Thursday, April 02, 2015

Nuclear Deal with Iran

US President Obama has just announced that a deal has been reached with Iran over its nuclear program, whereby Iran will agree to forego nuclear enrichment in exchange for relief on sanctions:

So what are the implications of this deal, particularly for India? Well, oil markets have reacted with prices dropping, since more Iranian oil will be able to reach the market. That's good for India. Also, India may not receive as much pressure over its dealings with Iran as in the past, which is good. If the fence-mending  helps to contain ISIS, then that might be of some marginal benefit as well.

The Iranian revolution and the souring of relations with the United States is of course one of the key reasons Pakistan became much more strategically valuable for the US from Zia's time onwards. Uptil then, the US had relied much more on the Shah as their lynchpin ally in the region, and Pak was seen as more troublesome and thorny, due to its conflict with India. After ties with Iran broke in 1979 then Pak became much more important, but will we now see US-Iran relations mending to the point where they diminish Pak's importance? Unless and until that threshold is crossed, then Pak's strategic maneuvering room isn't really impacted so much.

The Saudis and Israelis will not be happy at all - will they somehow upset the cart by moving to launch airstrikes against Iran? Israel's capabilities for this might be overstretched, and certainly the Saudis couldn't do anything alone, other than continue support for ISIS.

China will certainly move to take advantage of the new opening, and India should too. We have good relations with Iran, including both trade and strategic cooperation. We would benefit from supporting Iran as an access route to Central Asia and its natural resources, since oil prices are expected to rebound in 2016.

On the other hand, if Iran later reneges on this nuclear agreement down the road, expect oil prices to go sky high in a nuclearized Middle East, and also expect that Saudi will start buying bombs from Pakistan. Saudi strongly opposes this Iran deal, and sees as inevitable that Iran will later renege and go for the bomb. In which case, Saudi won't wait for that last moment to respond, and would likely start engaging Pakistan through backdoor channels right now, to secure its access to the Pak Bomb. Are we therefore now preparing for the implications of this? Will Pak and its nuclear arsenal become increasingly bound to conflict in the Middle East? Will this give Pak new levers against us? If so, then which ones? Will we become hostage to other geopolitical dynamics?

No comments: