the deal, US re­sponded by as­sur­ing their com­pa­nies would be al­lowed a grace pe­riod be­fore sanc­tions come, and that US policy would evolve in con­sul­ta­tion with Europe. The aim pos­si­bly is to coax th­ese coun­tries into di­a­logue with Iran for lat­ter to agree to in­clude its mis­sile pro­gramme in the deal and even sup­port to ter­ror groups. But the is­sue is that th­ese coun­tries are per­fectly happy with the 2015 JCOPA. So it is Catch 22 sit­u­a­tion. The crunch will come when the sec­ondary sanc­tions are im­posed. But then the first di­rect Is­rael-Iran ex­change of fire over Syria has al­ready hap­pened on May 10, which could es­ca­late.

Im­pact on In­dia of US Pullout

Dur­ing Ira­nian Pres­i­dent Has­san Rouhani’s visit to In­dia, In­dia had reaf­firmed its sup­port for full and ef­fec­tive im­ple­men­ta­tion of the JCPOA, which has been en­dorsed by the UN Se­cu­rity Coun­cil and is a cru­cial con­tri­bu­tion to the non-pro­lif­er­a­tion frame­work and in­ter­na­tional peace, sta­bil­ity and se­cu­rity. For safe­guard­ing In­dian projects in Iran, In­dia also took has taken some ac­tions to shield it­self from po­ten­tial costs such as al­low­ing In­dian com­pa­nies to in­vest in Iran in ru­pees, but with sanc­tions, the costs can po­ten­tially be much higher than an­tic­i­pated. In­dia will need all the deft diplo­macy with the US, Iran and other P5+1 na­tion to pos­si­bly keep the JCPOA in­tact and min­i­mize the im­pact should sec­ondary sanc­tions be im­posed. In case of lat­ter, ob­tain­ing waivers would be vi­tal, op­ti­mis­ing on the Indo-US Strate­gic Part­ner­ship. In­dia would need to open bi­lat­eral di­a­logues on the is­sue with US, Iran and oth­ers, which must al­ready be hap­pen­ing. The im­pact on In­dia of US im­pos­ing more sanc­tions on Iran and sec­ondary sanc­tions on na­tions deal­ing with Iran are dis­cussed in suc­ceed­ing para­graphs. Chaba­har Port Project. With Pak­istan per­pet­u­ally deny­ing In­dia land ac­cess to Afghanistan, Chah­ba­har is cru­cial to us for trade with Afghanistan, Cen­tral Asia and Eura­sia. Ar­rival of the first ship­ment of wheat from In­dia to Chah­ba­har in Novem­ber 2017, sig­naled the im­por­tance of this route. In­au­gu­ra­tion of Phase 1 of In­dia’s Chah­ba­har project has al­ready been done, al­beit it took 14 years be­cause of US sanc­tions. Fresh US sanc­tions could risk Phase 2 of port de­vel­op­ment, with con­tract for it al­ready signed be­tween Iran’s Port and Mar­itime Or­gan­i­sa­tion and In­dia IPGL (In­dia Ports Global Lim­ited), and lat­ter al­ready putting out ten­ders for the task. In­dia has al­ready com­mit­ted $85 mil­lion for Chaba­har (to­tal $500 mil­lion in­vest­ment planned), be­sides rail­way line to Za­hedan on Afghanistan bor­der could cost $1.6 bil­lion. Hope­fully, the US will not im­pose sanc­tions that would hurt In­dia’s Chah­ba­har de­vel­op­ment, oth­er­wise the costs could go up by many times. INSTC. In­dia is a founder mem­ber of the In­ter­na­tional North South Trans­porta­tion Cor­ri­dor (INSTC) since it was rati- fied in 2002 for a multi-mode net­work link­ing Iran, cut­ting across Cen­tral Asia to Rus­sia over 7,200 km, cut­ting down travel-time by 30 per cent. INST will cut the tran­sit time be­tween In­dia and Rus­sia from 40 days to less than 25. Rus­sia, In­dia and Iran are sep­a­rately part­ners in the INSTC which has more than 11 mem­ber na­tions. Rus­sia is a ma­jor player, both as a de­fence part­ner and with in­vest­ments in the oil and gas in­dus­try. Plans for INSTC re­ceived a boost af­ter JCPOA was signed in 2015. US sanc­tions would ad­versely af­fect the INSTC, es­pe­cially if coun­tries along the INSTC route, as also banking and in­sur­ance com­pa­nies deal­ing with INSTC de­cide to com­ply with US sanc­tions, in­clud­ing for trade with Iran. The new fac­tor here is the ag­gra­vat­ing eco­nomic war be­tween US-China and US im­pos­ing more and more sanc­tions against Rus­sia. Af­ter the Modi-Xi in­for­mal meet at Wuhan and up­com­ing SCO meet, In­dia could lever­age China-Rus­sia also for keep­ing INSTC go­ing.

Oil Im­ports. Iran is In­dia’s third largest sup­plier of oil (af­ter Iraq and Saudi Ara­bia) and In­dia pays for the oil in Eu­ros. As long as Europe stays in the deal, In­dia can con­tinue with en­ergy im­ports. In Fe­bru­ary this year, Dhra­men­dra Prad­han, Min­is­ter for Pe­tro­leum and Nat­u­ral Gas had in­di­cated In­dia plans to dou­ble its im­ports from Iran, which in­di­cates im­ports from Iran will con­tinue. How­ever, with the hike in crude oil prices al­ready vis­i­ble with Trump’s an­nounce­ment, in­crease in prices will hit both in­fla­tion lev­els as well as the In­dian Ru­pee. SCO. In­dia and Pak­istan are to be for­mally ad­mit­ted to SCO in June 2018. Chi­nese of­fi­cials have also hinted the China-Rus­sia led SCO is likely to ad­mit Iran also to SCO. Some schol­ars feel the US may con­sider SCO as anti-Amer­i­can but this is where In­dian diplo­macy will need to balance In­dia’s SCO mem­ber­ship with group­ings like the ‘Quad’, Macron pro­posed ParisDelhi-Can­berra axis, and the like. Indo-US Strate­gic Part­ner­ship. Un­der Don­ald Trump, the US first pulled out from the UN Cli­mate Change Treaty (Paris Ac­cord), and now has pulled out from the JCPOA that was signed by the US just three years back and rat­i­fied by the UNSC. This puts a ques­tion mark also on the Indo-US Strate­gic Part­ner­ship and the var­i­ous agree­ments signed like LEMOA, etc, whether th­ese can be ab­ro­gated on the whims and fan­cies of the Trump Ad­min­is­tra­tion. This needs se­ri­ous dis­cus­sion with the US, and req­ui­site lev­els of as­sur­ances.

Con­clu­sion

The US pullout from JCPOA is er­ratic con­sid­er­ing that no con­crete ev­i­dence has been found of Iran mil­i­taris­ing its nu­clear pro­gramme in con­tra­ven­tion of the nu­clear deal. The mere fact that other mem­bers of the P5+1 have no rea­son to dis­be­lieve Iran proves it. Iran has ev­ery right to pur­sue its peace­ful nu­clear pro­gramme. The US was close friend of the Shah of Iran, but then Iran was sud­denly dumped. The US is act­ing sim­i­larly now. Though geopol­i­tics is much about eco­nom­ics, con­trol of oil and en­ergy, this time mis­cal­cu­la­tion can lead to con­flict. Hope­fully, bet­ter sense would pre­vail.

Given the geopo­lit­i­cal sit­u­a­tion, one view is that with Trump’s ac­tion, it would be sui­ci­dal for Iran ‘not’ to purse nu­clear bomb if it is be­ing eco­nom­i­cally squeezed with­out valid ev­i­dence.

PHO­TO­GRAPH: PIB

Prime Min­is­ter Naren­dra Modi with the Pres­i­dent of the Is­lamic Repub­lic of Iran, Dr Has­san Rouhani in Hy­der­abad House, New Delhi

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