Relevance: GS-2 : Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora

Key phrases: JCPOA, P5+1,America’s Sanction on Iran, 2015 Iran Nuclear Deal

Why in News ?

• Recently, Iran’s foreign minister said that a US move to restore sanctions waivers to Tehran was not enough, and Washington should provide guarantees for the revival of the 2015 nuclear deal with major powers.
• Earlier, Washington restored the waivers to allow international nuclear cooperation projects, as indirect US-Iranian talks on reviving the nuclear deal enter the final stretch in Vienna.

Key Highlights

• The waivers restored by Washington had allowed Russian, Chinese and European companies to carry out non-proliferation work to effectively make it harder for Iranian nuclear sites to be used for weapons development.
• The waivers were rescinded by the United States in 2019 and 2020 under former President Donald Trump, who pulled out of the nuclear agreement in 2018.
• After Trump pulled the United States out of the deal and reimposed harsh sanctions, Iran gradually started violating the pact's nuclear curbs. Tehran insists its nuclear programme is purely for peaceful purposes.

Background

• In the 1970s, Iran received assistance in its nuclear program from the United States as part of the ‘Atoms for Peace’ program.
• The Shah of Iran even signed the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) in 1968 as a non-nuclear weapons state and ratified the NPT in 1970.
• It all changed when the Iranian Revolution threw the country’s nuclear programme into disarray as many talented scientists fled the country.
• The new regime was openly hostile to the United States and thus ended any hope for assistance from them.
• In the late 1980s Iran reinstated its nuclear program, with assistance from Pakistan (which entered into a bilateral agreement with Iran in 1992), China (which did the same in 1990), and Russia (which did the same in 1992 and 1995), and from the A.Q. Khan network.
• Although Iran stated that its nuclear programme was for peaceful purposes, Western powers and their allies in the Middle East suspected that this was not the case.
• Back and forth negotiations between Iran and the western nations took place throughout the 2000s with little progress.

Sanctions

• Based on the revelations of an Iranian exile group in 2002, Iran was suspected of having nuclear facilities.
  • Iran created plants for heavy water and Uranium enrichment.
• Following inspections by the International Atomic Energy Agency (IAEA) and subsequent discoveries, Iran continued to proceed with nuclear developments despite international opposition.
• In 2006, the United Nations imposed sanctions on Iran, which were followed by similar actions from the U.S. and the EU.
• Bitter confrontations then broke out between Iran and the world powers.
• These sanctions were primarily on Iran's oil business, weapons sales, and financial transactions severe impact on Iran’s economy.

2015 Iran Nuclear Deal

• The deal, formally known as Joint Comprehensive Plan of Action (JCPOA).
  • It imposes restrictions on Iran’s civilian nuclear enrichment program
• Participants
  •  It is a landmark accord signed between Iran and a coalition of world powers including the US, the UK, China, Russia, France, and Germany (collectively known as P5+1).
• Goals of the Deal
  • Proponents of the deal said that it would help prevent a revival of Iran’s nuclear weapons program and thereby reduce the prospects for conflict between Iran and its regional rivals, including Israel and Saudi Arabia.
  • The P5+1 wanted to unwind Iran’s nuclear program to the point that if Tehran decided to pursue a nuclear weapon, it would take at least one year, giving world powers time to respond.
  • Heading into the JCPOA negotiations, U.S. intelligence officials estimated that, in the absence of an agreement, Iran could produce enough nuclear material for a weapon in a few months.
  • Negotiating nations feared that Iran’s moves to become a nuclear weapons state risked thrusting the region into a new crisis.
• Iran’s Response
  • Iran agreed not to produce either the highly enriched uranium or the plutonium that could be used in a nuclear weapon.
  • It also took steps to ensure that its facilities pursued only civilian work, including medical and industrial research.
  • The relatively moderate regime of President Hassan Rouhani agreed to dismantle much of Iran’s nuclear programme.
    • He opened its facilities to greater international monitoring.
  • In return, the world powers agreed to lift many of the sanctions imposed on the country, opening its economy to billions of dollars of lost revenue.
• Sanctions relief
  • The EU, United Nations, and United States all committed to lifting their nuclear-related sanctions on Iran.
  • However, many other U.S. sanctions on Iran, some dating back to the 1979 hostage crisis, remained in effect.
    • They cover matters such as Iran’s ballistic missile program, support for terrorist groups, and human rights abuses.
  • Though the United States committed to lifting its sanctions on oil exports, it kept restrictions on financial transactions, which have deterred international trade with Iran.
  • The parties agreed to lift an existing UN ban on Iran’s transfer of conventional weapons and ballistic missiles after five years if the IAEA certifies that Iran is only engaged in civilian nuclear activity.
• Impacts of Deal
  • Iran’s economy, after suffering years of recessions, currency depreciation, and inflation, stabilized significantly after the deal took effect.
  • Its exports skyrocketed as Iran regained trading partners.
  • After the JCPOA took effect, Iran began exporting more than 2.1 million barrels per day.
  • Israel, America’s closest ally in the Middle East, strongly rejected the deal.
    • Other countries like Iran’s great regional rival Saudi Arabia, complained that they were not involved in the negotiations even though Iran’s nuclear programme posed security risks for every country in the region.
• Former President Donald Trump and Iran
  • In May of 2018, President Trump announced that the U.S. would pull out of the deal and by the end of the year had reinstated sanctions on Iran.
  • European countries, including Germany, France, and the U.K. disagreed with the sanctions.
  • As a result, Iran's economy struggled, leading to protests in the streets.
  • Iran responded when Iranian President Hassan Rouhani announced that the country was rolling back some of the restrictions that had been previously agreed to under the 2015 deal.
    • He also stated that Iran would stop complying with the caps for stockpiles of enriched uranium.
  • In early 2019, President Trump ordered the killing of General Qasem Soleimani, who was one of Iran's top military leaders.
    • In response, Iran announced it would no longer comply with the nuclear deal that President Obama had signed in 2015.
• President Joe Biden and Iran
  • The United States and Iran have held eight rounds of indirect talks in Vienna since April.
  • It was aimed at reinstating the pact with major powers - the United States, China, Russia, France, Germany and Britain - which lifted sanctions against Tehran in exchange for restrictions on its nuclear programme.
  • Biden and his aides are going through the process of reviewing each sanction that former U.S. President Donald Trump put in place against Iran.

Impact on India of restoration of the deal:

• Boost to regional connectivity: Removing sanctions may revive India’s interest in the Chabahar port, Bandar Abbas port, and other plans for regional connectivity. This would further help India to neutralize the Chinese presence in Gwadar port, Pakistan.
• The International North-South Transit Corridor (INSTC), which runs through Iran, is important to India to improve connectivity with five Central Asian republics, may also get a boost.
• Energy Security: Due to the pressure of the US’ Countering America’s Adversaries through Sanctions Act (CAATSA), India had to bring down oil imports to zero. Restoration of ties between the US and Iran will help India to procure cheap Iranian oil and aid in energy security.

Conclusion

• The pros and cons of such a landmark deal were hotly debated. Most views, claims, and allegations were often politically tuned. European leaders still hold out hope that a deal can be reimplemented in an effort to constrain Iran's nuclear ambitions.

Source: The Hindu BL, Council of Foreign Relation

Mains Question:

Q. Discuss the Impact of restoration of the 2015 deal by the USA on Indian trade and ties with Iran.