What is the issue?
- Trump administration had earlier imposed sanctions on Iran and walked out of the “JCPOA Nuclear Deal”.
- As sanctions are now taking a political toll in Iran, allies should facilitate talks with the U.S. to ensure that the situation doesn’t escalate.
What is the context of the nuclear deal?
- Alarm - Iran was thought to be in the process of acquiring nuclear capabilities as it had uranium enrichment plants, which raised a worldwide alarm.
- To restrain Iran from this endeavour, UN sanctions were introduced in 2010, which effectively curtailed Iran’s economy.
- Compromise - The election of Hasan Rohani (a moderate leader) as Iranian President in 2014 saw the commencement of talks with international players.
- Negotiations were carried out by P5+1 countries (permanent 5 in the UN, plus Germany), and a “Joint Comprehensive Plan of Action” (JCPOA) was evolved.
- This was called “Iranian Nuclear Deal” and it effectively placed restrictions on Iran’s potential to enrich Uranium and thereby develop a nuclear bomb.
- The deal proposed to lift sanctions on Iran in a phased manner and opened up Iran’s nuclear facilities for international inspections (by IAEA).
- Politics - This was appreciated as a historic deal that resolved a tense situation peacefully, for which Obama administration was commended for.
- But the Trump administration decried the deal since the start, claiming that it gave away too much to Iran, it recently withdrew U.S. from the deal.
- Further, it had introduced sanctions again and is also coercing its trading partners to do the same through stringent norms.
What are the implications of a U.S. walkout?
- Economic - The Nuclear Deal and its subsequent lifting of sanctions had boosted Iranian economy massively and created an overall euphoria.
- Tehran had managed to double its oil exports, climbed out of recession and had managed to contain the runaway inflation that prevailed before 2015.
- With the return of economic sanctions, Iran has been prohibited from using the U.S. currency, and faces a bar on trade in cars, metals and minerals.
- Further, “Rial” lost over 50% of its value this year, pushing up prices and compelling consumers to convert their savings into gold and other assets.
- Political - Iranian Finance Minister and Central bank governor were removed recently for failing to handle the currency situation effectively.
- These actions have helped a little to subdue public anger against high inflation and alleged corruption, but the situation is far from addressed.
- The crisis has also upended the hand of extremist views within Iran’s polity, thereby directly affecting President Rouhani’s popularity.
How does the future look?
- Internal - Iranian Central Bank has announced a relaxation of foreign exchange rules to enhance access hard money for essential purchases.
- But with the next round of sanctions (to curb Iran’s oil exports and financial dealings) slated to kick in by November, the future looks bleak.
- International - With tensions rising, there is speculation that Iran might blockade the vital Strait of Hormuz (33% of world’s oil supplies flow here).
- This might create a worldwide panic and generate a situation akin to the oil shocks of the 1970s, which is undesirable.
- Direct confrontation isn’t on anybody’s cards, and a renewed nuclear deal also looks unlikely, thereby indicating the likelihood of a prolonged stalemate.
- Hope - Considering the likely fallouts, European Union (EU) and other international players should engage to ease the tensions between both sides.
- Even a small relaxation in U.S. sanctions might help in easing tensions within Iran, an option that is possible despite Trump’s inconsistent policy stands.
Source: The Hindu
