November 29, 2013

US-Iran Deal- when foes become friends



Having worked in a few multinational banks since 2002, and being at the receiving end of being forced to cut short business wherever "sanction" countries like Iran and Iraq and Syria are involved, I am delighted at the announcement of the deal between Iran and a group of international powers to freeze important parts of Iran's nuclear program in exchange for a temporary relaxation of sanctions.

The US-Iranian deal on allowing Iran to continue with its nuclear ambitions on a limited scale is one of the most epochal moments in world history and it must be lauded for what it entails - it ends Iran's international isolation, its alienation from the international banking  and will restart commercial transactions between American companies and Iranian entities. The landmark deal has raised eyebrows even in Israel because for decades, Israel and Iran were bitter foes because of irreconcilable differences in culture, religion and identity. 

This is surprising because, way back in 1943, President Roosevelt told a British Ambassador: "Persian Oil is yours; we share the oil of Iraq and Kuwait. As for Saudi Arabian oil, it's ours.". Historically, Iran was always a beligerant nation and fiercely independent in asserting itself as a regional hegemon, creating a bipolarity and sometimes tripolarity with Saudi Arabia and Iraq. I read a book by Robert Keacy in 2010 about "Iran: The Devil we know" which outlines how the country has become more liberal, less Islamist (by way of endorsing Shia regime) and built the largest ballistic missile inventory in the region. It naturally had clear ambitions to build nuclear weapons, which the US tried to thwart firing all the salvos in its range of socio-politico-economic foreign policy to check Iran. 

But nothing worked. On the contrary, instability in the region grew even as Iran, despite the international ostracisation welded itself into one voice as a nation. Lebanon, Gaza, Iraq, Afghanistan, Libya,Syria, Egypt, some say, the Arab Spring that led rebellions against extreme Islamic fundamentalism could have been a hotbed of religious and political uprisings of the Shia. Clearly, the Iranian model of re-asserting cultural supremacy and neo-liberal religious reforms have definitely dented the gambit played by US interests in middleeast region. US tried to sell more arms to the Arab countries, orient all nations ex-Iran into a powerful force called Gulf-Cooperation-Council (GCC) to become a powerful deterrant against Iran. In turn, Iran has always criticised the GCC for its pro-US slant, had territorial disputes with UAE over three islands in the Persian Gulf and even laid claim over Bahrain that it was once part of the Persian empire. 

The US had built more bridges with the GCC countries ostracising Iran  with all the sanctions possible which intensified in 2012. The alignment of interests between the US and GCC were quite understandable: the GCC countries and Iran control over 55 per cent of the world's total oil production and 41 per cent of the world's total gas reserves. US has a lot to gain being an ally to GCC than Iran. Moreover, the Arab economies are a major buyer of arms from US. All the ruling regimes of the GCC countries, to add further, were all Sunni  - and the Shia Iran had to be checked so that its influence among the region's Shia minorities doesn't grow.

To a large extent, the ostracisation had an impact on Iran's economy - its currency fell and because of the steep sanctions  - which bar banking transactions - Iran suffered. But Iran retaliated. In 2012, there was another move by the cartographers in US to even re-name the Persian Gulf as the Arabian Gulf, that didn't work. Iran was happy that didn't name (there are few countries in the world which have seas, gulfs and oceans named after them). US intensified the sanctions impact by freezing all Iranian government assets in US territories. Iran retaliated again, this time threatening to block the Strait of Hormuz  - the little "mouth" of the Persian Gulf through which 85 per cent of all the oil the world consumes passes through. It has never carried out the threat. 

As this intensified, and Iran's oil exports faltered - the main stay of their economy, Iran never cowed down on the military front and diversified its efforts to reach out to others including BRIC nations like India and China. Iran is alleged to have continued supplying WMD and even biological weapons to countries like Syria and threatened to use them in any conflicts escalated by Israel. What must have changed US views towards adopting a lenient stance against Iran is the new-found love of China towards Iran and old-world love of India, which always had historic ties with Iran, from the times of the Persian empire.

China, while engaging with the Arab world, deepened its ties with Iran, Syria and Turkey. China is now Iran's biggest trading partner and has been supplying arms, including missiles and aircraft, to Iran since 1981. It is also important that for China, Iran is the only energy supplier in the Gulf  for its gargantuan economy that it can reach through pipelines as well as sea routes, ensuring a diversification of supply lines in the even of a blockade or disruption in its energy supplies. Besides, in the strategic rivalry with the US, Iran is a potential ally. Which is why, China, while supporting the sanctions on Iran, it is unlikely to stop dealings with Iran. Given this and the fact that India and Russia have also been continuing trade with Iran for oil supplies (there was a window of exports and imports carried on via a select conduit offered by Indian oil companies and to some extent, by State Bank of India). 

Besides, after the march of democratic movements which are eroding the bastions of conservative Islamist traditoins in many countries across the GCC and MENA regions, it appears that this move to cosy up to Iran is driven by compulsions of foreign policy to move from the Middle East to the Indo-Pacific Ocean regions. Because thats where the action is. It proves one thing though: In politics increasingly dictated by economics and win-win foreign policy, there are no permanent enemies and no permanent friends either. The event is still a small leap of faith in taming a country that has a civilzation older than the most-powerful country in the world today but it will have benign consequences going forward for the region (in cooling off oil prices) and the world. 

India, for its part played with lot of caution on Iranian front even though culturally it is closest to the Persian Empire with links dating back thousands of years. Persian was a language spoken at Moghul Courts, trade ties were always on, and were normal since 1950 but fully formalised under PV Narasimha Rao's regime  since 1993 and strengthened under the Vajpayee regime . India has done  two joint naval exercises  with Iran in 2003 and 2006, trained their army personal in combat aircraft etc. and offered to build ports for them. Both of us dread the radical regimes of Talibans calling the shots in Pakistan and elsewhere. Both are aspiring nuclear powers although differences remain in being the signatory to NPT. With the clouds eased out on sanctions, India should revive the $7 billion gas pipeline that got stalled due to US opposition, distrust of Pakistan and doubts on viability. If US and Iran could bury their differences and move on, India and Pakistan can also move on in life. I am not an expert in foreign policy but thought this little piece will drive home again why the world is going to only get better and better with countries softening their stance against each other.


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