IAEA Iran Sanctions - Background, Features, Significance, Challenges, Impact on India and Iran’s Economy

The International Atomic Energy Agency (IAEA) has been recently emphasizing that it needs greater access to the nuclear facilities in Iran to access the nuclear capabilities of Iran better. Otherwise, the IAEA would be forced to implement strict sanctions on Iran. Western countries like the US, the UN, and other Western countries have already levied sanctions against Iran. These sanctions have previously been relaxed as a result of talks with the P5+1 Group.

In addition to this, Iran has also pledged to reduce its stockpile of nuclear fuel gradually. As a result, some of the Western countries have reduced the intensity of the sanctions on a gradual basis. However, fresh sanctions have also continuously been imposed by the US, IAEA, and EU on Iran due to its non-compliance with the Joint Comprehensive Plan of Action (JCPOA) Deal that was signed with the USA in 2015.

The topic of IAEA Iran Sanctions is particularly important from the exam point of view as questions can be asked about this topic in the international relations section of the mains examination (GS 2) of UPSC.

In this article on the IAEA Iran Sanctions, we shall discuss its origin, causes, features, impact, challenges, and other important details for UPSC Examination.

Latest News

• The IAEA Board adopted a resolution on 8 June 2022 requesting Iran to better cooperate with the agency about its nuclear abilities.
• Additionally, according to the IAEA Resolution, Iran’s nuclear programme is “increasing in ambition and capability.”
• The Resolution also emphasises that the organization requires greater access to the nuclear capabilities of Iran to access the ground level situation.
• According to the Chairman of IAEA, Tehran is getting ready to build fresh cascades of centrifuges for nuclear enrichment.
• Recently, Robert Malley, a U.S. Special Envoy for Iran, announced that Tehran had access to enough highly enriched uranium to manufacture bombs in a matter of weeks.

What is IAEA?

• The International Atomic Energy Agency is the independent intergovernmental platform for global cooperation in nuclear science and technology.
• It promotes the safe, secure, and peaceful use of nuclear science and technology, advancing international security and stability and the UN Sustainable Development Goals.

Objectives of IAEA

• It encourages the sustainable transmission of this expertise to developing countries. It supports the formulation of plans by its Member States for employing nuclear science and technology to meet their social and economic goals.
• Through its inspection system, it ensures that States abide by their commitments to use nuclear assets and infrastructure only for peaceful purposes under the Non-Proliferation Treaty and other non-proliferation accords.
• It promotes achieving and maintaining high safety standards in nuclear energy applications and safeguarding the environment and people’s health from ionizing radiation.
• Additionally, it develops nuclear safety standards.

Background on IAEA Iran Sanctions

• In the 1950s, America helped Iran disseminate nuclear technology under the “US Atoms for Peace Program.”
• The bilateral relationship between Iran and the United States suffered a significant transformation during the Iranian Revolution in 1979.
• Iran began purchasing centrifuges and other nuclear-related hardware from unidentified international suppliers in 1987.
• Iran started working on Project Amad, as far as is known, in the late 1990s or early 2000s.
• From a few hundred in 2002, Iran now produces roughly 3,000 centrifuges for uranium enrichment.
• Tehran purportedly gained the ability to produce enough low-enriched uranium for an atomic weapon thanks to the expansion of its low-enriched uranium stockpile.
• Iranian violations of safeguards regulations were identified by the International Atomic Energy Agency (IAEA).
• This led to negotiations between Iran and the international community.
• Also, in 2006, the United Nations Security Council passed a resolution that asked Iran not to continue with its nuclear enrichment strategy. However, Iran refused to comply with the terms of the resolution.
  • As a result, fresh sanctions were implemented by the United Nations on Iran based on the ground-level inputs shared by the IAEA.
  • Some of the Western nations tried to negotiate with Iran on the issue of its nuclear capabilities. However the same were not conceptualized.
• But in 2015, based on the findings shared by the IAEA, the P5+1 Group signed the Joint Comprehensive Plan of Action deal with Iran.
• But in 2018, the USA withdrew from the deal, alleging that Iran is violating the terms of the JCPOA deal. As a result, fresh sanctions were imposed on Iran by USA.
• Now, the IAEA has also warned Iran to cooperate better and share the ground-level information about its nuclear capabilities. If Iran fails to do so, the IAEA has stated that it might put fresh sanctions on Iran.

Also read about BIMSTEC for UPSC Exam.

About Sanctions on Iran

Why are sanctions imposed on Iran

• Due to Iran’s ongoing illicit nuclear activities, the United States and other countries imposed previously unheard-of sanctions against it in an effort to denounce it, stop it from continuing these activities, and persuade Tehran to address the concerns of the international community regarding its nuclear programme.

US Sanctions Against Iran

The USA had firstly imposed sanctions on Iran is 1979 when the US Embassy in Iran was siezed by a few Iranian students. Following this, the sanctions were lifted in 1981 as a result of the Algiers Accord. Then, USA had imposed sanctions on Iran in 1987 as USA alleged that Iran had tried to take over the US shipping vessels in the Persian Gulf. Finally, when the USA withdrew from the Joint Comprehensive Plan of Action (JCPOA) deal in 2018, it has implemented some fresh sanctions on Iran.

JCPOA Deal

• Iran and the P5+1 group of world powers—the US, UK, France, China, Russia, and Germany—agreed to a long-term accord over its nuclear programme in 2015.
• The agreement’s formal name is Joint Comprehensive Plan of Action (JCPOA), sometimes referred to as the Iran Nuclear Deal.
• An agreement was made on Iran’s declared desire to get nuclear weapons after years of debate.
• Iranian efforts to convince the world that its nuclear programme is completely benign failed.
• Iran agreed to limit its nuclear activity under the JCPOA by stopping uranium enrichment and allowing outside organizations to tour its nuclear sites in return for the lifting of economic sanctions.
• The International Atomic Energy Agency (IAEA) also played a significant role in signing of the JCPOA deal as it provided crucial inputs about the nuclear capabilities of Iran to the P5+1 countries by closely monitoring the situation in Iran at ground level.

US withdrawal from JCPOA

• The Iranian nuclear deal, according to the US, is inadequate in addressing the threat presented by Iran’s missile programme and lacks a reliable system for monitoring and inspecting Iran’s nuclear sites.
• Sanctions were threatened against Iran and other nations that engaged in significant trade with Iran after the US left the Iran Nuclear Deal (JCPOA) in May 2018.
• However, none of the other accord signatories, including the UN, have publicly disagreed with the US position.
• The US has not shown any evidence that Iran has in any way broken the JCPOA.
• In its evaluation of Iran’s heavy water and uranium stockpiles and the implementation of new procedures in June, the IAEA found that Iran was “in compliance” with the agreement.

UN Sanctions on Iran

• The UN passed a number of resolutions imposing sanctions on Iran in response to the International Atomic Energy Agency Board of Governors’ report on Iran’s breach of its safeguards agreement and the Board’s finding that Iran’s nuclear activities raised issues that fell under the Security Council’s purview.
• Sanctions were initially implemented when Iran rejected the Security Council’s demand that it stop all activities related to enrichment and reprocessing.
• It was announced that sanctions would be withdrawn once Iran complies with these requirements and the rules imposed by the IAEA Board of Governors.
• The Joint Comprehensive Plan of Action allowed for the removal of the majority of UN sanctions on January 16, 2016.
• However, on February 21, 2020, Iran was once more put on the FATF blacklist due to Iran’s violation of the JCPOA Agreement’s provisions.

Check out the linked article on Shanghai Cooperation Organization here.

EU Sanctions Against Iran

• Early in the 2010s, tensions between the EU and Iran erupted amid differences on Iran’s nuclear programme. As a result of the disagreement between the European Union and the United States regarding Iran’s nuclear programme, sanctions were put in place. According to European officials, these sanctions, which the EU Council most recently strengthened on October 15, 2012, are the most severe the EU has ever imposed on another country.
• The European Union Council published a report on January 23, 2012, in which it reiterated its worries about the evolution and make-up of Iran’s nuclear programme.
• The Council then declared that all oil shipments from Iran would be prohibited. The assets of the Iranian Central Bank, as well as the import and export of items like petrochemicals and precious metals, would be frozen.
• The old Council Regulation 423/2007, which was released on July 27, 2010, has been replaced by this. Current restrictions on foreign trade, financial services, the energy industry, and technologies are a result of the most recent sanctions. They also prohibit EU insurance firms from providing insurance and reinsurance to Iranian government entities and Iranian-owned businesses.
• Iran has now threatened to seal the Strait of Hormuz if the embargo is implemented.
• At the time, 20% of Iran’s oil exports went to the European Union, while the majority of the remaining oil went to Asian nations, including China, Japan, India, and South Korea.
• Up until July 2012, current oil contracts may be renewed.

Easing of Iranian Sanctions

• As indirect US-Iranian negotiations on renewing the 2015 international nuclear deal with Iran near their conclusion, the US has extended sanctions waivers to Iran through February 2022 to allow for international nuclear cooperation projects.
• By enabling other countries and companies to participate in Iran’s civilian nuclear programme without being exposed to US sanctions, the waiver advances security and non-proliferation.
• As a result of the United States’ decision to leave the nuclear accord under the administration of former President Donald Trump, the waivers were revoked by the country in 2019 and 2020. Officially, the agreement is known as the Joint Comprehensive Plan of Action (JCPOA).

Impact of Iran Sanctions on Iran’s Economy

• The International Monetary Fund (IMF) predicts that the Islamic Republic’s oil exports will continue to decline in 2022.
• The IMF has also predicted that the economic growth rate in Iran will be 3% per annum.
• Additionally, the inflation rate in Iran will fall by around 8%, according to the IMF.
• Previously, the GDP of Iran was predicted to have decreased by 4.99 percent in 2020, continuing a declining trend that began in 2017.
• Due to the restrictions, Iran found it more difficult to export oil and needed help to send money from energy sales home.
• When the limits were reestablished, both exports and imports plummeted precipitously. Iran was susceptible to sanctions because of its industrial metals and oil, which account for a sizable portion of its export earnings.
• Since the start of the year, the Iranian rial’s value has been steadily dropping.
• Locals’ living costs are increasing as they adjust to a slow economy and job market due to a weak currency and high inflation.
• Iran’s already high unemployment rates are expected to rise significantly due to the country’s economic issues.
• According to IMF forecasts, the unemployment rate will cross 10% in 2022.
• The Iranian government is dealing with a growing budgetary imbalance due to excessive spending. This could make it more difficult for the nation to revitalize its economy and recover from the coronavirus outbreak, even if it might not necessarily be a bad thing.

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Impact of Iran sanctions on India

• Bilateral ties deteriorated while the restrictions were in effect. Prior to the imposition of sanctions, Iran was the second-largest crude oil supplier to India, right behind Saudi Arabia.
• India opposed Iran’s clandestine nuclear programme at the International Atomic Energy Agency, and in response to American pressure, India cut back on its purchases of Iranian oil by up to 40% during that time.
• New Delhi also gave up on a pipeline project that was planned to carry natural gas from Iran to India via Pakistan.
• It would have an effect on the growth of the Chabahar port in Iran, providing India with a new route to the landlocked Afghanistan via Pakistan.
• In 2018–19, Iran was India’s fourth-largest oil supplier. The fundamental issue is that Iran provides more enticing choices, such as a 60-day credit period, free insurance, and shipping, than Saudi Arabia, Kuwait, Iraq, Nigeria, and the US do.
• Economic sanctions that raise the price of crude oil will exacerbate India’s current account and trade deficits.
• The currency may be impacted if the trade and current account imbalances grew. If the import bill increases, the rupee will probably experience pressure.
• Inflation may be significantly impacted by the government’s acceptance of consumer pass-through and the erratic nature of crude oil prices.
• Following the announcement, investors quickly sold shares out of concern that inflation and rising oil prices would worsen the already bleak consumer story, causing Indian benchmark indexes to fall by more than 1.3 percent.

Check out this linked article on the International Development Association for UPSC now.

Conclusion

• Iran was the second largest crude oil exporter to India prior to the introduction of sanctions.
• Currently, Iran is at the third place in exporting oil to India as some of the sanctions have been eased.
• Iran is still behind Saudi Arabia and Iraq in exporting crude oil to India.
• Additionally, in the struggle against transnational terrorist organisations like Al-Qaeda and the Islamic State, New Delhi and Tehran have similar objectives.
• With the maiden visit of Iranian President to India in 2021, India has a chance to create balance in its foreign policy, which recently was seen as favoring Israel and Saudi Arabia.

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