Collateral damage

The global dismay over US President Donald Trump’s decision to unilaterally walk out of the Iran nuclear deal is perhaps summed up by Washington-based think tank The Brookings Institution, which commented that Trump’s move “opens the door to the unfettered resumption of Iran’s nuclear program and unleashes unpredictable escalatory pressures in an already volatile Middle East.” Trump’s action, while not a surprise — he has been determined to consign the deal to the nearest trash can ever since he moved into the Oval Office — nevertheless comes in the face of strong pleas from the other signatories to the accord like Russia, China, France, Germany and the UK, and worsens an already tense situation in the region. By clearly siding with Saudi Arabia and Israel, who’ve forged an unusual partnership in the Middle East against Iran, the largest country in the region, Trump has destroyed the chances of any workable peace being achieved in the many conflict zones in the region. Worst of all, almost everyone from the US Defense Department downwards agrees that Iran had kept its side of the deal, which weaken’s the US’s position as global policeman.

The Europeans, for their part, have already issued a statement couched in diplomatese that clearly puts the blame on the US. Trump’s betting that his ‘extreme sanctions’ will bring the Iranians to their knees. That seems unlikely. Instead, it will provoke Iran into pushing more resources into increasing its clout both in Iraq and Syria where it has outmanoeuvred arch-rival, Saudi Arabia. For India, the reintroduction of sanctions against Iran is bad news. Iran is now India’s third largest source of oil. Apart from supply disruptions, a further surge in crude prices will worsen India’s current account imbalance and fuel inflation, at a time when the economy is just beginning to show signs of returning to a high growth trajectory. For global corporations too, there will be considerable pain. For example, there are said to be around 200 French companies operating in Iran and some like Renault have plants there. They will now have a 90-day period to wind down operations. India’s Chabahar port project in Iran, which was just showing signs of moving forward, could be in trouble.

Trump, whose autobiography was famously called The Art of the Deal, has shown that he’s more of a deal-breaker than a dealmaker. The President startled the world by announcing that he was withdrawing from the Paris Climate Agreement. He pulled out of the Trans-Pacific Partnership, designed to give succour to Asian countries worried by China’s growing clout. And he’s trying to renegotiate the North American Free Trade Agreement with Canada and Mexico. Nobody knows how this will all unfold in the coming weeks but it’s clear that the world is at a precarious point and at the mercy of a US President who is willing to thumb his nose at both friend and foe alike.