Scrounging for saving grace: How US withdrawal from 2015 Iran Deal impacts Indian interests

[dropcap]O[/dropcap]n May 8, 2018, the United States announced it was withdrawing from the Joint Comprehensive Plan of Action that was agreed to at Vienna in July of 2015. This Joint Comprehensive Plan of Action is commonly known as the Iran Nuclear Deal. It's an understanding between the Permanent Members of the United Nations Security Council, along with Germany and the European Union. This deal paved the way for the lifting of non-nuclear sanctions against Iran and provided a pathway of Iran to once again re-integrate itself with the Global Community. In this article, I provide a brief background on the deal and the legal consequences arising from the United States unilaterally withdrawing from the arrangement.

The "deal" is in fact a misnomer. What was agreed at Vienna was a framework agreement between the relevant parties who had led the charge against Iran's nuclear programme. Largely brokered by Russia, the Nuclear Deal provided for a phased lifting of sanctions along with providing for safeguards in order to prevent Iran from developing nuclear weapons in the future.

In this light, it would be good to take a look at India's historic nuclear tests Pokhran I and Pokhran II. India justified its nuclear weapons tests as being "peaceful nuclear explosions". India's stance on the Nuclear Non-Proliferation Treaty is one that says that unless there is universal de-nuclearisation, then India won't destroy its stockpiles of nuclear weapons.

With Iran, there hasn't been a nuclear test so far. The deal, in the strictest sense, was akin to consent terms that parties file in a court. It only provides a framework for future negotiations. Unlike a treaty, this framework agreement arises from a joint statement made by the parties in how they wish to conduct their relations with each other.

Provisions of Nuclear Non-Proliferation Treaty

Iran is a non-nuclear weapons state as far as the NPT is concerned and it is a signatory to the NPT. In this light, Articles 2 and 4 of the NPT become relevant:

ARTICLE 2

"Each non-nuclear-weapon State Party to the Treaty undertakes not to receive the transfer from any transferor whatsoever of nuclear weapons, or other nuclear explosive devices or of control over such weapons or explosive devices directly, or indirectly; not to manufacture or otherwise acquire nuclear weapons or other nuclear explosive devices; and not to seek or receive any assistance in the manufacture of nuclear weapons or other nuclear explosive devices."

ARTICLE 4

"1. Nothing in this Treaty shall be interpreted as affecting the inalienable right of all the Parties to the Treaty to develop research, production and use of nuclear energy for peaceful purposes without discrimination and in conformity with Articles I and II of this Treaty.

2.  All the Parties to the Treaty undertake to facilitate and have the right to participate in the fullest possible exchange of equipment, materials and scientific and technological information for the peaceful uses of nuclear energy. Parties to the Treaty in a position to do so shall also cooperate in contributing alone or together with other States or international organizations to the further development of the applications of nuclear energy for peaceful purposes, especially in the territories of non-nuclear-weapon States Party to the Treaty, with due consideration for the needs of the developing areas of the world."

Article 4(1) of the NPT provides a right to all states to develop and use nuclear energy for peaceful purposes. But Article 2 creates a general prohibition for states that currently don't have nuclear weapons from developing them in the future. The NPT also provides that the International Atomic Energy Agency (IAEA) is the authority that will ensure that states are compliant with their obligations in the NPT, not to develop nuclear weapons and ensure the safeguards are met. One such safeguard that the IAEA has is for states to declare their reactors.

The problem with atomic weapons is that there is a fine line between using the fuel to produce energy and weaponising it. In Pokhran I, for example, India used plutonium enriched from the Canadian CIRUS reactor that had been supplied to it by Canada. A state that does nuclear research and also develops its own fuel, has the potential to develop its own nuclear-grade fuel. This becomes worrying as nuclear weapons are weapons of mass destruction. Their presence in unstable regimes are a matter of global concern as they may fall into hands of non-state actors who may, unlike the states where the weapons come from, decide to use it for not-so-peaceful purposes.

So, when the IAEA raised a flag that Iran was not complying with its obligations under the NPT, there was obvious global anxiety. Further, Iran's history of supporting non-state actors such as Hezbollah in Lebanon and the Houthi rebels in Yemen meant that Iran's neighbours felt an even greater anxiety about a rising Iran. Iran is perhaps the one Middle Eastern state that still openly rejects relations with the United States of America and the western world.

JCPOA and lifting of sanctions against Iran

Let us now briefly examine the terms of the Framework Agreement of the Joint Comprehensive Plan of Action. Articles iii and iv of the Preamble to the Framework are reproduced below:

"(iii) Iran reaffirms that under no circumstances will Iran ever seek, develop or acquire any nuclear weapons.

(iv) Successful implementation of this JCPOA will enable Iran to fully enjoy its right to nuclear energy for peaceful purposes under the relevant articles of the nuclear Non-Proliferation Treaty (NPT) in line with its obligations therein, and the Iranian nuclear programme will be treated in the same manner as that of any other non-nuclear-weapon state party to the NPT."

The Framework Agreement also provided for the lifting of all sanctions against Iran except non-nuclear sanctions. This became important due to the US' sanctions on all Iranian entities and companies that worked with Iran. It allowed for renewed foreign collaboration between Iranian companies and the rest of the world and also paved way for significant investment in Iran by India, especially at the Chabahar Port which is operated by India Ports Global Pvt Ltd.

With the US withdrawal from the deal, it appears that the safeguards provided in the deal for transactions that happened during the deal may not be honoured by the US government.

The Framework Agreement itself doesn't provide for the termination by any party to the framework, but it does contemplate what happens if Iran doesn't live up to the bargain. It provides that in the event Iran is found to be non-compliant, all the previous sanctions would be restored. However, Para 37 of the Framework Agreement does provide for the following in the event of sanctions being re-imposed:

"[…] In such event, these provisions would not apply with retroactive effect to contracts signed between any party and Iran or Iranian individuals and entities prior to the date of application, provided that the activities contemplated under and execution of such contracts are consistent with this JCPOA […]"

UNSC Resolution 2231 might salvage India-Iran economic ties

This may save India's port project in the region as it may not fall within this scope. The US has decided it will withdraw from the framework. This does not automatically mean that all sanctions against Iran at the UN level are automatically restored. The Framework represents an agreement between the P5 to move appropriate resolutions. This was done via UNSC resolution No. 2231 of 2015. This resolution contemplated the use of the dispute mechanism in the Framework and provided for the following:

"11. Decides, acting under Article 41 of the Charter of the United Nations, that, within 30 days of receiving a notification by a JCPOA participant State of an issue that the JCPOA participant State believes constitutes significant non-performance of commitments under the JCPOA, it shall vote on a draft resolution to continue in effect the terminations in paragraph 7 (a) of this resolution, decides further that if, within 10 days of the notification referred to above, no Member of the Security Council has  submitted such a draft resolution for a vote, then the President of the Security Council shall submit such a draft resolution and put it to a vote within 30 days of the notification referred to above, and expresses its intention to take into account the views of the States involved in the issue and any opinion on the issue by the Advisory Board established in the JCPOA;

12. Decides, acting under Article 41 of the Charter of the United Nations, that, if the Security Council does not adopt a resolution under paragraph 11 to continue in effect the terminations in paragraph 7 (a), then effective midnight Greenwich Mean Time after the thirtieth day after the notification to the Security Council described in paragraph 11, all of the provisions of resolutions 1696 (2006), 1737 (2006), 1747 (2007), 1803 (2008), 1835 (2008), and 1929 (2010) that have been terminated pursuant to paragraph 7 (a) shall apply in the same manner as they applied before the adoption of this resolution, and the measures contained in paragraphs 7, 8 and 16 to 20 of this resolution shall be terminated, unless the Security Council decides otherwise…"

What this essentially means is that if a party brings it to the attention of the UNSC that Iran is not complying with terms of the Framework, then the UNSC is required to vote on a resolution to continue the termination of the sanctions. If this resolution is not adopted within thirty days, the sanctions are back in effect and Iran is essentially back on the list of global pariah states.

The Resolution further provides that:

"14. Affirms that the application of the provisions of previous resolutions pursuant to paragraph 12 do not apply with retroactive effect to contracts signed between any party and Iran or Iranian individuals and entities prior to the date of application, provided that the activities contemplated under and execution of such contracts are consistent with the JCPOA, this resolution and the previous resolutions."

US withdrawal from JCPOA limits its powers

The question now remains is if the withdrawal from the Framework would kick into motion the process outlined in the Resolution. The Resolution only provides that it will be terminated on a complaint by a state that is party to the Resolution. The US has till date made no formal complaint and the IAEA has acknowledged that Iran is complying with the framework. The US withdrawing from the deal rather than working with it may be the only thing that would save Iran from UN sanctions again. If the US had complained, it could have blocked any UNSC resolution not terminating the Resolution using its veto powers. But now that the US has withdrawn, from the framework, it will need to go to the UN again for fresh global sanctions. This time though it may face a veto from all the other powers.

How US withdrawal impacts India

The US withdrawal from the deal will end up affecting India. India relies heavily on petroleum imports from Iran and US sanctions could see Iran not being able to access the global oil market. This will affect oil prices which fuel inflation not just of petrol in India, but also food commodities, as India relies heavily on road transportation to move agricultural commodities. Further, the absence of dollar trade would mean that it may become unprofitable to trade with Iran in the long run as the US dollar is the preferred choice for trade. India may get some relief in the fact that the European Union has opposed the US exit from the deal, a fresh round of sanctions from the States may allow India to use the euro and the British pound to trade with India. Previously, when other sanctions were in place, India had created a rupee facility in order to procure essential commodities.

But all of that may not matter in the long run. The long arm of American commerce means that if the US passes a law that says that anyone trading with Iran can't trade with the United States, it will put Iran back in the same place. Despite the growing relevance of China and India, no country in the world can today afford not to trade with the United States. This is unfortunately a negotiating position that neither Iran nor its oil reserves can match.

India must push for amicable resolution

Politically India finds itself in peculiar situation. India has been warming up to the United States in the past couple of decades and also has historically enjoyed warm relations with Iran. India would do well to use its position as a neutral power in these negotiations and attempt to assist in mediating a settlement. As India rises as a world power, it is essential that it engages in international issues that don't have a direct consequence for it.

It's worth remembering that good relations with Iran provides India with an important check against Pakistan in the region, a region that is marred by instability. The Iranian side of the Pakistani border will allow India to commence security related projects in Baluchistan, an area where India has a significant interest in. But perhaps, for now at least, it is important that India pursues a wait and watch policy to see how the situation develops.

India's role as a responsible nuclear power

India has learnt first hand that nuclear weapons do benefit countries that have them. India's nuclear programme has allowed it to exercise significant foreign policy muscle over the years. After Pokhran II, India has only seen a short war with Pakistan in Kargil, and both sides have generally attempted to exercise restraint when it comes to taking military action. India's nuclear weapons also keep China from taking aggressive measures in India's northeast corridor.

But while nuclear weapons may be a deterrent to all-out war, they don't deter the new form of warfare that is sweeping the world. Proxy wars today are far more common than they were earlier. While earlier wars with Pakistan and China would have been fought by using regular military, now wars are fought with Pakistani mujahideen and Chinese support to India's Naxalite insurgency in the infamous red corridor.

As of 2018, India has an estimated nuclear stockpile of around 110 warheads, a conservative estimate. With the Agni programme, India has expanded its range to deliver and deploy these warheads. Agni-V has a range of approximately 5,000 kilometres, allowing it range to reach Russia, Eastern Europe and the horn of Africa along with the entire Middle East. The Agni-VI is expected to double this range covering Australia, North America (North Canada and Alaska) along with the ability to attack all of western Europe.

While India doesn't seem like stopping its missile programme any time soon, its ability as a space power will definitely assist with its missile programme. India would do well to have a proper nuclear command set up and allow parliamentary oversight of the Strategic Forces Command which controls the nuclear arsenal to ensure accountability.