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President Donald Trump And Future Of The Iran Deal – Analysis

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By Kabir Taneja

The world is still perhaps coming to terms with the outcome of the elections in America, where Republican candidate and businessman Donald J. Trump orchestrated a shock victory, which caused a wave of concern within the global diplomatic community.

One of the foremost questions around Trump’s victory has been in relation to the future of the Iran nuclear deal, one that the President-elect has criticised himself, dubbing it as a “horrible deal” and insisting that he will look to renegotiate the agreement known as the Joint Comprehensive Plan of Action (JCPOA). He went on to add, prior to his victory, that the sanctions imposed against Tehran were in fact doing a good job, and their removal will push Iran to become “a major power at some point.”

Over the past few weeks, Trump’s appointments to critical posts in his cabinet have largely included people who have been against the JCPOA (we still wait for his decision to appoint the Secretary of State). The current chief of the Central Intelligence Agency (CIA), John Brennan, has warned the incoming president against any attempts to dismantle the deal, calling any such move as a ‘height of folly.’ Meanwhile, Trump’s pick to replace Brennan, Mike Pompeo, posted on Twitter that he was looking forward to “rolling back” the nuclear deal with Iran, calling it “disastrous” and relegating the Iranian establishment as “the world’s largest state sponsor of terrorism.”

The Iran deal, successfully negotiated at the Palais Coburg Hotel, a legacy palace built in 1845, in Vienna, between Tehran and the UN Security Council members, plus Germany (collectively known as P5+1) was seen as a momentous victory for international diplomacy where military actions were avoided to bring Tehran’s nuclear programme under international scrutiny. Even as America’s allies in the region, such as Saudi Arabia and Israel, who found themselves in a rare embrace over similar regional interests against Iran, criticised the deal, the world looked forward to warding off a potential nuclear arms race in the planet’s most volatile region. Of course, Israel is known to already have nuclear weapons, and if former US Secretary of State Colin Powell is to be believed, Tel Aviv, which of course denies having any such weapons, has an arsenal of around 200 nuclear weapons, more than India. This past week, the US Senate overwhelmingly voted for renewing the existing non-nuclear sanctions on Iran for another ten years. Even as Trump has not revealed any detailed outlooks on his approach to the Iran question, the above move emboldens his stance currently on offer as a take-away menu from his scrappy takes on foreign policy during pre-election debates. Overall, there are no clear, well-presented indication on what he intends to do with the Iran agreement.

However, it is critical to remember here, that the JCPOA is a multilateral deal and not one that Washington can scrap just by itself. The governments in Paris, Berlin, Beijing, Moscow and London have perhaps much more invested into the success of the deal economically and politically than the US, and will look to continue the deal in whatever forms possible in an event of an American abdication.

Iran offers tremendous economic opportunities as it comes out of international isolation. It is home to some of the world’s largest untapped oil and gas reserves, and much of the technology currently in use in Iran here is obsolete, which led to many Western energy companies to camp out in Tehran well before the deal was achieved in Vienna in order to gain a first-mover advantage. Beyond energy, Iran offers a well educated, young population, a strong domestic manufacturing base thanks to it being forced to look inward over the decades and so on. To put it in simple terms, Iran is not the destitute, war-torn pariah state that many believe it to be.

India, while a close, historical friend of Iran, with significant trade and civilisation ties, was initially in two minds over its approach on the country’s nuclear programme. New Delhi, in 2009, played a balancing gamble when it voted against then Iranian President Mahmoud Ahmadinejad’s regime at the United Nations against the country’s nuclear programme. While India did so predominantly under pressure from Washington, it also looked to continue its robust energy trade with Iran despite a confrontational Tehran under Ahmadinejad’s rule over its stance at the UN. However, New Delhi and Washington caught each other at odds over this, as the Americans continued to squeeze Iranian interests out from the largely Western controlled global financial system. India’s energy imports from Iran came down drastically, and New Delhi was unable to make payments to Tehran as the Americans also terminated the last route to do so, via a bank in Turkey. The Iranians, known for their bullish and often backtracking style of diplomacy, pressured India tremendously to release more than $6 billion in due payments which New Delhi was depositing in a bank account at a UCO Bank branch in Kolkata. However, to move this money at that time to Iran would require India to break a host of international financial accords it was signatory too, which it refused to do. During this period, Iran even threatened to ‘give away’ the Farzad B gas field, which it had committed exclusively to India for its development, if India did not make the payments.

Beyond energy, the development of Chabahar port is also critical to the India-Iran optics. While India has been characteristically slow in execution of this project, the extended regional policy of Afghanistan may finally push its commitments to the port development into overdrive after Prime Minister Narendra Modi asked for the project to be executed on priority, and later visited Iran as well. However, the public discourse around Chabahar in India has been oversimplified, making it look like an exclusively strategic Indian influence region in Iran, similar to what China has in the name of Gwadar, about 300 km away in Pakistan. To put the false equivalence in perspective over Chabahar’s exclusivity towards India’s interests, Tehran has openly invited China as well for the Chabahar Economic Zone’s development, and in January this year, Nawab Sanaullah Zehri, Chief Minister of Pakistan’s Balochistan province, where Gwadar port is located, and Iran’s Sistan-Baluchistan Governor Ali Osat Hashemi signed a decree to declare Gwadar and Chabahar as “sister port cities.” Iran also pledged to help out Gwadar in one of its most debilitating problems, water scarcity. Zehri also roped in the fact that the China-Pakistan Economic Corridor (CPEC) will bring progress to both sides for Balochs, with Iran also selling electricity to Pakistan’s Balochistan grid.

Last month, after a long gap, Iran regained its top spot from Saudi Arabia as India’s largest crude oil supplier. After months of New Delhi getting breathers from the US in financial sanctions against Tehran to pay its dues, uninterrupted energy trade resumed clearing significant portions of debts to Iran. Return of financial sanctions under Trump, or worse, repercussions of an attempt by the US to renegotiate the JCPOA could put India in a spot of bother once more. Even though India can easily hedge its oil imports from other suppliers, with Gwadar now fully operational under China’s influence in Pakistan, New Delhi will look to increase its influence at a fast pace in the region.

A dismantling of the Iran nuclear agreement, as unlikely as it may be, may not cause a huge dent in Indo-Iranian optics, but will require India to manoeuvre its relations with Tehran with diplomatic creativity, something that has been missing in the past. The good news is, if such a situation arises, New Delhi can align with the European powers interests in Iran quite naturally, including on issues such as financial transactions and trade. Overall, a revisit of the agreement by Trump’s administration is going to be far more counterproductive and possibly even isolating for Washington than Iran or other global players.


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Observer Research Foundation

Observer Research Foundation

ORF was established on 5 September 1990 as a private, not for profit, ’think tank’ to influence public policy formulation. The Foundation brought together, for the first time, leading Indian economists and policymakers to present An Agenda for Economic Reforms in India. The idea was to help develop a consensus in favour of economic reforms.

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