Recently, the United States imposed sanctions on a petrochemical firm based in Mumbai, Tibalaji Petrochem Pvt Ltd, for allegedly selling Iranian petroleum products. This is the first instance of an Indian entity facing US designation under unilateral sanctions that were passed in 2018-19, following the US withdrawal from the Joint Comprehensive Plan of Action (JCPOA).
Understanding The Joint Comprehensive Plan of Action (JCPOA)
Known also as the 2015 Iran Nuclear Deal, the JCPOA came into being after extensive negotiations between 2013 and 2015 involving Iran and P5+1 countries (China, France, Russia, the UK, the US, and Germany). Under this agreement, Iran consented to significantly cut its stores of key components for nuclear weapons including centrifuges, enriched uranium, and heavy-water.
Furthermore, Iran agreed to let International Atomic Energy Agency (IAEA) inspectors access its nuclear sites, ensuring no secret development of nuclear weapons. In return, the West agreed to lift sanctions related to Iran’s nuclear proliferation but maintained other sanctions concerning alleged human rights abuses and Iran’s ballistic missile programme.
Effects of the US Abandoning the JCPOA
The US exit from the JCPOA in 2018 and reinstatement of banking and oil sanctions led Iran to ramp up its nuclear programme, reaching nearly 97% of its pre-2015 nuclear capabilities. When the US announced its plans to snap back sanctions in April 2020, other partners objected, arguing that the US, no longer part of the deal, couldn’t unilaterally reimpose sanctions.
Several countries continued to import Iranian oil under waivers by the Trump administration initially. A year later, however, the US ended these waivers, significantly curbing Iran’s oil exports, receiving widespread international criticism.
Attempts to Keep the Deal Alive
To try and keep the deal alive, the other powers launched a barter system, namely Instrument in Support of Trade Exchanges (INSTEX), facilitating transactions with Iran outside the US banking system. Worth noting, INSTEX only included food and medicine, items already exempt from US sanctions.
In January 2020, following the US assassination of top Iranian general Qasem Soleimani, Iran declared it would no longer limit its uranium enrichment. September 2022 saw Iran and IAEA officials discuss the prospect of Iran agreeing to let inspectors back for reactor oversight.
The JCPOA’s Significance for India
The removal of sanctions may reawaken India’s interest in Chabahar port, Bandar Abbas port, and further plans for regional connectivity to counter Chinese presence at Pakistan’s Gwadar port. Also, India’s interest in the International North-South Transit Corridor (INSTC), which runs through Iran and promises enhanced connectivity with five Central Asian republics, could receive a boost.
Due to the pressure associated with the Countering America’s Adversaries Through Sanctions Act (CAATSA), India had to reduce oil imports to zero. If ties between the US and Iran are restored, India will be able to procure cheaper Iranian oil, aiding its energy security.
UPSC Civil Services Examination Previous Year Question
An example question from the 2016 UPSC Civil Services Exam asked which of the following was not a member of the ‘Gulf Cooperation Council’. The options presented were Iran, Saudi Arabia, Oman, and Kuwait. The correct answer was Iran. The Gulf Cooperation Council (GCC) is an alliance of six countries on the Arabian Peninsula, including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates, but not Iran. Established in 1981, the GCC promotes economic, security, cultural, and social cooperation among member countries. It holds a summit annually to discuss cooperation and regional affairs.
