US confronts Iran but dialogue looks possible
The latest Iranian statement may reflect caution after rejection of the nuclear accord signed earlier. It doesn’t close the door.
At a joint press conference with President Emmanuel Macron at the end of G7 Summit in Biarritz, President Donald Trump stated that he was prepared to meet Iranian President Hassan Rouhani. He added that a line of credit could be extended to Iran against oil exports by that country. This provides partial sanctions relief, which could improve the climate for a summit meeting between the two leaders.
Rouhani also gave a positive signal by stating that power and diplomacy should go hand in hand. He has subsequently stated in a nationally televised speech that sanctions will have to be lifted first before the meeting. The latest statement may reflect caution after rejection of the nuclear accord signed earlier. It doesn’t close the door. For the first time there is a faint glimmer of hope, though a summit process is always fraught with risks.
Recent months have witnessed increasing attacks on shipping in the Gulf, which raise the spectre of the tanker war in the closing phase of the Iran-Iraq war. However, there are two major differences between then and now. The war in the 1980s was between two regional protagonists. This time, the US is directly engaged. Even more important is the context. What is at stake is not a territorial dispute, but the future of the nuclear deal, and likely proliferation if no agreement is reached.
Mine attacks on Gulf tankers on May 12 and June 13 were not claimed by any side. The seizure of Grace 1 carrying Iranian crude off Gibraltar by Royal Marines on July 4, and capture of British flagged vessel Stena Impero by Iranian Revolutionary Guard Corps (IRGC) on July 19, have directly engaged governments of big powers. This represents a major escalation.
The British argument that Grace 1 was arrested for carrying Iranian oil for Syria in violation of EU sanctions is hardly tenable. EU sanctions do not apply to third countries. Besides, they only cover import of oil from Syria into EU; not exports to Syria. The Iranian action in arresting Stena Impero is retaliation. The increasing incidents of attacks on shipping have led to a call for a multi-national task force to guarantee freedom of navigation in the Gulf. This has no meaning for Iran, unless sanctions are lifted to allow her to export oil.
While there has been dangerous escalation, both sides have tried to exercise control. The US has stated it does not want regime change. Trump said he does not want war and is willing to negotiate with Iran. He also refrained from ordering retaliation against downing of a US drone. He said that such a step costing 150 Iranian lives would have been disproportionate response. He has also approved Republican Senator Paul Rand to act as an intermediary with Iran. His statement in the joint press conference at the end of G7 Summit on August 27 goes beyond previous statements and holds out prospects of interim sanctions relief.
Iran continued to adhere to its commitments under the nuclear accord for one year after US withdrawal from the accord (called JCPOA). It has since resumed uranium enrichment, but promised that the step could be ‘reversed’ in case EU helps mitigate adverse effect of US sanctions. Rouhani’s statement on August 27 reiterated Iran’s policy of not developing weapons of mass destruction, based on the Supreme Leader’s fatwa.
Fear of the US-China tariff war and global recession has depressed demand, and moderated the oil price despite growing geopolitical tensions. However, the Indian oil basket has gone up from $47.60 in FY17 to $69.40 in FY19 and currently stands at $59.54 per barrel. An $10 increase per barrel adds enormously to India’s annual import bill. In the event of closure of the Gulf, crude price will rise sharply. There is no mechanism to compensate for loss of 21% of world crude supply which currently passes through Hormuz.
Abandoning JCPOA could start a nuclear arms race in the region. This at a time when Trump has announced drawdown of US presence in Afghanistan, could force Arab countries to look elsewhere for their security. Though America continues to be the pre-eminent power in the region, Russian role has increased as reflected in visits by leaders of Israel, Saudi Arabia and Iran to Moscow. President Vladimir Putin however has said his country cannot be the world’s fire brigade.
Grace 1 has been released; release of Stena Impero by Iran could be the next step towards de-escalation. It should be possible to explore options based on common elements of US and Iranian positions. Both have affirmed that they do not want war. Iran’s Supreme Leader has stated that nuclear weapons are forbidden in Islam. Foreign minister Javad Zarif said, “If Trump wants more for more, we can ratify the Additional Protocol and he can lift the sanctions he set.” Placing the nuclear accord on a longer term basis could meet a US condition. Once exploratory work has been done, a summit meeting will impart momentum. Zarif has said that Iran is willing to sign a non-aggression pact with neighbours; but Arab countries may expect more. The regional dimension was left out of JCPOA. India can play a role. It has the trust of both sides, and interest in stability of the Gulf as well as Afghanistan. The road to negotiations will be tortuous; there is a long history of distrust on both sides. Nevertheless, the risks are worth taking.
The writer is former Ambassador to Iran.