What Just Happened?
Donald Trump, President of the United States, has followed through on one of his repeated election campaign promises – he backed out of the US’ painstakingly-negotiated nuclear deal with Iran. Iran and the deal’s European signatories have reacted sharply, vowing to continue with the deal despite the US reneging.
How has the geopolitical landscape shifted as a result, and what can we expect in the future?
But first things first. What was the deal all about?
What's an 'Iran Nuclear Deal'?
The Joint Comprehensive Plan of Action (JCPOA) as the nuclear deal is formally titled, was negotiated and signed by the P5 (permanent members of the UN Security Council) + 1 – US, UK, China, Russia and France, plus Germany – in a bid to get Iran to halt its nuclear program.
In return, the P5+1 would ease the economic sanctions Iran was under for refusing to suspend its uranium enrichment – uranium enrichment being a crucial process to build a nuclear bomb. This deal is considered by its proponents to be more effective in halting Iran’s nuclear ambitions than continued sanctions, which they believe harmed the Iranian people more than its government.
The US, the rest of the UN Security Council, and Iran finally signed the deal in 2015 after two years of fraught negotiations by the Obama administration, in the face of bitter domestic opposition from Republicans. In 2016, after the International Atomic Energy Agency (IAEA) certified that it was abiding by the agreement, Iran broke free of its sanctions. To do so, Iran had to follow these terms:
- Reducing its existing number of centrifuges by two-thirds. Centrifuges are an essential machinery in the enrichment of uranium.
- Reducing its stockpile of uranium by 98%. Iran is still allowed some uranium to use in nuclear energy for civilian purposes.
- Capping uranium enrichment at 3.67% – that is a proportion that still allows it to use uranium to power some of its energy needs, but falls well short of the 95% enrichment needed to build a nuclear bomb. Before the deal, Iran had reportedly enriched uranium up to 20%.
- Restriction on operating its heavy-water Arak reactor to produce plutonium (another way to fuel a nuclear bomb). Its Arak reactor is not allowed to operate, or must be redesigned in a way that it cannot produce plutonium if it were to operate.
- Allowing International Atomic Energy Agency (IAEA) inspectors access to its nuclear sites and to conduct inspections to make sure the terms of the deal were being followed.
Why Does Trump Hate This Deal So Much?
Trump laid out his reasons for breaking the deal, but they were scant on specifics:
"It is clear to me that we cannot prevent an Iranian nuclear bomb under the decaying and rotten structure of the current agreement. The Iran deal is defective at its core. [...] Iran’s leaders will naturally say that they refuse to negotiate a new deal. [...] But the fact is they are going to want to make a new and lasting deal, one that benefits all of Iran and the Iranian people."
Republicans in the US have been against the deal since its negotiation. Earlier this year, Trump removed his National Security Advisor HR McMaster, and his Secretary of State Rex Tillerson, from their posts. McMaster and Tillerson had been in favour the nuclear deal, whereas their replacements, John Bolton and Mike Pompeo, are both Iran hawks, dead-set against it.
US Republicans have argued that lifting the sanctions on Iran allows the ayatollahs to continue their sponsoring of terrorism around the world, posing a national security threat to the US and its allies.
Trump has not cited violation of the agreement by Iran in his decision to back out; on the contrary, the IAEA has repeatedly certified after inspections that Iran was indeed holding up its end of the bargain. So the Republicans' problem with the deal mainly centres on these three issues:
- The ‘sunset clauses’ in the deal. These allow for a relaxing of restrictions after 10 years (though the restriction on ever building a nuclear bomb is permanent); Republicans believe this is too lenient.
- The terms under which IAEA inspectors are allowed access, which they believe give Iran too much leeway.
- The fact that the deal does not address Iran's other problematic activities, like ballistic missile tests or its perceived support for terrorists.
Republicans' frequently cite Iran's 2017 test of a ballistic missile as proof that Iran is intent on flouting the spirit of the nuclear deal, if not the letter, and see Iran’s continuing activities in war-torn Yemen and Syria through its militias as proof of the same.
Add to this the fact that two of the US' closest allies in the Middle East, Israel and Saudi Arabia, are both against the deal, and you have some of the context behind the move.
Does India Need to Care?
India opened the first phase of a port it is developing in partnership with Iran – Chabahar Port – in 2017. This is important, because Chabahar Port, located in southeastern Iran, was supposed to be India's answer to China's Gwadar Port in Pakistan. It was billed as a game-changer in India’s economic and geopolitical rivalry with China, meant to open up a new trade route to Afghanistan and Central Asia.
If the reimposition of sanctions by the US threatens to affect Chabahar's functioning, India will definitely have something to say about it.
MEA spokesperson Raveesh Kumar said that India would take "necessary steps" if the US withdrawal impacted projects India is working on in Chabahar, reported The Hindu.
Apart from Chabahar, India also depends on Iran for oil. As the sanctions take effect, oil prices can be expected to rise as Iran is India's third-largest exporter of oil. To make matters worse, just earlier this year, India had committed to doubling its oil imports from Iran.
The last time Iran was under US sanctions, India maintained its relations with it – one of the handful of countries to do so.
But this time around, US-India cooperation has increased significantly, with India more or less joining the group of democracies in the region – US, Japan, Australia – against a belligerent China. Just before the nuclear deal was negotiated in 2015, US pressure on India to decrease its trade and business dealings with Iran had begun to take effect – and when the deal was brokered, the pressure eased. Now that the US is unilaterally reimposing those sanctions, it's back to the drawing board for India re: Iran.
Why Are US' Middle East Allies On Board?
Israel and Saudi Arabia are the US’ closest allies in the Middle East. And the US pulling out of the deal is an absolute godsend for Israel, Iran's nemesis in the region.
Israel has long been against the deal because it believes the Iranian regime cannot be trusted to hold up its end of the bargain, and that the terms of the deal allow it to continue on its path to uranium enrichment – something Israel cannot tolerate as it perceives an existential threat from the Iranian ayatollahs, who have threatened Israel with “annihilation” on several occasions.
Saudi Arabia, on the other hand, while not a nemesis, is Iran’s main competitor in the region. Majority Sunni Saudi Arabia and majority Shi'ite Iran have been vying for hegemony in the region and in the eyes of the world’s Muslims, often battling it out through proxies, like in Yemen and Syria. Saudi Arabia, like Israel, argues that the nuclear deal allowed Iran economic relief while failing to dent or slow its nuclear ambitions.
The World Is Watching
The main concern here is global uncertainty and instability. While the deal may not be dead if the rest of the P5+1 and Iran continue to abide by its terms, what the US pulling out does do is give Iran leeway to push the boundaries of the deal with the remaining members to see what it can get away with. US sanctions will bite, but the remaining members, in continuing to stick with the deal, can be expected to find ways to circumvent and blunt these sanctions.
Many analysts fear that the US withdrawal from the deal could embolden Iran to speed towards the nuclear threshold. The US reneging on this deal with a non-nuclear Iran also has direct implications for a nuclear power the US and the world are hoping to defang – North Korea.
Negotiations with North Korea, like they were with Iran, will largely be about easing economic sanctions in return for denuclearisation. If the US cannot be trusted to stand by an important international agreement made with Iran, there is less reason for North Korea to believe that any deal struck with the US will be honoured by future administrations – giving it more space to extract assurances and concessions in any negotiations.
Then there is the larger implication of the US choosing to isolate itself from its allies and the international community in this way – uncertainty about the US' role in the world as the reigning hegemon. As has already begun to happen, alliances will shift to take into account a declining superpower, putting the international order in a state of flux.
What Happens Now?
The oil markets will be waiting with bated breath to see what transpires. The sanctions that will hit Iran's oil sector will reportedly not be reimposed for 180 days, giving the markets a little breathing room. Companies and businesses that do business with Iran will have 3-6 months to wind down their operations before they too will risk being hit with sanctions. Iran's automative sector will reportedly see reimposed sanctions in a matter of 90 days.
In the absence of a new deal, and in the event that Iran decides to also withdraw from JCPOA and make a sprint for the nuclear threshold, the US' only recourse will be military action, either unilateral or in conjunction with regional allies – or else to accept a nuclear Iran. North Korea will be watching closely.
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