Saturday, May 26, 2018

The last thing Beijing needs at this time is a trade war

Under US President Donald Trump, relations with China have a dramatic edger. There was a touch of Trump’s prime time show, The Apprentice, in the flourish with which he declared that he would extend a lifesaver to the Chinese telecom giant ZTE which was on a death watch after the impositions of US sanctions by his own administration. That touch was there in first snubbing in February, and then welcoming to Washington this month, Liu He, China’s Vice Premier and economic czar.
Now after a week of negotiations between a Chinese team led by Liu and an American one by Steve Mnuchin in Washington, the two countries appear to have a deal. China is now committed to buy more US agricultural and energy products aimed at reducing the yawning trade deficit between them. ZTE’s fate remains unknown as of now. Trump’s boast on instructing his department of commerce to help the beleaguered Chinese giant led to a barrage of criticism that his action was cocking a snook at the law.
A combination of file photos of US President Donald Trump and Chinese President Xi Jinping. There was a touch of Trump’s prime time show The Apprentice in the flourish with which he declared that he would extend a life-saver to the Chinese telecom giant ZTE which was on a death watch after the impositions of US sanctions by his own administration.
The joint statement issued on Saturday has spoken of “meaningful increases in US agriculture and energy exports”. China’s trade surplus with the US was a record $375 billion in 2017. In all this, we do not know what part of Trump’s dealings with Kim Jong Un are a side-scene, but as is evident, the twists and turns are theatrical.
Trump’s handling of the ZTE issue clearly reveals his taste for staged about-turns. The US Commerce Department issued crippling sanctions against the company whose products are dependent on US components and software. The action was perfectly legal since the ZTE knew what it was up to when it exported its products to countries like Iran and North Korea which were under American sanctions.
Reportedly, Xi Jinping himself took up the issue of the company with Trump who tweeted on May 13 that Xi and he were working together to give a life line to the company and that the US Commerce Department had been instructed to get it done. In targeting ZTE, the US discovered a weapon whose potency it was probably not aware of, and now it also has Huawei in its crosshairs, and this is something that is giving Beijing sleepless nights.
Both sides are aiming for something more than just trade. The US wants to thwart China’s technological ambitions as much as Beijing wants to foster them. The US delegation that went to China earlier this month, clearly signalled that it was not in it for just the trade. They wanted Beijing to not only reduce the its trade balance, but open up markets and protect intellectual property. Further, they demanded that China not use the WTO mechanism to delay action.
Meanwhile China also has longer term aims. It is working on a two-track plan, one that seeks internal reform and a wider opening up to the world, and another to build up critical industries to prevent ZTE-like situations in the future. In a recent meetings and speeches, Xi is sounding the theme of China taking charge of its own technological destiny. The Chinese see the current battle as similar to the one they had to fight when the Soviets abruptly cut off aid in the 1960s. They see the American actions as aimed to block their “Made in China 2025” policy. In their view, it is about the US seeking technological hegemony and thwarting China’s rise.
The US has been conscious of the Chinese strategy of technology acquisition. Now a new American bill is being mooted to expand the powers of the Committee on Foreign Investment in the United States (CFIUS) to target Chinese tactics more effectively.
Almost everyone is agreed that China would be a loser in a trade war with the US because its positive trade balance does not leave it with enough products to impose retaliatory tariffs on. More important, it confronts structural issues relating to its growing massive fiscal deficit, declining exports, dependence on US exports, its mountain of debt, the distrust it has generated in foreign enterprises.
Economic reform is, therefore, vital for China, and the process is finally underway following Xi’s consolidation of authority. The last thing Beijing needs at this time is a trade war. China wants to work along a policy “with Chinese characteristics”. But the US under Trump is in no mood to accommodate them beyond a point. But Washington, too, must realise that a trade war could be mutually ruinous. There is more leverage is to be had by effectively shaping the Chinese reforms rather than creating conditions that could prevent them from taking place.
Hindustan Times May 23, 2018

Modi-Putin meet: As global ties are being disrupted, a vital moment to shore up an old relationship

Reportage from Sochi, where Prime Minister Narendra Modi met Russian President Vladimir Putin on Monday has been sparse. This is, of course, by design. Modi has been innovative if not anything else in his foreign forays. He has patented the use of official visits abroad to drum up support for his agenda at home.
Now Modi has come up with a new feature: informal summits to reach out to key foreign leaders. Like his meeting in Wuhan with China’s President Xi Jinping in April, his meeting with Putin was “agenda-less”. Unlike Wuhan, which was spread over two days and featured delegation-level talks, the Sochi meeting was held over nine hours, and remained an interpersonal interaction between the two leaders.
Modi-Putin meet: As global ties are being disrupted, a vital moment to shore up an old relationship
The Indian statement on Sochi spoke of the special and privileged strategic partnership between the two countries, the words “special and privileged” signifying its uniqueness as a category among scores of strategic partnerships. A suggestive point was made about the importance of “building a multi-polar order” and the significance of the long-term partnership between the two countries “in the military, security and nuclear energy fields”.
Some nuances can also be captured from the opening remarks made in Sochi, according to news reports. Modi thanked Putin for helping India get a permanent membership in the Shanghai Cooperation Organisation. In turn, Putin noted that “our defence ministries maintain very close contacts and cooperation. It speaks about a very high strategic level of our partnership”.
Modi made sure to make the point that India is in the Shanghai Cooperation Organisation, an outfit championed by China, courtesy the Russians. For his part, Putin seemed to remind Modi of the important business they had on the defence front, at a time Russia’s share of the Indian arms market was declining.
The Russian view, revealed by Russian Foreign Minister Sergei Lavrov after the meeting, said that the two sides focused on economic cooperation. This is a major area of weakness between the two countries whose relationship is dangerously dependent on the arms and energy trade. The decision to institute a Strategic Economic Dialogue between India’s NITI Ayog and the Russian Ministry of Economic Development is a welcome step in this direction.
Lavrov claimed that the two sides were against a bloc architecture for security in the Asia-Pacific. Bloc here means a grouping like the Quadrilateral – consisting of Australia, India, Japan and the US – which China and Russia are not part of.
It is unlikely that India would have criticised a group of which it is a member. Though, New Delh, a member of Shanghai Cooperation Organisation, would hardly support any group that excludes its partners in that grouping either.

Looking ahead

Action on substantive issues, both economic and military, could come up in the formal annual bilateral summit between India and Russia in October. This could include discussions on a free trade zone between the Eurasian Economic Union and India, further movement in the International North South Transportation Corridor (to move freight between India, Russia, Iran, Europe and Central Asia), and further cooperation in the energy sector. This area has been boosted by the reworking of the Liquefied Natural Gas supply agreement with Gazprom and the purchase of Essar oil by the Russian giant Rosneft. As for the military side, the major issues relate to the purchase of the S-400 air defence system and the Russian proposal for the manufacture of Ka-226T utility helicopters for the military. There are a number of other offers, such as that for the Project 75I submarines, and the more sensitive Indian quest for nuclear-powered attack submarines.
Modi referred to the India-Russia cooperation on BRICS – the association of major emerging economies Brazil, Russia, India, China and South Africa – and the International North–South Transport Corridor. First concieved of nearly 18 years ago, the transport corridor, involving ship, rail and road routes, is an ambitious venture whose time has come. But it is not clear whether the three partners behind it – India, Iran and Russia – are ready to create a multi-modal system that will link Indian ports like Kandla and Mumbai with Russia and Europe through the Iranian port of Bandar Abbas. While test cargoes have been run, much more needs to be done to operationalise what could be a means of enhancing the weak non-military bilateral trade between India and Russia. But even as the three countries procrastinate, the Iran nuclear issue is casting its shadow on the region.

The shadow of CAATSA

India’s ties with Russia have been under strain for a while. The Ukraine issue and the resulting western sanctions have been steadily pushing Russia into the arms of China. On the other hand, New Delhi had made clear its interest in developing stronger ties with the US. This was manifested by the Joint Strategic Vision on Asia Pacific and Indian Ocean that it worked out with the US in 2015. This has been accompanied by greater acquisitions of military equipment from the US and the cancellation of important deals such as that relating to the India-Russia Fifth Generation Fighter.
The Russians are not too concerned about the Indo-Pacific, where in a way, their position as supporters of Vietnam is not very different from India. But as Lavrov noted, Russia is concerned about blocs that exclude them.
But now there is a bigger shadow looming – the US law called Countering America’s Adversaries Through Sanctions Act. This law imposes sanctions on three countries, including Russia, Iran and North Korea and includes a section under which any country trading with Russia’s defence sector can face sanctions. More than 60% of India’s defence inventory comprises of Russian-origin equipment, many like submarines and missiles that the US itself is reluctant to provide. Under this Act, all this could be imperilled. There is talk of a waiver, but India needs to consider defence ties with a country that is wont to issue sanctions at the drop of a hat.
From the 1960s to 1980s, an antagonistic posture towards China cemented India and Russia’s ties with each other. But things have changed in recent years. India has become a significant customer of American weapons systems, while Russia has begun supplying its cutting edge fighters like the Su-35 to the Chinese. Beijing has also become the lead customer for Russia’s S-400 air defence systems.
In the past five years, the Sino-Russian embrace has tightened. The two countries have signed deals worth half a trillion dollars for the supply of oil and gas from Russia to China over the next quarter century. China has become an important source of Foreign Direct Investment to Russia and it is not surprising that Moscow has lined up with Beijing’s Belt and Road Initiative and even agreed to coordinate its Eurasian Economic Union activities with the Chinese. Last December, in a visit to New Delhi, Lavrov publicly called on India to join the Belt and Road Initiative.

Russia and Pakistan

Another visible shift has been in Russia’s approach to Pakistan. Last month, Russia began supplying Mi-35M assault helicopters to Pakistan, fulfilling a deal that was originally reached in 2015. Russian goals in Pakistan relate to its Central Asian commitments. Though it is under Chinese pressure in the region, it remains the region’s principal security provider and would like to retain its status there as its principal economic partner. In this, Russia views access to the Middle East through Pakistan as a major step. There has been a flurry of Russian investments in Pakistan, and the more Moscow is isolated in Europe, the more it turns East.
India and Russia have a relationship that has been tested by time and has served both countries well. But global relations are going through a period of unusual disruption. It was therefore useful for the leaders of India and Russia to put aside their other cares and focus for a brief while on the need to shore up their relationship.
The Scroll May 26, 2018

Why Modi government's Ramzan ceasefire in Kashmir is doomed to fail

The ceasefire ordered by the government is a poor copy of the one that was initiated by the Vajpayee government between November 2000 to May 2001. That was a carefully prepared event towards making peace in Kashmir by engaging the separatists and the militants and bypassing the Pakistanis.
A lot of behind-the-scenes work with the Hizbul Mujahideen (HM) and the All Parties Hurriyat Conference (APHC) went into it. And it came apart because of systematic ISI pressure. First, after supporting it, the HM chief Salahuddin who resides in Pakistan Occupied Kashmir, renounced his support.
Chaotic ceasefire
It was viewed seriously enough by the ISI that it triggered an attack on the Red Fort by Lashkar-e-Tayyeba terrorists and a suicide bombing at the headquarters of the Army’s 15 Corps in Srinagar. It led to severe infighting in the APHC and the eventual assassinations of the principal advocates of peace, HM deputy chief Abdul Majid Dar and Abdul Ghani Lone. Eventually, New Delhi threw in the towel and invited Musharraf for talks in Agra.
The current non-initiation of combat operations (NICO), to give the ceasefire a more precise name, comes in a confused and chaotic circumstance, in the middle of the government’s blood and iron strategy to finish off militancy for good in the state.
There is no doubt that the NICO will be a boon to the militants who have been under enormous pressure. But it has not even got token support from the militants of any stripe, or, for that matter, the so-called joint resistance leadership, who also doubles as the APHC.
From Clausewitz onwards, military strategists acknowledge that military operations are a means of fulfilling political ends. In the case of the Modi government in Kashmir, it is difficult to discern any other goals other than to militarily finish off the militancy.
Though the Prime Minister’s two-hour stop-over in Srinagar on Saturday to inaugurate a hydro project is being conflated as some kind of a political gesture, the fact is that there is no discernible political initiative accompanying the ceasefire. His last set of golden words, uttered while inaugurating another project in April, were his standard wordplay—“the youth of Kashmir have two ways ahead, on one hand you have tourism and on the other terrorism.”
There are problems with this approach and the current NICO appears to be aimed at heading them off. In what is increasingly appearing to be a failed policy, the removal of armed gunmen from the scene is only leading to their replacement by a radicalised mass of young Kashmiris who are increasingly ready to sacrifice their lives in attacking military convoys and even tourist groups with stones.
Mob fury
So far, rules of engagement have prevented mass casualties, but the recent lynching of a JCO and the killing of a tourist signal a situation that is slowly getting out of hand with the crowds escalating their violence using stones, Molotov cocktails. The Army is simply not trained to deal with this unless the government intends to give them the freedom to deal with the situation like the Israeli Army which does not hesitate to shoot at violent, but unarmed protestors.
The difference is that while the Israeli soldiers are killing “the enemy”, Indian soldiers will be asked to fire at their own unarmed, albeit violent countrymen.
Different tactics
The big challenge is to evolve tactics to deal with these mobs. For long it has been clear that the Army is not the right kind of force to deal with this because it is not equipped to handle violent but unarmed mobs. This is not an uncommon challenge, it is confronted by police forces across the world in Germany, France, South Korea or Brazil.
The handling requires special tactics, equipment, a very high level of training and psychological conditioning and a significant mass of personnel who would have to be deployed across the Valley.
Though the Modi government is an expert in appropriating ideas and icons, it seems to lack the creative ability or the executive skills to go beyond simple copying. The same seems to be the case with the ceasefire or NICO.
Experience should tell us that the problem has two tracks – the Pakistani and the domestic – which must be simultaneously engaged and the process synchronised in a manner that ensures that both move at the same pace.
Engaging one and not the other doesn’t work, neither does an uncoordinated procedure. More than anything else, it also requires a point man who has the prime minister’s authority. As of now, all these seem to be lacking and so, there is little chance that there will be any forward movement.
Mail Today May 21, 2018

Lessons from Tanzania

The oceans both unite and divide countries. Take Tanzania, at one level, across the Indian Ocean it is a neighbor, on the other, the  physical distance that separates the two countries remains vast. India’s relations with Tanzania go back in history to the days when Arab traders plied to Zanzibar. In the 1960s, Pandit Jawaharlal Nehru and Mwalimu Julius Nyerere  to the hoary days of non-alignment when both sought to develop their “socialistic” societies.
Today, both have liberalized and are among fast growing economies with their GDP averaging 7 per cent growth and enjoy a vibrant business and commercial relationship.  India accounts for 18 per cent of the Tanzanian trade with a huge potential for further growth in the area of minerals, agricultural products, as well as engineering goods and services. Reportedly, Tanzania possesses the highest known deposits of minerals and hydrocarbons in the East African region. 
Lessons from Tanzania

The peripatetic Narendra Modi was the last high-level visitor from India to the country in 2016. Though, New Delhi has paid steady, if low key, attention to the country through the decades. Tanzania is a major beneficiary of India’s cooperation programmes  receiving some 350 trainees from the countries in a variety of areas from technical training to academic fellowships.
 With Indian telecom companies being big players in the country, it is not surprising that Information and Communications Technology training is a major area of focus. Indian credit lines are helping set up water supply and distribution projects in the country. They also helped in providing trucks and other vehicles to the Tanzanian People’s Defence Force in 2013-2014 and tractors and agricultural equipment. 
India’s great asset is the diaspora—mainly from Kutch and Kathiawad region--  some 60,000 strong which is largely concentrated in the major urban centres of Dar-es-Salaam, Arusha, Mwanza, Dodoma, Morogoro, Zanzibar and Mbeya. There are also over 10,000 Indian professionals who work in companies like Tata Africa Holdings, Kamal Steel, Airtel, Cotton Greaves, Bajaj Auto, Ashok Leyland, and Wintech Elevator. Besides public sector banks, the National Minerals Development Corporation and WAPCOS (water resources) are active in the country.
But India now has tough competition from China which has been big in Africa for decades.  Tanzania was the site of China’s first big Africa venture—the 1,860 km Tanzam railway—linking Dar-es-Salaam to Zambia that was completed in 1975. The Tazara Railway, as it is now called, was aimed at helping land-locked Zambia to export its copper ore, even while avoiding white regimes in Rhodesia, South Africa and Namibia. It also played a significant role in promoting agricultural trade  and migration through its route. But now the rail line is in bad shape, despite help from the Chinese who see it as a symbol of their Africa commitment.
China’s investments in Tanzania have surged in recent years, reaching about $ 2.5 billion in 2017, but it is still number two to India in its trade. Not surprisingly, while it imports $ 1.6 billion of Chinese goods, it is exporting only $ 354 million to China.  But the Chinese have been coming big, especially in the area of infrastructure construction and mining.
The big Chinese bet is on a mega port to be built at Bagamoyo some 30 kms away from Dar es Salaam. Originally, the port and a special economic zone was to be a three-way partnership between Oman, China and Tanzania. But that project was cancelled because Tanzania could not raise the money for its share which was essentially to compensate the land owners. So now, a  new contract will be signed next month with  the China Merchants Holdings International and the Oman Investment Fund, with the former taking the responsibility of running the port. 
Bagamoyo should focus Indian minds on the role of Tanzania as an Indian Ocean country. Indian naval ships are regular visitors to the Tanzanian ports, but though located at a strategic point in the Indian Ocean, it does not seem to be of much interest to the strategic planners in New Delhi. India has been focusing on Mauritius, Seychelles and the Maldives, but a look at the map will tell you that Tanzania is no less important. After the Modi visit, India has begun sending six officers to the Combined Command and Staff College  in Arusha, but is not sending any to the National Defence College in Dar-es-Salaam which has a Chinese course participant and a faculty member.  
China is, of course, majorly interested in the Indian Ocean where it established its first overseas base in Africa in Djibouti in 2017. It has huge economic interests in the countries of the Indian Ocean littoral and is dependent on its sea lanes for its energy security. Its ships, including a huge navy hospital ship, Peace Ark, regularly visit the ports in the region.
In the future, we are likely to see more Chinese bases, perhaps in Jiwani, near Gwadar and the Maldives. In themselves, these bases should not concern India since it is a strong resident power of the Indian Ocean with a favourable geographic location.
Greater Kashmir May 21, 2018

On de-nuclearization

Across the world we are seeing two varying approaches on denuclearization being carried out by one country. In one instance, the United States has withdrawn from a process that froze and rolled back parts of the Iranian nuclear programme through the Joint Comprehensive Plan of Action (JCPOA) in 2015.
In the other it is moving forward to engage North Korea which has already tested nuclear weapons and is reputed to have a small cache of them, with a view towards dismantling the country’s nuclear capability.
In recent history, countries have given up their nuclear weapons capability for a variety of reasons. South Africa gave up its weapons at a point when the minority white regime that enforced apartheid  was on the verge of ceding power to the black majority, and signed the Nuclear Non-Proliferation Treaty (NPT) in 1991.
There was a rivalry between Brazil and Argentina that led to both developing nuclear capacity in the 1970s and 80s, especially in the years they were run by military governments. Their rivalry was largely an  issue of prestige since there was no significant dispute between the two countries affecting their security. However both were signatories to the Treaty of Tlatelolco which committed them to a nuclear free zone in South America.
The two  instituted a bilateral inspection regime in 1991 to ensure that their nuclear programmes were peaceful and in 1995  Argentina signed the NPT, followed by Brazil in 1998, bringing their facilities under the inspection regime of the International Atomic Energy Agency (IAEA).
After its defeat in the war of 1991, Iraq was forced to accept a weapons inspection regime under the auspices of the UN. Over the next decade, Iraqi nuclear, biological and chemical weapon capability was systematically dismantled. Yet, the US falsely alleged that the capability was still there and launched another war in 2003 which overthrew Saddam Hussein and devastated  the country.
As for Libya, its programme was in its initial stages which its leader Muammar Gaddafi gave up in 2003, following  an intelligence operations that revealed the Libyan acquisition of nuclear material from the Pakistani scientist A Q Khan and his nuclear black market. Gaddafi and his son Saif claimed that the US had offered him security guarantees, but they were of little avail when western countries like the US, UK and France intervened militarily to overthrow the Libyan leader in 2011.
And then there is Israel which neither confirms nor denies its capability. There is enough evidence, however, to show that the country has a sophisticated nuclear weapons programme with a significant arsenal.
Iraq, Libya, North Korea and Iran have all been signatories to the NPT and did commit themselves not to make nuclear weapons. Israel, like India and Pakistan, has refused to sign the 1967 treaty. North Korea walked out of the NPT in 2003.
The historical record  shows then, that while the US will not hesitate to attack a country without nuclear weapons, like Iraq and Libya, it will think many times before it does so a country with a proven capacity like North Korea.
Speaking after his talks with his South Korean counterpart Kang Kyung-wha, US Secretrary of State Mike Pompeo declared  last week that his country would rebuild the North Korean economy if Pyongyang agreed to surrender its nuclear arsenal. The South Koreans and the Americans say that their ultimate goal is the “total, permanent and verifiable” denuclearization of the divided peninsula.
It is well known that the for Kim Jong Un, nuclear weapons capability is linked to regime safety. His interest is not the enrichment of his country, had it been so, he would not have starved its people to create a nuclear arsenal.  
The  Korean  negotiations are a complex dynamic involving Chinese, South Korean and American interests which are not necessarily congruent.  The chances of a quick denuclearization are not very high. The more likely scenario is that Kim will agree to a step-by-step process which could see the dismantling of North Korea’s capability along with the stage-by-stage removal of sanctions. Will someone like Trump who wants to declare quick victory play along?
This is important because of the implications of the recent American torpedoing of the Iran nuclear deal. Most accounts agree that Iran was  still some distance away from making them and that the  JCPOA has frozen the programme, albeit for 15 years. Over time, it was expected, it would have been possible to push Iran to dismantle even this capacity.
Given American behavior in Iraq and Libya, regime security is an important calculation for the mullahs. What is alarming that the same combination that made wanton war on Iraq—Netanyahu, John Bolton and a hawkish American President  are now making the same false arguments about Iran that they made about Iraq in 2002-2003.
Most observers agree that Iran has kept its part of the bargain. But that is where the rub comes in. President Trump feels that the JCPOA and UN inspections cannot guarantee that Iran is not cheating. So, a water-tight agreement is needed that  should be certified not by the UN, but by the US and Israel, as though Iran was some defeated entity.
A cross section of top Israeli security officials believe that the JCPOA may not have been the best deal, but Trump’s action will  only make things worse.  Last October Ehud Barak,  former Israeli Prime Minister and a hawk on Iran had urged Trump to stick to the deal, noting what every sensible critic has observed, that by breaking a commitment, the US was hardly sending the right signal to Kim Jong Un, who of course, actually possess nuclear weapons.
Greater Kashmir May 14, 2018

On Iran and Trump, India Has Landed Between a Rock and a Hard Place

For some years now, India has liked to think of itself as a “leading power” rather than simply a “balancing power”.  But if the Modi government’s response to Donald Trump reneging on the Iran nuclear deal is anything to go by, India may find itself being classed among the craven powers.

It is not surprising that in the run-up to the decision, Trump met French president Emmanuel Macron and German chancellor Angela Merkel on the issue and spoke to British prime minister Theresa May. He didn’t speak to Xi Jinping and Vladimir Putin because China and Russia’s stands are well known. But he did not bother to consult Prime Minister Narendra Modi, the leader of a country which is a close ally of the US and stands to lose a great deal from the decision. This is because Trump knew he could take India for granted; after all, the Modi government’s weak-kneed approach was evident when it avoided substantial comment on the US shifting its embassy to Jerusalem.
India’s official statement on Trump’s Iran decision began with the non sequitur that Iran’s right to peaceful uses of nuclear energy should be respected, that the issue should be resolved through dialogue and diplomacy. “All parties should engage constructively to address and resolve issues that have arisen with respect to the JCPOA,” the MEA said, using the acronym for nuclear agreement’s formal name, the Joint Comprehensive Plan of Action.
There was, unlike the Chinese statement, no expression of regret that an international agreement which had the mandate of a UN Security Council resolution and whose termination has profound implications for the stability of a region which is, arguably, the most important external region for India, had been terminated so wantonly.
Trump’s policy might push Iran to conduct more ballistic missile tests. Credit: Reuters
With his ill-considered actions, Donald Trump may trigger a war which could be more destructive than the American invasion of  Iraq in 2003. Credit: Reuters
The issue is not about Iran’s right to the peaceful uses of atomic energy, but about ensuring that it does not develop nuclear weapons. The JCPOA is not some treaty that is under negotiation, but as the Russian statement pointed out, it is “a key multilateral agreement approved by the 2015 UN Security Council Resolution 2231.” In other words, it has the force of international law.
The US which frequently swears by the “rule of law” now says it is “withdrawing”, not “violating” the JCPOA because it goes against its strategic interests. Mind you, this is a treaty in which the then Obama Administration was the lead negotiator. National security adviser John Bolton declared, on May 8, that “any nation reserves the right to correct a past mistake.” To this end he cited the Bush administration’s withdrawal from the 1972 ABM Treaty, which he said the Americans abandoned not because the Russians were violating it, “but because the global strategic environment had changed.” The Trump administration earlier withdrew from the Paris climate accord, presumably because it does not serve its strategic interests.
This, of course, is a catch-all which can justify China trashing the arbitration award on the South China Sea under UNCLOS in 2016, or any future Indian decision to scrap the Indus Waters Treaty of 1960, or for the Iranians to simply walk out of the Nuclear Non-Proliferation Treaty as the North Koreans did in 2003.
Everyone else – the Europeans, the Chinese and even the UN watchdog IAEA–  says Iran is conforming to its obligations there. But what the US is saying is that not only must Iran implement the letter of the JCPOA, which seeks to prevent them from developing nuclear weapons, but must also meet other demands made by the US, Israel, Saudi Arabia and all their allies, as though it is a defeated nation. So it must not have ballistic missiles, it must not support insurgents in other countries – even while the US, the Saudis, Emiratis and Saudis are free to do so. Israel, of course, can do what it likes. It can possess nuclear weapons, ballistic missiles and militarily occupy another state and repress its people. In short, the US wants to decide who is going to be a power in the Middle East by dictating the manner in which countries can arm themselves.
As of now, according to Bolton, sanctions come into effect immediately insofar as new contracts are concerned. As for the older ones, they need to be phased out between three to six months. There is little doubt that the US action will create a great deal of needless turmoil and possibly, war. It is bound to give Russia and China greater room in the region. Europe is in a dilemma, even though it supports the JCPOA and has criticised the American “withdrawal”, the reality is that its exports to Iran – worth $400 billion – are dwarfed by the $18 trillion worth of goods and services it sells to the US every year.
China has shielded Iran from the effects of previous rounds of sanctions, and there is little doubt that it will continue to do so now. Not many know that Beijing has had an active presence in Iran for the past 30 years. Iran has been the largest recipient of Chinese foreign assistance in the 2001-2014 period, some $143 billion. China is Iran’s biggest economic partner and customer of oil. It is playing a major role in aiding Iran’s oil exploration and infrastructure construction. Xi Jinping was the first visitor to Tehran when sanctions were lifted in 2016 and the decision taken to raise bilateral trade to $600 billion in 30 years from a figure of around $40 billion today.
China is a major supplier of weapons to Tehran and has helped set up its military-industrial sector, including the establishments that fabricate missiles. But it has also played and continues to play a major role in developing its railway system by building everything from rails to manufacturing wagons. Iran is an important way station in Beijing’s Silk Road Economic Belt route to Europe. As part of this, the first train from Yiwu arrived in Tehran in February 2016; since then several more trains have done the route. A Chinese company is electrifying the railway track between Tehran and Mashad, from where it goes on to Turkmenistan and China. An ambitious project will see the Iranian system link to the Turkish one to carry freight through the Bosporous tunnel to Europe.
Narendra Modi with Hassan Rouhani. India’s bilateral trade is around $13 billion currently and it has committed some $500 million on the Chah Bahar port project .
Where does that leave India ? Between a rock and a hard place. The Persian Gulf region is by far the most important external region for the country. Iran is the closest major source of hydrocarbon energy to the Indian land mass. Iran is India’s third largest supplier of oil after Iraq and Saudi Arabia, prior to the sanctions it was number two. Iran supplied 18.4 million tonnes in the April 2017-January 2018 period and the year before that as much as 27.2 million tonnes.
The issue of oil trade with Iran or the future of Chabahar is not our primary concern, but the very stability of the larger region that provides us over 60% of all our oil, where nine million Indian citizens work and send back $40 billion in remittances from what is the largest single external source.
The regional stability India seeks there is built on carefully nurtured relationships between the various antagonistic powers there — Saudi Arabia, the UAE, Qatar, Israel and Iran. One of its most important recent pillars was the carefully crafted JCPOA, a measure aimed at normalising Tehran’s relation with the West (and their regional allies) by ensuring that it winds down its capacity for making nuclear weapons.
India’s bilateral trade is around $13 billion currently and it has committed some $500 million on the Chabahar port project and has also said it would fund the $1.6 billion rail link between Chabahar and Zahedan. There are ambitious plans to invest in gas-based fertiliser and other projects in a special economic zone that is planned around Chabahar. But there is little doubt that US sanctions will become a major impediment here.
There is an aspect of India’s relationship with Iran which goes beyond oil and energy. It is related to business opportunities in the country, as well as connectivity schemes through it to Afghanistan and Central Asia via Chabahar and Europe through the International North South Transportation Corridor originating in Bandar Abbas.
Indeed, ties with Iran are important for India’s emergence as the “leading power” that it aspires to be. However, it may soon have to choose between its strategically autonomous goals and those which the Trump administration has in mind for the region.
With his ill-considered action, Donald Trump may trigger a war which could be more destructive than the American invasion of  Iraq in 2003. But almost certainly what it will do is to promote a  major geopolitical shift that could catalyse the political and economic integration of a  vast Eurasian region from Vladivostok to Baghdad and Moscow under Chinese auspices,  rivalling the Mongol empire at its zenith.
The Wire May 12, 2018