7 PM |From the brink of war: on U.S.-Iran conflict| 9th January 2020

Context:US – Iran Conflict.

More in news:

• Iran’s top military commander, Gen Qasem Soleimani, is killed by a US drone strike in Iraq.
• In retaliation, Iran on Wednesday launched ballistic missile attacks at American troops in two military bases in Iraq.

Timeline of US – Iran conflict:

• 1979: The US and Iran are at loggerheads since the 1979 Islamic Revolution, which witnessed the overthrow of the Shah, an American ally in the Middle East, and brought Iran under a clerical regime antagonistic to the US and its involvement in regional politics.
• 1984: Iran- Iraq War prompted Iran to restart nuclear programme.
• 1980s and 1990s: US sanctions in the 1980s and 1990s were intended to check Iran’s regional activities and compel it to cease support for terrorism.

• 2002-2015: UN and USA and EU put Economic sanctions on Iran
• July 14, 2015: Iran Nuclear Deal.
• May 8, 2018: US withdrew from Iran Nuclear Deal.
• May 2019:Relations between the US and Iran worsen in May 2019, when the US tightens the sanctions targeting Iran’s oil exports. In response, Iran begins a counter-pressure campaign.
• In May and June 2019, explosions hit six oil tankers in the Gulf of Oman, and the US accuses Iran.
• On 20 June, Iranian forces shoot down a US military drone over the Strait of Hormuz. The US says it was over international waters, but Iran says it is over their territory.

• July 2019 onwards: Iran begins rolling back key commitments under the nuclear deal in July.
• On 3 January 2020,Iran’s top military commander, Gen Qasem Soleimani, is killed by a US drone strike in Iraq.
• January 8, 2020:Iran’s missile strikes against al-Asad airbase and Erbil airport, both of which play host to US troops.
• January 8, 2020: In a statement later on Wednesday, Trump said the strikes appeared to be the extent of Iran’s actions and pledged more US sanctions on Tehran, signalling a scaling down of tensions, at least for the moment.

India-Iran Relations:

• India has strong bilateral relations with Iran. In addition to cultural and historical links, the two countries look at each other as important regional actorswho have contributed positively to stability in their respective regions. New Delhi and Tehran have maintained robust political engagements since the 1990s. 
• At the moment, the core of the relationship lies in strong bilateral trade, crude oil imports from Iran and cooperation in the development and operationalisation of the Chabahar Port. Iran is one of India’s major trading partners and accounts for nearly two per cent of its foreign trade.
• Energy is the most important component of bilateral trade and Iran contributes significantly to India’s energy security. Iran has been one of the top three suppliers of crude oil to India for over a decade, except during the period 2011-15 when it was under international sanctions. Moreover, India also buys natural gas from Iran and hence the total value of energy imports from Iran is even higher, accounting for 80-85 per cent of its overall imports from Iran.
• Chabahar Port: India deems the port as a gateway for its trade with Afghanistan and Central Asia.

Effect of the US-Iran conflict on India:

• Energy:For India, US-Iran impacts India’s sea-link communication and energy flows from the region.
• If there is a dramatic escalation, it would lead to spike in oil prices which would have a negative impact on an already slowing down, sluggish economy.
• The retail pump price of petrol rose to Rs 75.69 per litre. It is the highest price for petrol since November 2018. Diesel price climbed to Rs 68.68 a litre. The reason for this rise was a sudden spike in global oil prices that hit $70 mark in the wake of escalating US-Iran tensions.
• India imports 84 per cent of its oil needs. It costs dollars and hence eats up foreign reserves. Higher price of crude oil and unstable situation in the source region means more payment for insurance of the oil tankers that bring fuel to Indian shores.
• Chabahar Port: India has already been pushed by the US sanctions into a corner to not conduct business with Iran. Any further escalation could mean that India’s Chabahar project would be in jeopardy.
• Sensex:Trump’s attack order had its impact on Sensex as well. Sensex fell by 788 points. Rupee fell below 72 against one dollar. Gold prices hit a lifetime high of Rs 41,730 for every 10 grams.
• Indian Diaspora in region: There are 8 million Indians living and working in West Asia, the vast majority of who live in the Arabian Gulf. Conflict would put them all in danger, as it did at the start of the 1990s, when the US went to war with Iraq and New Delhi had to arrange an airlift of more than 110,000 Indian citizens.
• Remittances: A sudden jolt would put pressure on the places Indians return to, and also endanger the $40 billion in remittances India receives from West Asia.
• Pakistan:To counter increased animosity with Iran, the Trump administration has opened its purse for Pakistan military. Trump has ordered resumption of military training to Pakistan. It had been suspended in 2018 – a news welcomed by all in India — after the US accused Pakistan of not doing enough to eliminate terrorism from its soil.

Way forward:

• India has asked US and Iran to exercise restraint to prevent destabilizing the region.
• India needs to finely balance its approach towards Iran and the US, since a significant amount of Indian interests lie in both countries
• The Ministry of External Affairs said, “It is vital that the situation does not escalate further. India has consistently advocated restraint and continues to do so.”

Source: https://www.thehindu.com/opinion/editorial/from-the-brink-of-war/article30517035.ece