Iran has begun its long march out of the cold, after economic sanctions related to its nuclear programme — imposed by the US, EU and the UN — were lifted, following the IAEA’s confirmation of Tehran’s compliance with the terms of last July’s historic nuclear deal. But Iran’s long march is more an extended tightrope walk — proved by Washington’s imposition of fresh sanctions over Iran’s missile programme, pertaining to the test-fire of a precision-guided ballistic missile capable of delivering a nuclear warhead in October 2015. Moreover, the US has only suspended its nuclear-related sanctions; it hasn’t terminated them. Non-nuclear economic sanctions imposed by the US remain in place, forbidding American citizens and firms from trading with Iran. As a result, foreign companies may still not feel confident about dealing with Tehran. Despite so many qualifiers, Iran is now back in the global market, ready to raise its production and export of oil, gain access to capital and investment, and utilise its own $100 billion of assets that are being unlocked.
The Middle East has changed since the nuclear sanctions were imposed in 2006. Tehran’s continued isolation on the international stage was an important factor in precluding solutions to the Syrian crisis and the threat from the Islamic State. After he became president in 2013, moderate Hassan Rouhani declared his intention to resuscitate Iran’s moribund economy and end its pariah status. US President Barack Obama, in turn, broke through America’s ideological bind on Iran. The result has been a geopolitical sea-change. It hasn’t made Tehran and Washington friends yet. Nor will lifting sanctions alone end high inflation and steep unemployment, given corruption and economic mismanagement. The current low price of oil, too, may undercut the gains from increased sales. This is the risk Rouhani has chosen to take, and if he fails, it will politically help his hardline opponents. The prospect of more Iranian oil will not be welcomed by rival oil-producing states either, and the biggest of them, Saudi Arabia, is locked in a dangerous political conflict with Iran, widening the Shia-Sunni sectarian schism.
Global business is looking at opportunities to access Iran’s market, and invest in and rebuild the country’s infrastructure. India, which stands to benefit from the unshackling of Iranian oil, must seize the greater diplomatic space this opens up in the Middle East. As India’s gateway to Central Asia, Iran is also a promising investment destination for India’s private sector in infrastructure, IT, petrochemicals, etc. As other Asian economies, like China and Japan, rush in, India must move swiftly.