What Donald Trump’s pullout from Iran deal means for India

India’s first reaction has been cautious, and it may gain from the US-Europe disagreement. Indian interests in Afghanistan and West Asia are at stake, and this could be the moment to plan for similar crises in future.

Written by Shubhajit Roy | New Delhi | Updated: May 10, 2018 8:13:21 am
What Donald Trump’s pullout from Iran deal means for India India has been extremely supportive of the deal. Prime Minister Narendra Modi had in 2016 complimented the Iranian leadership on the JCPOA and subsequent developments, and said it represented the “triumph of diplomacy and sagacity”.

India’s first reaction has been cautious, and it may gain from the US-Europe disagreement. Indian interests in Afghanistan and West Asia are at stake, and this could be the moment to plan for similar crises in future.

What is the nuclear deal from which President Donald Trump on Tuesday pulled the United States?

It is officially called the Joint Comprehensive Plan of Action (JCPOA), and informally the ‘Iran nuclear deal’. It was signed between Iran and the P5 (the five permanent members of the United Nations Security Council — US, China, France, Russia, and the UK), plus Germany and the European Union, in Vienna on July 14, 2015. The deal, aimed at preventing Iran from building a nuclear weapon, involved lifting of international sanctions in return for Tehran curbing its nuclear programme. But the Trump administration says the deal did not target Iran’s ballistic missile programme, its nuclear activities beyond 2025, and its role in conflicts in Yemen and Syria. The President said the “horrible one-sided deal that should have never, ever been made”… “didn’t bring calm,… didn’t bring peace, and it never will”.

Read | Donald Trump pulls US from Iran nuclear deal, Obama says ‘serious mistake’

How has India responded to the US action against the deal?

India has been extremely supportive of the deal. Prime Minister Narendra Modi had in 2016 complimented the Iranian leadership on the JCPOA and subsequent developments, and said it represented the “triumph of diplomacy and sagacity”. On Wednesday, the Ministry of External Affairs walked a diplomatic tightrope, its spokesperson Raveesh Kumar issuing an extremely cautious statement: “India has always maintained that the Iranian nuclear issue should be resolved peacefully through dialogue and diplomacy by respecting Iran’s right to peaceful uses of nuclear energy as also the international community’s strong interest in the exclusively peaceful nature of Iran’s nuclear programme. All parties should engage constructively to address and resolve issues that have arisen with respect to the JCPOA.”

What Donald Trump’s pullout from Iran deal means for India

How does this statement sit with India’s position on multilateral commitments?

India has been a proactive votary of the international rules-based order. This has been its line on the South China Sea and on the 2015 Paris climate accord, to which it reiterated its commitment just days after Trump announced in June 2017 that the US was abandoning the agreement. New Delhi did not, however, articulate with sufficient clarity its position when Trump announced the US would shift its embassy in Israel to Jerusalem, and recognise that city as the country’s capital. On the US withdrawal from the Iran deal, India seems to be hedging its bets currently; however, if New Delhi, which has recently become a member of three multilateral export control regimes (MTCR, Wassenaar Arrangement, Australia Group) wants to also join the Nuclear Suppliers Group (NSG), a clearer articulation of commitment to JCPOA will help with the Europeans, especially the French. The complication though, is that, like France, the US too, is a strong backer of India’s NSG membership bid.

Read | Despite Trump walkout on Iran, Delhi should back Europe

What is the implication for India on the energy trade?

Iran, India’s third-largest oil supplier after Iraq and Saudi Arabia, supplied 18.4 million tonnes (mt) of crude in the first 10 months of the 2017-18 fiscal (April 2017 to January 2018). Until 2010-11, Iran was India’s second-largest supplier after Saudi Arabia, but slipped in subsequent years as international sanctions hit. In 2013-14 and 2014-15, India bought 11 mt and 10.95 mt respectively from Iran. This rose to 12.7 mt the following year, and then jumped to 27.2 mt in 2016-17.

What Donald Trump’s pullout from Iran deal means for India

Read | UN chief Antonio Guterres ‘deeply concerned’ by US decision to exit Iran nuclear deal

While the 2010-15 sanctions were imposed by global consensus, Trump has made his decision to pull out from the deal unilaterally — the UK, Germany and France have said they remain committed to the agreement with Iran; China has said the JCPOA “should be implemented in good faith by all parties”, and Russia has said it is “deeply disappointed” with the US. Should these signatories be able to ensure the deal does not collapse altogether, India could conceivably use euros to pay Iran for oil supplies.

What Donald Trump’s pullout from Iran deal means for India US President Donald Trump signs a proclamation declaring his intention to withdraw from the JCPOA Iran nuclear agreement in the Diplomatic Room at the White House in Washington, US, May 8, 2018. (Source: REUTERS)

Is there a threat to India’s strategic investment in Iran’s Chabahar port?

India is developing Chabahar as the beginning of a route to strife-torn, landlocked Afghanistan that bypasses Pakistan, and as a gateway to Central Asia. It is both a financial and a strategic investment. Over the last three years, the engagement between India and Iran on Chabahar has gathered momentum; Modi travelled to Iran in May 2016, and work is expected to be completed and the port handed over to Indian authorities by July, Iranian officials have said.

Also Read | Donald Trump withdraws US from Iran nuclear deal: All you need to know

This timeline may, however, come under pressure — and get pushed to perhaps the end of the year — if American sanctions hit infrastructure development in Chabahar. However, India may still have options if the other signatories stick with the JCPOA. New Delhi will likely argue with its interlocutors in Washington that access to Afghanistan is a shared objective of both countries, and that India’s goal of helping Afghanistan’s reconstruction — at the request of the Trump administration — through $ 1 billion assistance and work in over 100 small development projects, may be affected if Chabahar is slowed down.

Chabahar is crucial to Indian interests also because Iran is seen to be offering the port to other countries as well, including China, which is already developing Pakistan’s Gwadar port next door.

What Donald Trump’s pullout from Iran deal means for India U.S. President Donald Trump holds up a proclamation declaring his intention to withdraw from the JCPOA Iran nuclear agreement after signing it in the Diplomatic Room at the White House in Washington, U.S. May 8, 2018. (Reuters Photo)

What can be the implications in West Asia, especially from an Indian perspective?

Trump’s move to target Iran, and side with its regional rivals Saudi Arabia and Israel, could destabilise the region where over 8 million Indian migrants live and work. Military tensions in West Asia have forced India to evacuate its nationals in the past; New Delhi’s capacity to do so is, however, limited.

What does Trump’s move mean for the India-US relationship?

Under Trump, this relationship has been transactional. The US has been hard on Pakistan, but has asked India to be more proactive in the Indo-Pacific, with an eye on China. While there has been complementarity of interests in both these situations, the Indian establishment has been wary of committing too much on the Indo-Pacific strategy — the India-US-Japan-Australia ‘Quad’ is still taking its first baby steps. Also, faultlines between India and the US over its relationship with Russia have grown prominent of late — New Delhi is aware of these divergences, and the Iran situation will test the durability of the “strategic partnership” between the world’s largest and oldest democracies.

And what about the future of the India-Iran relationship?

The two countries have a strategic interest in keeping the relationship durable and sustainable, and would want to insulate it from the impact of sanctions. Many experts feel the government should look at options like the rupee-rial trading mechanism, and opening of Iranian banks in India and Indian banks in Iran, to facilitate movement of money and income between the two countries. The current crisis could force New Delhi and Tehran to work on a plan for similar situations in the future.

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