13th annual Municipal Finance Conference


13th annual Municipal Finance Conference



What the Iran nuclear deal means for India


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 moniker—has been evaluated by most experts in only nuclear terms and measured in the number of centrifuges and Tehran’s break-out timeline to build a nuclear weapon. While this is, doubtless, the crux of JCPOA, the yet to be signed agreement is equally significant for US-Iran relations, the future of the Middle East as well as India’s regional and global geopolitical future.

At the very least the deal ensures a non-attack guarantee for Iran not only by the US 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 also raises the possibility for normalizing relations between Washington and Tehran, estranged since the 1979 Islamic revolution. Indeed, this prospect makes the US opening to Iran as significant as the US opening to China in 1972 under the Nixon-Kissinger combine (with Qatar playing the backchannel role that Pakistan performed vis-à-vis China) and holds similar potential to change world order. Consequently, it makes US secretary of state, John Kerry, and Iran’s foreign minister, Mohammad Javad Zarif—the chief architects of the deal—frontrunners for this year’s Nobel Peace Prize.

This deal, if it comes to fruition, also recognizes 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.

For India, the Iran deal holds several lessons and implications. First, it underlines the crucial leadership role of the US in achieving breakthroughs and also holding its allies opposed to the deal in check. Indeed, in 2003 the Europeans were unable to reach an agreement because the US was uninterested and had labelled Iran an “axis of evil” country. As India seeks to reshape the existing nuclear order through membership of the various nuclear and missile related export control regimes, it would be vital for New Delhi to work closely with Washington and leverage US leadership in achieving its objectives.

Second, while the deal will also allow India to increase oil imports from Iran (which had dropped to zero), it will also face greater competition from other countries, particularly US allies such as 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.

Third, sanctions played a part in compelling Tehran to finally give the go ahead (after a decade’s delay) to New Delhi’s request to develop its Chabahar port, which is strategically significant as an entreport in providing India access to Afghanistan. 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, such as China, who can easily outspend India’s puny $85 million initial investment in the port project.

Finally, while sanctions compelled India to undertake a tightrope walk between Iran and the US, 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 is signed in July, especially as Iran’s Supreme Leader, Ayatollah Ali Khamenei, cautioned that there was “no guarantee” of a deal, India’s long-term interests, ironically, might be served even if there is no deal.

This column first appeared in Mint, on April 13, 2015. Like other products of the Brookings Institution India Center, this is intended to contribute to discussion and stimulate debate on important issues. The views are those of the author.