Iran’s Nuclear Program & Western Sanctions

How not to choose among allies


Mains Paper 2: IR | Effect of policies & politics of developed & developing countries on India’s interests, Indian diaspora

From the UPSC perspective, the following things are important:

Prelims level: Joint Comprehensive Plan of Action (JCPOA)

Mains level: US sanctions on Iran and why India should not toe the line as sketched by the US


India’s role in JCPOA negotiations

  1. In May 2012, Hillary Clinton, then U.S. Secretary of State, visited Delhi on behalf of the Western countries negotiating the Joint Comprehensive Plan of Action (JCPOA), or the nuclear deal, with Iran, to convince India to cut its oil imports from Iran
  2.  India needed various reasons to help put pressure on Iran to return to the negotiating table for the six-party talks
  3. India agreed to cut its imports by only about 15%
  4. But cumulative global pressure had the desired impact on Iran, where inflation had risen more than 40% and oil exports declined from 2.5 million barrels of crude each day to about 1 million
  5. JCPOA negotiations that followed eventually led to a deal hailed by the United Nations, that had quarterbacked the talks all through

Current scenario

  1. The sanctions that the U.S. now proposes trying to ensure India adheres to have been placed not in order to forge any deal, but because the Trump administration has walked out of the JCPOA
  2. In this, the U.S. has no support from any other country involved in the deal, and the UN has expressed grave misgivings about the decision
  3. The U.S. has given no evidence that Iran in any way violated the terms of the JCPOA — in fact, the International Atomic Energy Agency’s June report concluded that Iran’s stockpile of uranium and heavy water, as well as its implementation of additional protocols, were “in compliance” with the agreement
  4. Unlike in 2012, the U.S.’s EU allies are now working closely with arch rivals like Russia and China to put a “special payments mechanism”, primarily with a view to supporting trade to Tehran to ensure that the Iranian regime does not walk out of the nuclear deal as well
  5. The US  is increasingly being isolated politically, as was evident at the most recent Financial Action Task Force meet in Paris where the U.S. proposed sanctions on Iran for terror funding

Impact on India

  1. There is the shock that sanctions would deal to the oil import bill, given that Iran is India’s third largest supplier
  2. There are not only rising costs of oil to contend with, but also the added cost of having to recalibrate Indian fuel refineries that are used to process Iran’s special crude
  3.  India’s investment in the Chabahar port would face both direct and indirect sanctions: as shippers, port suppliers and trading companies refuse to participate in the project
  4. This problem will only get more acute as sanctions kick in, threatening India’s $500 million investment in the port and its $2 billion plan for a railway line to circumvent Pakistan and reach Afghanistan and Central Asian trade lines
  5. There would be the impact on India’s regional security situation, which could see the Iranian-Arab divide deepen, Afghanistan’s choices dwindle and an angry Iran pitched closer into the China-Russia corner
  6. All of the above outcomes will follow regardless of whether the U.S. gives India a waiver for sanctions or not
  7. Along with the JCPOA-linked sanctions, India continues to face sanctions linked to the Countering America’s Adversaries Through Sanctions Act, which puts more strictures on dealings with Iran, Russia and North Korea

Iran’s possible reaction

  1.  With trade levels receding, the Iranian regime may well lose interest in the Chabahar option, and focus on its main port of Bandar Abbas instead, derailing India’s grander plans for regional connectivity
  2. All of India’s sacrifices may come to naught, as Mr. Trump may well use the pressure placed on Iran to his own advantage, and possibly open talks with Tehran at a later date

India’s affection with the US

  1. Indian officials have made a beeline for Washington to discuss the reasons why India deserves a waiver, from both Iran and CAATSA sanctions
  2. The U.S. has been apprised of India’s energy requirement compulsions, and of the cut of about 35-50% in its oil purchases from Iran
  3. On the CAATSA front, the U.S. has also been assured of a significant reduction in Indian defence dependence on Russia, and that no weapons procured, like the recently purchased S-400 missile system, would be used against American interests
  4. Given the heavy costs and in the complete absence of any benefits, it is surprising that the government has not been more vocal in its protest against the U.S.’s actions

Way forward

  1. If the U.S. presses on with sanctions, it would be a marked failure of Indian diplomacy
  2. And if the waiver does come through, as is indicated, it will be no victory, but signify an abject submission to the sanctions themselves
  3. With no gains in the offing from a policy of ‘pragmatism’, India may have been better off sticking to principle instead
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