Six global powers (Britain, China, France, Russia, the US and Germany) signed up a deal with Iran on November 24th.
In exchange for phased-out relief from economic sanctions that have been weighing heavily against Iran for a long time now, Iran agreed to caps being placed on its nuclear capacity. How far the deal will crystallize will be determined over the next six months. If Iran does cooperate in giving substance to the deal by refraining convincingly from going in the direction of not making the nuclear bomb, this deal will come as a beam of bright light in the world’s most troubled region.
Credit must go to John Kerry, the US Secretary of State for spearheading the discussions and to Catherine Ashton, the discreet but indefatigable EU Foreign Affairs representative, for making this breakthrough. The opportunity came with the election of Hassam Rouhani, as president of Iran, perceived to be more moderate than his predecessor. The deal has the potential to unlock the Middle East which is a hotbed of tensions with Israel on the one side and the Arab world, on the other, caught up in the midst of prolonged contention around the state of Palestine. Aside from this broader geopolitical tension – which might defreeze as a result of the deal – the Middle East is itself torn by internal strife (e.g., Syria’s civil war, Egypt, Tunisia, etc.) as challenges are increasingly mounting against holders of dictatorial power in several countries. A new global diplomatic moment is likely to emerge if this deal goes through.
It may be recalled that 34 years earlier, in 1979, America was violently ousted from Iran when a wave of religious fervour coupled with a feeling of revolt against the US as supporter of the former holder of power, the Shah of Iran, swept through the country. Since then, strained relations have resulted in billions of dollars of Iran’s foreign assets having been frozen for decades in Western banks. This has been compounded by a series of economic and trade sanctions having crippling effects on the Iranian economy, having been taken. In the circumstances, Iran was headed on a collision course against western allies Israel and Saudi Arabia, its arch enemies on geostrategic and theocratic considerations. Israel, a staunch ally of the US, has vehemently advocated military assault against Iran’s nuclear sites and is today a fierce opponent of the Geneva deal of November 24th. It considers that the cunning clerics who rule over Iran are duplicitous and cannot be trusted to live up to it.
The poor and less well-off countries pay a heavy price
Now, what happens in the Middle East is highly relevant to us inasmuch as we are highly dependent on imported energy sources. We depend on imported coal but also on fuel oil for generating electricity. Add to this a fleet of 450,000 vehicles on our roads and it should become clearer the amount of fuel oil we have to go on importing. Most of the fuel oil we consume is generated in the Middle East. Its price is dictated by the impact of ups and downs in Middle East politics.
The young generation in Mauritius may not recall it. In the 1970s, tensions in the Middle East coupled with the formation of a global oil cartel, OPEC, brought about important spikes in international oil prices. As an importer of oil, not only did we face major price hikes which hit hard our country’s balance of payments. We also ran out of foreign exchange reserves. We had to borrow from the international market on onerous terms and had to raise money from the World Bank and the IMF to pay up our soaring import bills. All this landed us into one of the harshest periods of domestic austerity and price inflation.
Tensions in the Middle East tend to hike up oil prices. The economic consequences of oil price hikes occasioned by those tensions are felt mostly by those at the lower and middle positions in the economic ladder. This kind of severe impact on the living standards is not only the lot of the less well-off in Mauritius. It affects severely the poor who live in other less developed countries just as well. There are hundreds of millions of the world’s most deprived and destitute people living in Africa and Asia. It is they who bear the brunt the hardest, not those living in the West and the Middle East who can easily fend for themselves despite fluctuations in the price of oil.
A thaw preferable to the Freeze
88% of the world’s population live in countries other than in the rich countries of the West and the Middle East. History bears testimony to the fact that the harsher burden of oil price hikes, whenever they occur, are passed on to the bulk of the world’s population living in perilous conditions in the Asia-Africa region. Oil price hikes are partly the consequences of the West’s entanglements in disputes in the Middle East and/or due to conflicting situations among the Middle Eastern countries themselves. In a sense therefore, the rest of the world has to pay a heavy price for what goes wrong due to geopolitical tensions between the West and the Middle East and in the Middle East itself.
It is clear that the recent diplomatic initiative to thaw Iran’s relations with the big powers of the world will help remove the element of uncertainty which almost always grafts on to the price of oil to the detriment of the majority of the world’s population. Carried to its satisfactory conclusion, the diplomatic deal will even improve the world supply of oil, which sanctions against oil export from Iran are artificially curtailing. This may have a positive effect on oil prices in general at a time the world economy is trying to move out of the downturn which has affected it over the past five years.
A growing world economy will prove beneficial to Mauritius by opening up its traditional markets again and increasing our scope beyond the new markets we have gone into when European markets proved more difficult of access. We have every reason therefore to support the fulfilment of the diplomatic deal made in Geneva.
Transforming international politics to a saner level
We are not directly concerned but there should be other positive fallouts from the deal at the global level. This deal is a departure from hasty and empty grandstanding that we’ve seen in the past. It is also a departure from seeking to dodge difficult issues, as seen in the withering away of the resolve to engage in military intervention, the futility of war having been demonstrated time and again as reflected in increasing war-weariness at home in the West. The Iran deal is a well-leveraged pragmatic programme incentivising Iran to move on away from the nuclear bomb and conclude a bigger deal. The alternative would have been for Iran to push further its defiant uranium enrichment programme until it came close to the 90% level needed to make bombs. This will be avoided.
Another fallout will possibly be a curtailment of American reliance on Saudi Arabia in the Middle East. Radicalism should get mitigated as well. Having no axe to grind against Iran, Israel might invite itself finally to the table to resolve the issue of an independent Palestinian state, taking care of Israel’s security concerns. It will be a seismic change for the Middle East as also for global international relations since Russia and China will, as a result of the deal, miss out the cutting edge they use to corner America away each time there is a tension somewhere.
By imparting a greater dose of confidence to Iran, this significant diplomatic move involving the Security Council members (P5) should induce Iran to help rather than hinder the Middle East peace process. We should not forget that hatred between the Palestinians and Israel has fuelled war and terror for three decades now, something which has been travelling with destructive force to the most remote of places on the planet. There is even a good chance that an Iran restored into the confidence of a new world order, will want to help sort out the Syrian crisis rather than go on stoking the fires over there that have cost 125,000 lives and created 2 million child refugees over the past two and a half years since 2011. There is a strong case to go for appeasement rather than military confrontation which the intransigent stand of Israel has been advocating all along. The world will stand to gain from the ensuing reconfiguration of forces.
* Published in print edition on 6 December 2013