India will benefit from Iran nuclear deal, but will face more competition: Expert

Updated: Jul 18, 2015, 14:44 PM IST

Iran has finally struck the contentious nuclear deal with the five permanent members of the UN Security Council plus Germany.

While US President Barack Obama said that the Iranian nuclear agreement was the best way to avoid a nuclear arms race and more wars in the Middle East, the deal also cheered the Indian industry and the equity markets.

In an interview with Kamna Arora of Zee Digital, Shashank Joshi, who specialises in the international politics of South Asia and the Middle East, discusses the Iran nuclear deal and its implications for India.

Shashank Joshi is Senior Research Fellow of the Royal United Services Institute (RUSI) in London, a Research Associate at the Changing Character of War Programme at Oxford University, and a PhD Candidate at the Department of Government, Harvard University.

What is the importance of the Iran nuclear deal?

The Iran deal is the most important diplomatic agreement since the end of the Cold War, and perhaps since the Israel-Egypt peace treaty. It prevents a war between the US and Iran by limiting the latter's nuclear programme for between 10-25 years. It will not result in US-Iran friendship, but it certainly removes a key source of tension.

How does Iran nuclear deal benefit India?

When the sanctions on Iran are lifted, probably in Spring 2016, India will be able to import more Iranian oil. Its oil imports from Iran had halved from 2010 to 2015, forcing India to find alternative suppliers. Equally importantly, India will benefit from the reduction in oil price that should result from the expansion in Iran's supply. However, this could take years.

In strategic terms, India will be freer to cooperate with Iran on issues of mutual concern, notably Afghanistan, with less concern about American disapproval. However, this will have only limited benefits.

What could be the negative impacts of the deal on India?

Firstly, Saudi Arabia, which is opposed to the deal, might seek nuclear cooperation from Pakistan and therefore move closer to Islamabad. This might impact the Delhi-Riyadh relationship. Second, India will face more competition in engaging with Iran now than when Tehran was isolated. Iran has more suitors.

Can the nuclear deal help in reviving the long-pending gas pipeline projects from Iran to India?

Perhaps. The pipeline projects were stuck for a variety of reasons. Sanctions were only one reason. So even with sanctions gone, there are still a huge number of commercial, diplomatic, and strategic problems with Iran-to-India pipelines, such as concerns over the reliability of pipelines that transit Pakistan.

Now it can be said that India and Iran will increase cooperation on the development of the Chabahar deep-water port?

Chabahar is an Iranian port that India has agreed to develop, in order to better access Afghanistan by sea and then rail. Unfortunately, progress has been exceptionally slow. Although an MoU was recently signed, there is a little sign of rapid development. It is important to note that Chabahar's slow progress was not just to do with the Iranian nuclear dispute and sanctions. Therefore, the resolution of the dispute and the lifting of sanctions will not solve all problems.

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