12 MAY 2018
GS II-INTERNATIONAL-IRAN NUCLEAR DEAL
Q1. United States has recently withdrawn from the Joint Comprehensive Plan of Action (JCPOA), popularly called the Iran nuclear deal. Discuss the implications of the same on the international stability.
- The global non-proliferation regime has taken a direct hit from the U.S.’s decision to renege on the Iran deal. Even though Mr. Trump might think that playing hardball with Tehran will help him to extract concessions from Pyongyang, it is equally possible that the North Koreans will think twice before entering into any agreement with the untrustworthy Trump administration.
- Washington’s unilateral and dictatorial withdrawal from the deal would create deep fissures in the time-tested but increasingly shaky trans-Atlantic security partnership. Not least because it implies potential secondary sanctions against those European companies which are engaged in business deals with Iran. Here again, the U.S. does not have much to lose given its almost non-existent business contacts with Iran. Besides, the decision follows a pattern of similar unilateral steps – such as the withdrawal from the Paris climate accord and formal recognition of Jerusalem as Israel’s capital. Let alone the loss of face suffered by European leaders and the financial losses by their countries’ firms, U.S. unilateralism has deep-running implications for the global security and governance architecture, and other multilateral arrangements and regimes.
- Hassan Rouhani, the moderate President of Iran, who negotiated the nuclear deal, might lose his standing in the country as hardliners pitch for more aggressive steps, including developing a nuclear weapon capability and more military engagement in the neighbourhood. This is an indication of the hardline Iranian responses in the offing as and when sanctions are reimposed.
- Iran’s refusal to fall in line might prompt Israel and the U.S. to carry out attacks against Iran leading to Iranian counter-strikes against American allies in the region, or even Israel. This would further destabilise a region already reeling under terrorism, wars and internal conflicts. Americans, and the international community, should remember how the misguided military campaign against the Saddam Hussein regime in Iraq turned out to be a huge geopolitical disaster.
- While the U.S. has almost nothing to lose in reneging on the JCPOA, India has a lot to lose both economically and geopolitically, and it will take deft diplomacy to adapt to the changing alignments. A more unstable West Asia would ipso facto mean more difficult choices for New Delhi. More conflict in the region would adversely impact the welfare and safety of Indian expatriates in West Asia, leading to a sharp decline in the remittances they send home, and an assured hike in oil prices. Low crude oil prices had given India the much-needed economic cushion in the past few years – that phase of cheaper oil has now ended. Example, the U.S. war on Iraq had a debilitating impact on Indian workers and the West Asian remittances. India also had to abandon the Iran-Pakistan-India pipeline in 2008 thanks to U.S. sanctions against Iran.
- Indian government’s efforts to maintain a fine balance between India’s relations with Iran on the one hand and with the U.S., Israel and Saudi Arabia on the other will be seriously tested in the days ahead. The new warmth between Iran and India could attract American ire. What is even more worrying is that unlike the last time when the U.S. imposed sanctions on Iran, and India had to choose the U.S. over Iran, the geopolitical realities are starkly different this time. Not only are the Americans going it alone this time, but the the regional ganging-up against the U.S. and in support of Iran will be more pronounced this time around, making India’s ability to make a clear choice more difficult.
- India’s dreams of accessing Central Asia via Iran could also be dashed with the return of American sanctions against Iran. India’s projects in Iran’s Chabahar port have been widely viewed in New Delhi as a crucial plank of its Iran-Afghanistan-Central Asia strategy. With U.S. sanctions again tightening around Tehran, New Delhi may find it hard to continue with this project. As a matter of fact, thanks partly to India’s dilly-dallying on Chabahar during the previous round of U.S. sanctions against Iran, Iran had invited Pakistan to the Chabahar project. Some have even suggested a potential link between Chabahar and Gwadar in Pakistan.
Given that there is little consensus around Mr. Trump’s withdrawal from the JCPOA, several of the dissenting parties might look for ways of thwarting U.S. efforts at isolating Iran. Such efforts, especially those led by China and Russia, both parties to the JCOPA, would have implications for the Southern Asian region as well.
Q2. What are the various challenges faced by India in providing electricity for all under the Centre-State joint initiative on 24×7 ‘Power for All’?
- India continues to harbour energy poverty; 31 million rural households and about five million urban households are still to be connected to the grid – the highest in any single country. At the same time, a significant portion of connected rural households is yet to get adequate quantity and quality of supply. The Central government has set itself an ambitious target of connecting all remaining households by the end of March 2019 and made budgetary allocations to cover the cost of electrification. As part of a Centre-State joint initiative on 24×7 ‘Power for All’, State governments have already committed to ensuring round-the-clock supply to all households from April 2019. The aspiration for access to clean, reliable and affordable power for all is not free from barriers and fallibility.
- Subnational endeavours and the Centre’s pump priming seem to have addressed the regional imbalances in electrical development which concerned India’s early planners. But regional imbalances in electricity access have persisted. Seven States (Uttar Pradesh, Bihar, Odisha, Jharkhand, Assam, Rajasthan and Madhya Pradesh) account for 90% of un-electrified households. Coincidentally, these States are ranked poorly in social development indices and house about two-thirds of the population living below the poverty line. This concurrence between economic poverty and energy poverty will be a barrier to the goal of universal access.
- Who pays for the cost of supply will also be a critical driver. Electricity distribution companies (discoms) in these seven States are already highly indebted, accounting for 42% of accumulated debts of all discoms as on March 2016. Their debts account for 17% of accumulated liabilities of the States. Despite continued State subvention (except by Odisha), all these discoms have been consistently running at a loss, accounting for about 47% of the loss in electricity distribution business. State government subventions amounted to 10% of their cumulative gross fiscal deficit in 2015-16 and accounted for 40% of total subvention from all States. The losses of these discoms after subsidy add up to 19% of their gross fiscal deficits in the year. The fiscal space of these States and discoms seems to be constrained to accommodate additional subsidy. On the other hand, existing subsidised lifeline tariffs in these States appear unaffordable to the poor and certainly higher than in States with universal (or high) access. Had it been otherwise, households would have been connected as villages got supply.
- Given the context, it is uncertain whether the goal of electrifying all ‘willing households’ by March 2019 would translate into universal access to electricity. The assumption that a waiver of the connection charge and easing the connection process (but with no further rebate on lifeline tariffs) will make poor households willing to take up electricity connection is questionable.
- The other major challenge is from distribution network capacity. Electrification in India has followed an approach of expansion, often driven by political considerations, without much emphasis on capacity augmentation and making the grid future ready. As a result, the distribution infrastructure is overburdened, as the demand has grown, causing a high level of technical losses and frequent breakdowns. The distribution network capacity in several States is inadequate to carry available electricity. Subsequently, discoms have been resorting to load shedding while their contracted generation capacities are underutilised. Adding new load to the existing fragile distribution network will only compromise the quality and reliability of supply. It could result in continued blackouts for the rural poor during peak hours.
- Many States have failed to utilise the limited funding. Current allocations under the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS), to augment rural and urban distribution networks, respectively, are only a fraction of the requirement. Moreover, disbursement of these grants has been much slower, 17% under DDUGJY and 31% under IPDS, reflecting sluggish implementation.