The Iran deal: Implications for U.S.-India relations

Content from the Brookings Institution India Center is now archived. After seven years of an impactful partnership, as of September 11, 2020, Brookings India is now the Centre for Social and Economic Progress, an independent public policy institution based in India.

The Iran deal—or the “Parameters for a Joint Comprehensive Plan of Action (JCPOA) Regarding the Islamic Republic of Iran’s Nuclear Program”, to use the wordy official title—has primarily been measured in the number of centrifuges and evaluated in terms of Tehran’s ‘break-out’ timeline to build a nuclear weapon. While this is, doubtless, the crux of the JCPOA, the yet-to-be-signed agreement is equally significant for U.S.-Iran relations, the future of the Middle East as well as India-U.S. relations, and New Delhi’s geopolitical future.

The Iran deal is of salience to the United States and the world for several reasons. At the very least, it would ensure a non-attack guarantee for Iran not only by the United States, but also its estranged allies, Israel and Saudi Arabia; neither is likely to risk a military option as long as the deal is in place. It would also vindicate India’s preference for diplomacy over military action to address contentious issues, particularly in the Middle East.

More expansively, it raises the possibility for normalizing the relations between Washington and Tehran that have been estranged since the 1979 Islamic Revolution. Indeed, this prospect makes the U.S. opening to Iran as significant as the U.S. opening to China in 1972 (with Oman playing the backchannel role that Pakistan performed vis-à-vis China), and holds the same potential to change world order and India’s role in it.

For India, the deal holds several lessons and implications for its relations with both Tehran and the United States. Until now, India’s friendly relations with Iran and refusal to adhere to sanctions imposed by the United States were a hurdle to the growing Indo-U.S. strategic partnership. In fact, India’s opposition to U.S. sanctions on Iran might have been one unspoken element for slow progress on the U.S.-India nuclear agreement. Thus a deal, especially if it leads to lifting of sanctions, might also advance U.S.-India relations by removing one area of disagreement.

Second, a U.S.-Iran rapprochement might allow India to work with both Tehran and Washington to stabilize Afghanistan (just as they had done in 2001 to 2002, when all three, plus Russia, supported the Northern Alliance). Moreover, an alternative route through Iran would allow for greater Indian engagement with Afghanistan in coordination with the United States.

One indication of this might be the collaboration between Washington, New Delhi, Tehran, and Kabul to jointly develop Iran’s Chabahar port, which is strategically significant as an entrepot in providing access to Afghanistan. However, the lifting of sanctions might on the one hand reduce Iran’s enthusiasm for India’s participation in the Chabahar project, and on the other, bring in competitors with deeper pockets, like China, who can easily outspend India’s puny $85 million initial investment in the port project.

Third, for New Delhi, the deal underlines the crucial leadership role of the United States in achieving breakthroughs and holding its allies opposed to the deal in check. Indeed, in 2003, the Europeans were unable to reach an agreement with Iran because the United States was uninterested and had labelled Iran a member of the ‘axis of evil.’

As India seeks to reshape the existing nuclear order through membership in the various nuclear and missile related export control regimes, it will be vital for New Delhi to work closely with Washington and leverage U.S. leadership in achieving its objectives.

Fourth, while the deal will also allow India to increase oil imports from Iran (which had dropped to zero), it will also mean greater competition from other countries, particularly U.S. allies, like Japan and South Korea, as well as China. Moreover, increased oil imports from Iran will also skew the bilateral balance of payments against India with little prospects of improving them.

Finally, while sanctions compelled India to walk a diplomatic tightrope between Iran and the United States, the lifting of sanctions will witness New Delhi trying to walk between raindrops as it seeks to strengthen relations with Israel and Saudi Arabia on the one hand, (both of whom are vehemently opposed to the deal) and Iran on the other.

While it remains to be seen if a final nuclear agreement will be signed in July—especially as Iran’s supreme leader, Ayatollah Ali Khamenei, cautioned that there was “no guarantee” of a deal—there is a growing recognition of Tehran’s legitimate role in contributing to the future of the Middle East and, possibly, even the evolving world order.

This is evident in Pakistan’s overtures to engage Iran in resolving the Yemen conflict diplomatically, much to the chagrin of Islamabad’s patrons in Riyadh, who are seeking a military resolution. Clearly, Tehran’s voice will now resonate louder in the region.