Adopting a ‘wait and watch’ approach

Adopting a ‘wait and watch’ approach

Context:

• Differing preoccupations in both countries, Iranian President Hassan Rouhani’s visit this month was a subdued affair compared to Prime Minister Narendra Modi’s visit to Tehran.

Geographical dynamic:

• The future of the Iran- P5+1-European Union (EU) nuclear deal (Joint Comprehensive Plan of Action, or JCPOA), concluded in 2015 is at stake for it has been given U.S. President Donald Trump’s visceral opposition to it.
• In addition, Iran is focussed on developments in Syria and Yemen.
• For India, dealing with China’s growing footprint in the Indo-Pacific and challenges in its immediate SAARC neighbourhood assume priority.

Uncertainties of JCPOA:

• The JCPOA is not a bilateral deal between Iran and the U.S.; other parties are China, France, Germany, Russia, the U.K., and the EU.
• Further, the JCPOA was unanimously supported by the United Nations Security Council (Resolution 2231) enabling Security Council sanctions to be lifted.
• The problem is that the U.S. has imposed multiple and often overlapping sanctions on Iran pertaining not only to nuclear activities but also to missile testing, human rights, and terrorism.
• The threat of the U.S. snapback means that third country companies may now attract U.S. sanctions.
• This uncertainty has been adversely impacting the sanctions relief since Donald Trump’s election.

Major takeaways from the visits( Iranian President Hassan Rouhani’s visit to India and Prime Minister Narendra Modi’s visit to Tehran)

• India conveyed its support for the full and effective implementation of the JCPOA, the need for strengthening consultations on Afghanistan, and enhancing regional connectivity by building on the Chabahar.
• Nine MoUs were signed relating to avoidance of double taxation, visa simplification, cooperation in diverse fields including agriculture, traditional systems of medicine, health and medicine, postal cooperation, trade remedial measures, and a lease contract for an interim period of 18 months for Phase 1 of Chabahar.
• The last is a move forward after the inauguration of the first phase of the Chabahar port in December.
• Earlier in October, Iran had allowed a wheat shipment of 15,000 tonnes for Afghanistan through Chahbahar.
• There was talk about an aluminium smelter plant and a urea plant to build up Indian investments in the Chabahar free trade zone.
• One positive thing is the exploration of a rupee-rial arrangement which could provide an alternative channel for economic and commercial transactions in case U.S. sanctions do kick in, making dollar denominated transactions impossible.

Conclusion:

• It is clear, therefore, that both countries approached the visit with modest expectations.
• The near-term developments in its neighbourhood are a priority for Tehran even as Mr. Modi tries to find a balance with his stated preference to develop closer ties with both the U.S. and Israel.
• The uncertainties surrounding the JCPOA provide the justification for adopting a ‘wait and watch’ approach.