Pakistan

Trump’s Iran Withdrawal and Pakistan’s silver lining

By Farooq Yousaf

Donald Trump’s withdrawal from the Iran Nuclear deal – also known as the 2015 Joint Comprehensive Plan of Action (JCPOA) – did not surprise many. His critics might think of him as a maverick – risking America’s global hegemony. However, many fail to understand that he loves pandering to his local voter base, and therefore focuses on domestic politics. He is also supposedly on a quest to undo everything Obama did (especially the Trans Pacific Partnership (TPP) and the JCPOA) during his two terms as the US President. Hence, this deal, with Obama’s signatures on it, was always destined to be doomed under Trump.

Israel and some of the Gulf States were also jubilant; with Saudi Arabia, UAE and Bahrain swiftly backing Trump to reimpose sanctions on Iran.  However, if the deal falls apart, it would be hard to force Iran to implement its end of the bargain. Iran’s commitments under the JCPOA included destroying most of its centrifuges and uranium stock, not acquiring nuclear weapons, and keeping the facilities open for the IAEA. Such a scenario should ring alarm bells for regional security, especially when Iran and its arch-rival Israel are actively involved in a low-scale proxy war in Syria. It was expected that – in the aftermath of such a decision by the US – Iran would revert to pre-JCPOA position in terms of its nuclear enrichment. However, and on a positive note, the country’s foreign minister Javad Zarif has initiated efforts to ensure that other signatories honour the deal. If Zarif succeeds in getting what his country wants from other signatories, whatever Trump and the US do in terms of sanctions would not affect the future course of action for Iran. The other signatories, Britain, France, Germany, Russia and China, have already criticised Trump’s decision and expressed their desire to keep the deal intact.

This is where the silver lining for Pakistan comes in. Even though Pakistan has previously relied heavily on Saudi Arabia and USA to seek financial aid, its consolidation of alliance with China, and to some extent Russia and Turkey, can help it take a different route in case of foreseeable US pressures. Where previously deals with Iran, especially those focused on gas and other energy resources, were halted due to US sanctions, current arrangements with Tehran might go on as planned due to Pakistan swaying away from Washington. It is also important for Pakistan to maintain business as usual with Tehran, because only recently in 2016 both the countries agreed to take bilateral trade up to a figure of $5 billion in five years. But this also raises the question of how will Islamabad likely maintain a fine balance between Iran and Saudi Arabia? Especially when a retired General of the Pakistani army is heading the Saudi-led Islamic military alliance. This also means that in case of any escalation between Saudi Arabia and Iran (especially in Yemen), Pakistan might be implicated for supporting the Kingdom against Iran.

Ironically, this is also the first time both Pakistan and India have found themselves in a similar situation. India has heavily invested in Iran, especially in its Chabahar Port competing with Pakistan’s Gwadar, and it seems less than likely that Trump administration would be willing to create exceptions for New Delhi. Therefore, this puts Chabahar’s prospects for India under a cloud of uncertainty. These sanctions could also give India some ‘energy jitters’ as Tehran is New Delhi’s third largest oil supplier. Any negative consequence arising out of Chabahar might also shift the balance back in Pakistan’s favour, somewhat, forcing Afghanistan to reconsider its dwindling economic partnership with Pakistan. Afghanistan has reduced its logistic dependence on Pakistan, and has started using Chabahar for its trade with other countries, especially India. Therefore, any sanctions on Iran could also affect Afghanistan’s regional trade outlook.

The problem, however, is bigger when it comes to Europe, where firms have invested billions of dollars in Iran. If those companies are to sell their assets, Chinese firms might come into play and purchase those assets. Chines companies have previously successfully invested in Iran, using alternate channels, and therefore circumventing any sanctions in place. This would mean that China might then also hold the leverage and invite Iran to actively join its Belt and Road Initiative (BRI), and ultimately help catalyse further trade between Iran and other regional states.

However, whatever the future might hold for Iran and the region, Pakistan needs to ensure that it is ready for a good balancing act. Swaying towards one side or the other, when the tensions between Iran and the Kingdom are at their worst, could ultimately create domestic ideological problems for us. And we don’t need to look that further back in the history to gauge what sort of damage could such sectarian and ideological problems inflict on Pakistan.

The blog is adopted from its original form published in Express Tribune Blogs

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