About to the deal, Iran stood to gain access

About The Deal

The
Iran nuclear deal (Formerly known as JCPOA) – An agreement between Iran, P5+1
countries (USA, China, Russia, UK plus Germany) and the European Union, in July
2015. In this deal, Iran agrees to reduce uranium enrichment activity
drastically, dispose of its enriched uranium stocks and modify a heavy water
facility so it could not produce material suitable for a nuclear bomb.

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What
Iran Gets Out Of This Deal

Previous
sanctions imposed by the United Nations, United State and European Union in an
attempt to force Iran to halt uranium enrichment crippled its economy, costing
the country more than $160bn (£110bn) in oil revenue from 2012 to 2016 alone.
According to the deal, Iran stood to gain access to more than $100bn in assets
frozen overseas, and was able to resume selling oil on international markets
and using the global financial system for trade.

 

Why
Trump Calls it  –  “Worst Deal Ever”

“They
are not in compliance with the agreement and they certainly are not in the
spirit of the agreement in compliance,” Trump said

Although,
IAEA (International Atomic Energy Agency), which is responsible for keeping a
check on the deal, has always maintained that Iran is complying with all the
clauses set on the limit for its nuclear program.  

It
seems that the real reason for Trump administration going against this deal is
not the nuclear threat but more of a political in nature.

Iran is
indirectly supporting the ISIS by funding the Shia militias in Iraq who are
fighting against the Sunni minorities.

Hamas,
a militant group in Palestine is also funded and armed by Iran.It also sent
arms and ammunitions to Houthi, yet another militant group in Yemen which was
responsible for the civil war that resulted in dissolution of the government.   

The UN
security council had strictly warned against testing ballistic missiles, still
Iran went ahead with it. Although, these tests did not violate the Nuclear
Deal.

It is very much
possible that President Donald Trump would not certify Iran’s
compliance of terms of the Nuclear Agreement this coming month of May ’18 (120
days after the last review in October).

 

What
would it mean for the Global Economy

There
is only one word for it – “Oil”. Iran has 158 bn barrels of crude oil as it has
the fourth largest reserves worldwide. This decertification would drive
away the investors, hence a fall in oil production.

Moreover,
if the old sanctions are to be put up again on Iran, It would mean that Iran
would have to stop selling oil (30 -40 million barrels), which would push up
the oil prices.

Also,
Once the oil production starts falling, It would put an upward pressure on the
Global Oil prices, reducing the money that would be spent on other things.

One
final thought is that Iran trades its oil in Non-US currency, so it would be an
advantage to the US and the US world reserve currency.

 

Impact
on China and India

In
2008–09, Iranian oil accounted for nearly 16.5% of India’s crude oil imports.
About 40% of the refined oil consumed by India is imported from Iran.

India,
which is the fourth largest consumer of oil in the world, is free to import
Iranian oil will have to pay in Indian Rupees. Importing goods or
sending shipments to Iran will again become expensive because of high shipping
charges. Putting up sanctions will only make things harder for India.

Although,
Iran will loose out on options like Russia and China for their infrastructure
development, which will mean that India would have a better chance at uncompetitive
rates.

All
said, India will have an advantage in some sectors and will loose on others,
Like Pharmaceutical and IT sector, which would be reluctant to invest there due
the risks associated with the sanctions.