The historic deal between P5 + 1 Nations and Iran has marked the beginning of gradually ending of the embargo which isolated Iran since its Islamic Revolution 35 years ago. Iran’s Sanctions which crippled it’s international market access and economy, once removed will unfetter its economy and potential unblocked.
Along with opening new horizons for Iran’s development the deal has the following implications for the world:
- Iran unleashing it’s oil in international market which is already over-whelmed will lead to even more cheaper oil. Oil dependent economies like Venezuela will face axe of oil prices
- Iran’s re-entry into the world financial system and its assets unfrozen will reinvigorate it’s related economies too with international trade on various fronts
- It can in future provide an alternate market to economically strapped Russia
- In the current political scenario it will give boost to US President Obama’s ratings back home as threat of the Islamic State (IS) looms large and Iran can serve as an important stabilizing force in the region to check IS’s advance
- Iran’s increased global presence will positively impact Syrian peace talks which are soon to be held
The repercussions of the deal for India are more positive ones but it carries some negative consequences with it too.
India is world’s 4th largest oil importer and most of Indian oil refineries are designed for sweet crude oil found in Iran. The stagnation faced by India after 1979 will now be removed and Indian Oil refineries can harness their full potential. But too low prices due to increased availability can cause deflationary spiral in our markets which must be taken care of. Strategic oil reserves can be created to curb low pricing by imposing more excise, which will result into more profits for OMCs and thus easier migration to ‘Bharat 6’ emission standards.
American banking system still cannot be used in Iran which opens new opportunities for Indian Banking Sector there. It will further cut the cost of bilateral trade, business and retail transactions. Easing up of bilateral trade opens new prospects of an overseas market for Indian goods and services, further giving push to ‘Make in India’ and ‘Skill India’ programmes.
The positive implications extend to strategic and political scenarios too. The ‘Chah-Bahar’ port gives us an access to Afghanistan and Central Asia. The IPI pipeline may also start making progress serving dual benefits of energy, security and strategic ties for India.
But while nurturing relationships with Iran, India will have to be very vigil as it can adversely affect it’s ties with Saudi Arabia and Israel. Moreover the advantages will take some time to materialize and sanctions have only been suspended not terminated and investments still carry a risk factor.
On the whole, the deal might be considered as a step towards checking proliferation of nuclear weapons and thus towards global peace but the fact that the rights taken away from Iran are given to most of other NPT nations, is a beacon to strengthen third world solidarity too.
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