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6 April 2015, Gateway House

What the Iran deal means for India

As the UN, U.S. and EU sanctions against Iran begin to be lifted, synchronised with Iran fulfilling its obligations on the nuclear issue, there will be a much greater interaction between India and Iran which will certainly benefit both countries.

Director, Gateway House

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The P5+1 agreement with Iran is a historic breakthrough. India will gain economically and strategically from a re-integrated Iran. The immediate benefits will flow to India’s pharmaceutical exports, plus Iranian staples like rice and chicken which are short supply. India can look at rebuilding Iran’s infrastructure, especially the vital Chabahar port and restore oil and gas imports.

Neelam Deo, former ambassador and Director, Gateway House, speaks to Dev Lewis on what the Joint Comprehensive Plan Of Action (JCPOA) means for India and all of West Asia. The text based of an YouTube interview conducted on April 3. You can watch that interview, here.

Dev Lewis: What does the Iran-P5+1 JCPOA mean for India?

Neelam Deo: As you have seen, India has welcomed this deal. From the strategic point of view we would not like to see more countries becoming nuclear powers in our region—and Iran is a near neighbour.

As the UN, U.S. and EU sanctions begin to be lifted, synchronised with Iran fulfilling its obligations undertaken in this framework, there will be a much greater interaction between India and Iran which will certainly be of benefit to both countries.

The immediate benefits and somewhat medium term benefits and will flow in on the economic side. Straightaway, we would be in a position to increase exports of pharmaceuticals, which are in very short supply in Iran. We will also be able to export products like rice, chicken, etc, which are the staple in Iran and but are in short supply forcing prices to go up.

India could start looking for possibilities of projects to rebuild infrastructure in Iran. We would also be able to resume progress on building the Chabahar port which would give India access into Afghanistan. We could start reviving all the plans that have basically been on hold, such as oil and gas pipelines from Iran to India via Pakistan and Afghanistan (obviously, the situation in those two countries must also stabilize). We will be able to increase our oil and gas imports from Iran and release the $9 billion worth of payments that India owes Iran but cannot make due to the international sanctions currently in place.

Dev Lewis: Geopolitically, which countries/regions stand to gain the most from a reintegrated Iran?

Neelam Deo: Well, the Iranian economy of course will be the first to get a push and that is great for Iranian citizens. You can see how warmly they have welcomed this agreement.

The other countries that will gain will be China, who is the already the biggest importer of oil and gas from Iran, and will probably be the biggest winner. China will probably now go into Iran with big investments in infrastructure and help rebuild the oil and gas industry. Russia will gain as well—it has promised to build a number of new nuclear reactors for power in Iran.

The normalisation of Iran and its ability to play a role in the middle-east will have a lot of positive effects. It will probably also have some kind of impact, though at this moment, ambiguous, on the situation in Syria. It can probably be positive for the end-game in Afghanistan. It has also of course has already scared some of the Arab countries into coalescing and forming a joint armed command led by Saudi Arabia again.

Dev Lewis: How do you expect it to affect existing conflicts in the region(the Islamic State, civil war in Yemen)?

Neelam Deo: We know that Iran is already fighting alongside Iraqi army and some militias against the Islamic State(IS).  Even though it is not acknowledged, other countries like the United States are actually coordinating with Iran in this conflict, so for IS it is certainly bad news.

The U.S. will also have to find a balance in reassuring its Arab allies in the Gulf and Saudi Arabia—who are leading the air attack in Yemen where Shia Houthi rebels have taken over—while enabling Iran to become a “normal country” and play its appropriate role in the Middle-East.

This article was exclusively written for Gateway House: Indian Council on Global Relations. You can read more exclusive content here.

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