<div>Iran’s landmark deal with the United States (together with its other UN Security Council partners and Germany) halts its nuclear weapons programme at least for a decade and ends Iran’s international ostracisation. Pursued in the face of crippling international sanctions, without the agreement Iran could have had its first bomb in 2-3 months. In arriving at the agreement, after 20 months of tortuous negotiations, the US and Iran have opted for negotiated compromises rather no agreement at all. It will profoundly impact Iran’s economic, political and security profile and change the matrix of relations in the Middle East.</div><div> </div><div>Hardliners in both countries, opposed to any agreement, not to mention Israel’s relentless opposition seeing its regional nuclear monopoly threatened, were enough to deter all but the doughtiest negotiators. The tremendous political capital and personal prestige invested by the two Presidents, Barack Obama and Hassan Rouhani, was the single factor which sealed the deal. It will end the 25-year-long hostility between the two countries. It is now for the recalcitrant US Congress to see the light.</div><div> </div><div>The agreement has blocked all four Iran’s pathways to the nuclear bomb: the highly enriched uranium reactors at Natanz and Fordow, the Arak reactor for weapons grade uranium, and the possibility of covert production of fissile material. A robust system of surveillance and monitoring by the International Atomic Energy Agency (IAEA) will be in place. Iran will also reduce its 19,000 centrifuges to 6,104 and its current stockpile of low enriched uranium by 98 per cent, possibly by shipping it to Russia. The implementation phase of the 10-year agreement will start within 90 days.</div><div><table align="right" border="1" cellpadding="1" cellspacing="1" style="width: 200px;"><tbody><tr><td><img alt="" src="http://bw-image.s3.amazonaws.com/Rajendra-Abhyankar_UG-mdm.jpg" style="width: 200px; height: 200px;"></td></tr><tr><td><em>Rajendra Abhyankar</em></td></tr></tbody></table></div><div>India, which itself had an arduous journey in reaching the US-India agreement on civil nuclear energy, has welcomed the successful and peaceful conclusion of the long-running negotiations. The agreement creates both opportunities and challenges which need an early and holistic evaluation by involving the government, industry and trade. For a strong and resilient economy, thirsting for a wide range of industrial and technology products and services, the possibilities are infinite.</div><div> </div><div>India’s multi-faceted relationship with Iran needs rejuvenation on all fronts eschewing the reactive tendency that set in after the imposition of UN and US sanctions. The straitjacket had forced India into actions which did not always align with its national interest: the reduction of Iranian crude imports from a level of 18 per cent annually to 12 per cent, and eventually 8 per cent, and a halt to RIL’s exports of petroleum products; inability to finalise and commit financial resources for projects like the Iran-Pakistan-India oil pipeline, development of Farzad-B gas field discovered by ONGC Videsh and the long-pending Chabahar port development.</div><div> </div><div>The lifting of sanctions will allow Iran to regain its top place as India’s crude oil source. Until the Iraq-Iran war, Iran was India’s second-largest supplier and the third-largest till 2006. Its heavy sulfur crude is well-suited to majority of our refineries. It reportedly has 30 million tonnes of crude in ship storage ready to be put out on the international market and its production could go up by 7,00,000 barrels per day by 2016. From the present supply of 3,45,000 bblpd a very quick increase is easily possible. Iran’s entry will reduce global crude prices to near or below $50 per barrel, another plus for the Indian economy.</div><div> </div><div>The picture on merchandise trade is mixed. With a turnover of $5 billion, Indian exports of agricultural products like basmati rice and sugar and selected industrial and chemical products have eased the pain on account of growing import of crude oil. Accepting payment in escrowed Indian rupees for these products has eased pressure on forex reserves though the liquidation of outstanding oil debt of $6.5 billion is now unavoidable. At the same time, the possibility of a parallel transaction and settlement route for our merchandise exports based on the Indian rupee, much as China is experimenting with its remnimbi, needs to be explored.</div><div> </div><div>Despite competition in the Iranian market intensifying, there is strong likelihood that our perennial exports of agricultural and processed food, beef and industrial products like small cars, automotive components and ancillaries will go up. Iran could also be a fertile market for our information and communication technology products, services and training. India could also leverage Russian invitation to Indian companies to jointly promote their nuclear power plants to explore possibilities in Iran.</div><div> </div><div>As Pakistan continues to deny India transit facilities across its territory, Iran remains the fulcrum of India’s access strategy to Afghanistan and Central Asia. India is building the road from Zaranj to Delaram in Afghanistan which will link its road network to the Iran’s. India-Iran discussions to jointly develop the Iranian Gulf port of Chabahar, together with a free trade zone and other infrastructure facilities, need to be pushed forward. That China has shown its readiness to commit funds to Chabahar underlines the urgency. </div><div> </div><div>The freeing of restraints will see enhancement of Iran’s leverage in India’s extended neighbourhood: West Asia, the Gulf and South Asia. Iran’s military and financial support to the beleaguered regimes in Syria, Lebanon and Yemen will only grow. Iran and India have a relationship based on shared history and similar views on current challenges in the region. Whether on the scourge of the Islamic State or on preventing a Taliban resurgence in Afghanistan or curbing sectarian strife, there is room for India and Iran to work together. </div><div> </div><div>India is uniquely placed in having effectively harnessed its relations within three simultaneous triangles: Tehran-New Delhi-Tel Aviv, Tehran-New Delhi-Riyadh and Washington-New Delhi-Tehran. The strengths which India brings to these relationships will help to surmount a degree of negativity in the bilateral relationship after India’s IAEA votes against Iran. They could be assets to Iran as it charts its future course.</div><div> </div><div>An agreed action plan needs to be drawn up with inputs from major ministries, trade, industry and Iran-centered corporates like Reliance Industries, Hindujas, ONGC and the oil marketing companies. India’s policy towards Iran has now been freed of earlier compulsions. In the context of early visits to Tehran and Tel Aviv by foreign minister Sushma Swaraj and later by Prime Minister Narendra Modi, an early assessment of our equities is imperative.</div><div> </div><div><div><em>The author was former Secretary, Union Ministry of External Affairs, and has served as the Indian ambassador to the Euroean Union, Turkey and Syria</em></div><div> </div><div>(This story was published in BW | Businessworld Issue Dated 10-08-2015)</div></div>
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