The United States has pulled out of the Iran nuclear deal, President Donald Trump announced, upending a key foreign policy achievement of his predecessor Barack Obama.
The President has directed his administration to immediately begin the process of re-imposing sanctions against Iran that were lifted by the JCPOA. The re-imposed sanctions will target critical sectors of Iran’s economy, such as its energy, petrochemical, and financial sectors.
Repeating his long-held views on the deal, the President said JCPOA failed to deal with the threat of Iran’s missile program and did not include a strong enough mechanism for inspections and verification.
Accusing Iran of malign activities in the region, US said that it would not surrender to “nuclear blackmail by Iran.” US said that the agreement was so poorly negotiated that even if Iran fully complies, the regime could still be on the verge of a nuclear breakout in just a short period of time.
The deal’s sunset provisions are totally unacceptable. US stated that if it allowed this deal to stand, there would soon be a nuclear-arms race in the Middle East.
JCPOA (Joint Comprehensive Plan of Action)
The JCPOA, signed on July 14, 2015, was the result of prolonged negotiations between Iran and P5+1 (U.S., U.K., France, Russia, China, Germany and EU). Talks began in 2003 between Iran and E-3 (Germany, France and U.K.), and in 2005 expanded to the P5+1 format. Negotiations frequently stalled leading to new sanctions on Iran but became purposeful after Hassan Rouhani’s election as President in 2013.
In 2004, Iran had around 1000 centrifuges, and by 2015 the number had grown to 20,000. The U.S. concluded that Iran had recovered from the Stuxnet debacle and was barely months away from producing enough highly enriched uranium (20-25 kg) to produce a nuclear device. Therefore the JCPOA focussed exclusively on rolling back Iran’s nuclear activities.
Under the JCPOA, Iran ended certain activities (converting the underground Fordow enrichment facility into a research centre and dismantling of the Arak heavy water research reactor), accepted restraints on other activities (reducing the number of operational centrifuges to 5060 at Natanz for 10 years, restricting enrichment level to 3.6% for 15 years, limiting the low enriched uranium stocks to 300 kg by shipping out nearly 10 tonnes of extra stocks and refraining from setting up a research reactor for 15 years) and accepted a highly rigorous inspection regime.
In return, about $100 billion of Iranian assets were unfrozen and Iran was allowed to resume sales of oil. January 16 last year was declared Implementation Day when the IAEA certified Iranian compliance and sanctions relief kicked in. The UN Security Council (UNSC) unanimously adopted Resolution 2231, endorsing the JCPOA and lifting the UNSC sanctions.
Impact on India
Oil: The impact on world oil prices will be the immediately visible impact of the U.S. decision. Iran is presently India’s third biggest supplier (after Iraq and Saudi Arabia), and any increase in prices will hit both inflation levels as well as the Indian rupee.
Chabahar:India’s moves over the last few years to develop berths at the Shahid Beheshti port in Chabahar was a key part of its plans to circumvent Pakistan’s blocks on trade with Afghanistan, and the new U.S. sanctions could slow or even bring those plans to a halt depending on how strictly they are implemented.
INSTC: Beyond Chabahar, India has been a founder of the International North South Transport Corridor (INSTC) since it was ratified in 2002. It starts from Iran and aims to cut right across Central Asia to Russia over a 7,200-km multi-mode network.
Shanghai Cooperation Organisation:This year, Chinese officials say they will consider inducting Iran into the 8-member Eurasian security organisation. If the proposal is accepted by the SCO, which is led by China and Russia, India will become a member of a bloc that will be seen as anti-American.
Rules-based order: India has long been a proponent of a “rules-based order” that depends on multilateral consensus and an adherence to commitments made by countries on the international stage. By walking out of the JCPOA that was signed by the Obama administration, the U.S. government has overturned the precept that such international agreements are made by “States” not just with prevailing governments or regimes. This could also impact all agreements India is negotiating both bilaterally and multilaterally with the U.S., and the government will have to choose its future course factoring in the new U.S. behaviour.
France, Germany and the UK – whose leaders had tried to change US mind – have said they “regret” the American decision. The foreign ministry of Russia, another signatory, said it was “deeply disappointed”. EU is “determined to preserve” the deal.
The United Nations secretary general Antonio Guterres was “deeply concerned” at the announcement and called on the other signatories to abide by their commitments.
Israel’s Prime Minister Benjamin Netanyahu said that Israel “fully supports” US bold withdrawal from a disastrous deal.
And Saudi Arabia, Iran’s regional rival, said it supports and welcomes US moves towards pulling out of the deal.
US decision is not about nuclear weapons. If US administration was actually concerned about Iran acquiring them, it would have supported a deal that closes the path towards nuclear weapons for Iran. Instead, the bigger concern for US as well as Washington’s closest allies in West Asia — Israel and Saudi Arabia — is Iran’s re-accommodation in the global economic mainstream. They fear that if Iran’s economic profile rises, it will embolden it to increase its regional presence, posing a strategic threat to the interests of the U.S.-Saudi-Israel axis.
The U.S. action doesn’t necessarily trigger an immediate collapse of the agreement. For now, Europe, Russia and China remain committed to it. Iran has responded cautiously, with the Foreign Minister saying he will engage diplomatically with the remaining signatories. But the challenges will emerge, not only for Europe but also for other nations with strong trade ties with Iran, including India, once American sanctions are in place. The U.S. stands isolated in its decision. But the question is whether Europe and other powers will stick together to respect the mandate of an international agreement, or buckle under American pressure. If they do cave in, West Asia will be a lot more dangerous.