Iranian Nuclear Deal

In News

• Recently, talks to revive Iran’s 2015 nuclear deal with world powers were mired in uncertainty following Russia’s demands.

About 

• Russia demanded for a U.S. guarantee that the sanctions it faces over the Ukraine conflict will not hurt its trade with Tehran.
• The fact stated was that the Western sanctions over Ukraine had become a stumbling block for the nuclear deal.

Joint Comprehensive Plan of Action

• In 2015, Iran agreed on a long-term deal on its nuclear programme with a group of world powers known as the P5+1 (the US, UK, France, China, Russia and Germany).
• Under it, Iran agreed to significantly cut its stores of key components for nuclear weapons like centrifuges, enriched uranium and heavy water.
  • Iran would only have enough enriched uranium to maintain its energy needs, without having the ability to build a nuclear bomb.
• It also agreed to dismantle much of its nuclear programme and open its facilities to more extensive international inspections in exchange for billions of dollars worth of sanctions relief.
• The International Atomic Energy Agency (IAEA) played an important role in enforcing the deal, keeping a check on Iran and inspections.

Earlier Sanctions on Iran

• The United Nations (UN), the US and the European Union (EU) imposed sanctions to force Iran to halt uranium enrichment.
• It crippled Iran’s economy, costing it more than USD 160 billion in oil revenue from 2012 to 2016 alone.
• Under JCPOA, Iran gained access to more than USD 100 billion in assets frozen overseas and was able to resume selling oil on international markets and using the global financial system for trade.

US’s Withdrawal and Reinstated Sanctions

• In May 2018, the US under President Donald Trump abandoned the deal.
• The US held that the deal failed to address the threat of Iran’s missile programme and did not include a strong enough mechanism for inspections and verification of Iran’s nuclear sites.
• In November 2018, he reinstated sanctions targeting both Iran and states that trade with it.
• It resulted in a downturn in Iran’s economy, pushing the value of its currency to record lows, quadrupling its annual inflation rate, driving away foreign investors and triggering protests.
• The UK, Germany and France opposed the sanctions and set up an alternative payment mechanism aimed at helping international companies trade with Iran without facing US penalties.
• UN sanctions remain lifted but they would automatically “snap back” in place for 10 years, with the possibility of a five-year extension, if Iran violates any aspect of the deal.

Stakeholder’s stand

• Iran: 
  • Iran’s top authority has publicly and privately been calling for closer ties with Russia due to his deep mistrust of the United States.
• Iran and Russia:
  • The return of Iranian oil would help replace Russian barrels lost as the United States and its allies seek to freeze out Moscow ,following the invasion and soften the impact on the West which is already struggling with high inflation.
• US:
  • U.S. negotiator has suggested that securing the nuclear pact is unlikely unless Tehran frees four U.S. citizens, including Iranian-American father and son Baquer and Siamak Namazi.
  • A senior Iranian official in Tehran said if Tehran’s demands are met the prisoners issue can be resolved with or without a revival of the nuclear deal.

Impact on India

• Rise in prices: 
  • The crisis between Russia and Ukraine will impact the fuel price in  India as the prices will start soaring high. 
  • It will impact the transportation costs as well.
  • India’s imports of petroleum products from Russia are only a fraction of its total oil import bill and, thus, replaceable.
• Inflation: 
  • As the prices of fuels increase so will the prices of other basic commodities which will result in higher inflation.
  • This will impact the working and promises of the Reserve Bank of India.
• Relations:
  • Maintaining strong relations with Russia serves India’s national interests. 
  • India has to retain a strong strategic alliance with Russiaand therefore India should not join any Western strategy aimed at isolating Russia.
• Fiscal Deficit:
  • Price rise will also affect the fiscal deficit of the country.
• Import bills:
  • These surges will not limit themselves but will spread to the import duty structure and hence the deficits will rise more.
  • This will even become a threat to Rupee value.
• Agriculture: 
  • India imports most of its sunflower oil from Ukraine.
  • Considering the demand of oil in India, the price rise of sunflower oil will further increase inflation in India.
• US Reservations: 
  • While India is keen on buying the S-400 air defence system from Russia, the USA has repeatedly expressed reservations – the Trump administration did not invoke sanctions on Indian entities and the Biden administration is yet to take a call.

Opportunities for India

• Similar Approach: 
  • As the US-China rivalry threatens to disrupt the order of the day, India and Russia remain supporters of a multipolar world order.
• Strategic Space to Each Other: 
  • The most important, critical takeaway from the relationship for both countries is the strategic space they provide each other to deal with the US, China and other great powers.
• Multilateral Cooperation: 
  • The willingness towards continued cooperation is visible in formats including BRICS, UNSC, NSG, Shanghai Cooperation Organisation, International North–South Transport Corridor (INSTC) and the Eurasian Economic Union. 
• Inclusive Indo-Pacific: 
  • The proposed Chennai-Vladivostok Maritime Corridor could improve trade ties with the Russian Far East and the link will also act as a bridge between the Eurasian Union and open, free and inclusive Indo-Pacific. 

Way Ahead

• A restored deal could reduce the chances of another escalation and could further regional stability.
• India needs to balance diplomatic relationships with all the stakeholders to further own interests.

Source: MC