US President Donald Trump signed an executive order on June 24, imposing additional economic sanctions on Iran.
Apparently, it’s in retaliation to shooting down of the US Drone by Iran over its airspace last week, which has left the US red-faced, wargaming all options on the table from military retaliation to additional curbs, sanctions, talks and possibly another deal.
The US claims to have exercised restraints after ordering cyber attacks on Iranian missiles, which Iran denies to have any effect. The immediate trigger was a strike on merchant ships, for which the US blamed Iran.
No conclusive evidence appeared to confirm it to be a hostile act by Iran. It makes Strait of Hormuz another flashpoint in the global arena, more so when Iran finds support from some of the US competitors.
These triggers are only a by-product of greater US agenda to contain the behaviour of Iran’, where Israel and Saudi Arabia are direct beneficiaries because Iran has no capability to strike the mainland of the US.
Earlier US Presidents like Clinton and Obama did not consider striking Iran as a worthwhile option, instead the US worked very hard to get Joint Comprehensive Plan of Action (JCPoA) signed in 2015 with Iran (commonly known as Iran nuclear deal), even at the cost of differing with some of its allies and strategic partners.
It’s a subject of discussion in hindsight, as to why President Trump found it necessary to pull out of it and re-impose sanctions on Iran to moderate its behaviour, to help some of its allies? Did he have a better plan to achieve what the US wanted to or it was just an election promise; hence a domestic compulsion?
JCPoA was signed to reach an end state, wherein Iran gives up the means to make nuclear weapons and the United States and allies agree to reduce sanctions on Iran in return. The Republicans were not too happy with JCPoA at that time and made it an election issue.
The IAEA had not reported any conclusive breach of the agreement by Iran, which implies that it was workable, with some suspicion, minor allegations and counter allegations. President Trump delivered his election promise by walking out of the deal. Additional sanctions were imposed based on the narrative of the US and Israel that Iran was enriching Uranium beyond the agreed limit.
The fresh wish list of the US and Israel which they want Iran to follow seems to be a tall order for any meaningful negotiations. It includes ceasing its nuclear weapon programme, uranium enrichment and nuclear-capable ballistic missile systems permanently, under international verification with unqualified access to international inspectors.
It also desired Iran to pull out completely from Syria, end its support to Houthi militants in Yemen, Taliban in Afghanistan and allow disarming of Shia militants in Iraq. It also wanted Iran to cease backing Hezbollah in Lebanon, Hamas in Gaza and Palestinians.
Regime change in Iran due to economic pressure could also have been its unstated desire. With no such restrictions on Saudi Arabia, Iran refused to accept the new conditions, which it viewed as a threat to the survival of Shia community, more so when the US is continuing to increase the military strength of its arch-rival Saudi Arabia.
The rhetoric, provocative speeches, renewed sanctions and efforts to curtail their oil exports, have not worked so far. In my opinion, Iran has shown no signs that it will buckle under US pressure so far. People in Iran may/may not be happy with President Rouhani, but when it comes to taking an anti-American position, they will stand with him, because ‘Hate America’ sentiments are very strong in Iran and further economic hardship to them will make it even stronger.
Will sanctions and other measures (short of war) change Iran's behaviour is questionable, if it did not do so in North Korea.
Possibility of US-Iran conflict
The US will like to step up economic, diplomatic and information warfare to include electronic and cyber war. The sabre rattling may not end up in conventional war. The US has past experiences of starting a conflict in Middle-East, but later finding conflict termination difficult, leading to more chaos. With such bitter experience, it may not start it again. Iran is not a threat to its mainland; hence during the run-up to the election, President Trump may not like to get entangled in one more flashpoint for someone else, besides North Korea, South China Sea and the ongoing trade war with China. The war will push an alliance of China, Russia, Iran, North Korea and Pakistan, besides creating a problem of strategic balancing for its allies. The rhetoric will soon be seen following a US-North Korean downward curve.
The Iranian actions also seem to indicate impatience. Even if Iran feels that it's been pushed to the wall, I see no justification in threatening the world with 60 days ultimatum to commence dangerous level of enrichment, if the deal is not protected by then. It seems to be an overreaction when other partners of the deal like the EU have not walked out of it and criticised US action.
The economic strangulation of Iran may not work, if China and some other countries defy sanctions and start questioning the efficacy of CAATSA being US-centric, at the cost of some of the core interests of other countries like energy security.
Global implications of instability in the Gulf
A disturbed Gulf region and Strait of Hormuz has affected the oil flow adversely, and the most affected countries are China, India and Japan. The threatened air space has increased the distance of all the commercial flights, earlier routed over this region, resulting in extra fuel consumption and time delays. President Trump’s idea of prioritising US military hardware sale to Saudi Arabia over the further probe into Jamal Khashoggi’s murder will embolden Saudi Arabia.
The rise in oil prices resulting in further downslide in the global economy will be a natural outcome. These side-effects of sanctions make Iran different from the effects of sanctions on North Korea in near similar circumstances. Impact on India
Iran had been the third largest supplier of crude to India. The crude oil supplied by Iran was the cheapest for India, as it had agreed to accept payment in rupee terms. Any alternate arrangement will force India to buy oil in dollar terms, causing a heavy drain in foreign exchange. Most refineries in India are designed to refine crude from Gulf countries. India does not have enough refineries for US shale oil; hence it will have to be purchased at a much higher cost and that too in dollar terms, which will push the cost of oil products even more, which will be a challenge for India.
These incidents will affect Indian investment in Chabahar port of Iran adversely. The development of the International North-South Transport Corridor (INSTC) linking India with CAR countries and Russia will be adversely affected by the US sanctions. The commercial traffic to Afghanistan and beyond through INSTC will also be affected by instability in Iran. The Indian Diaspora in the Gulf region will also be insecure.
(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)