EIGHTEEN days of intense & uninterrupted negotiation process in Vienna. The capital city of a tiny European nation- Austria with a visible positive but constructive role on both sides marked the successful culmination of a 23 month western initiative with positive response of a suffering but confident nation. Consequently scripting a finest chapter in world history, Islamic Republic of Iran and USA, Britain, France, China, Russia, Germany called P5+1 approved the joint Comprehensive Plan of Action called JCPOA.
The United Nations Security Council in its meeting on 20th July 2015 unanimously endorsed the JCPOA resolution co-sponsored by all 15 council members thus adopting the landmark nuclear deal representing the general aspirations & support of 99% of the world population. The conclusion has recognised the Iran’s right to peaceful nuclear programme for commercial purposes in exchange for the removal of sanctions.
Whatever the deep bitterness that has affected the relations of Iran with USA since 1980 & other super power nations thereafter, the relations across globe are now poised to follow a new approach line based on mutual respect, cooperative spirit and national interest. This deal going through certain approval phases & major being final American go ahead will throw a potential of high proportions to rebuild relations between Iran and major world powers and promote economic cooperation globally.
The war of words being exchanged between Iran and United State even after the deal announcement is a mere rhetoric– a sort of reiteration of each other’s stated position. Deal is finding naturally opposition on both sides. However European countries seem jubilant and are eager to revive economic ties sooner than later.
Iran’s economic growth is a dynamite in waiting and a game changer eventually poised to contribute to the economic stability of South Asia & Middle East and help in pushing a fast turnaround. Consequent to the conclusion of the deal, Oil prices recorded lowest in last five and a half years. All positive indications of economic game changer are in sight for a brighter economic scenario contributing to cost effective prices & better energy situation. India, Pakistan & other neighbouring countries are poised to have access to increased oil & gas supply from Iran. Pakistan’s Foreign Ministry Advisor announced construction of gas pipeline project on its side in right earnest. This hopefully will later extend to India. Iran has since completed its part of the proposed pipeline project. India is also negotiating its participation in many core economic sectors & manufacturing projects like Aluminium industry etc.
The economic potential of Iran has kickstarted attracting international brands, trade & business chambers and governments. Since the first signs of a ray of hope emerged of the likely success of nuclear talks, visiting trade delegations have lined up in Tehran in quite succession even now at the ministerial levels starting with Germany.
Time has come for this country to unlock the real value of its economic treasure & help reduce the onslaught of Oil Producing & Exporting Countries ( OPEC ) in dictating oil prices which have crippled the battling economies in the times of economic slowdown adversely impacting the balance of payment positions of oil importing countries. India & Pakistan being no exception having been bruised by such unpleasant situation. The lifting of sanctions, Peace in Middle East & resumption of Iran’s cost effective oil & gas exports holds strong transformation to our sub continent.
An international conference under the auspices of Austrian Federal Economic Chamber and Irans Trade Promotion Organisation and joint chambers of commerce of Iran, France, Germany and Britain was held in Vienna on July 23-24 to discuss post-sanction opportunities for cooperation. Iran was represented by Minister of Industry, Trade and Mines heading the Iranian delegation, including representatives of economic, financial, banking and foreign investment sectors as well as executives from oil, gas, petrochemicals, mining, automotive and other industries. Reportedly trade & collaboration agreements amounting to billions of dollars were negotiated between the members of European Union & Iran. Austrian prime minster jubilantly announced his forthcoming visit to Iran.
Sanctions on Iran hit the automotive industry hard, slicing production by 1 million units from its peak of 1.6 million in 2011 and leading to 100,000 job redundancies. Iran is otherwise the biggest car producer in the Middle East needing urgently modernisation of its automobile industry. International car makers like Volkswagen, Daimler, Peugeot, Renault are now negotiating return to Iran. The abandoned projects are poised for a revival processes. German officials foresee bilateral trade, which totaled 2.7 billion Euros ($3 billion) in 2014, expanding to 6 or 7 billion Euros in 2016. Austria will provide technology for manufacturing Euro-6 version Car engine in Iran to boost the automobile industry.
Iran’s Aviation sector requiring planes, spare parts, modernisation, maintenance & overhauling has thrown a huge market for International companies to do a business of 20 Billion dollars equivalent to Rs 126000 crores in immediate future years in Indian rupees .
Some glorious facts about the economic resources and likely wealth generation attracting global giants & governments are stunning. The Islamic revolution has brought about a total transformation in the Iranian economy. Iran today is the 2nd largest economy in Middle East & North Africa after only Saudi Arabia, with 4th position in crude oil reserves & 2nd in natural gas reserves in the world. However June 2015 reports have suggested Iran having scaled to 1st position ahead of Russia.
The composition of gross domestic product ( GDP) of Iran reveals a different picture. The services sector on the back of over 4 million foreign tourists arrivals annually with 50% contribution at the top with Oil production at 23%, manufacturing/ mining at 20%, & Agriculture contributes 10% of gross national production. But that 23% treasure holds a brighter prospectus for our subcontinent having access to a close by supply line thus saving on costs & time.
Iran is expected to receive back close to 100 billion U.S. Dollars frozen as a consequence of UN approved sanctions & by US since 1980. Besides, international experts estimate the new investment opportunity of few hundred billion in every sector of the Iranian economy. It is an opportune time for countries of sub continent to earnestly plunge in negotiating their participation in boosting trade & commerce & contribute in making lives of the citizens comfortable, particularly on oil, gas & power front. That will trigger a push to our development momentum, increase production, create Jobs & reduce prices of essential items due to expected reduction of transportation costs.
The successful implementation of the agreed deal promises a new horizon of cooperation between the Islamic Republic and the world countries. India & Pakistan have shown eagerness for increased involvement in boosting economic ties post lifting of sanctions & clearance of legal systems of both the sides of the deal. So have the European countries singly as well as under the auspices of European Union since initiated visits & planned business summits. It could be an economic bonanza for South Asian countries given the better understanding, good relations, accessibility & Iran’s anxiety to be a source of constructive supporter of neighbours.
GDP per capita in US dollars in 2013 as per actual data of World Bank for Saudi Arabia is 53644, Iran 15590, India 5418 & Pakistan at 4692. And new resurgent Iran by any stretch of imagination can not be an economic danger to neighbouring brother country Saudi Arabia as it reveals. A broad unity between Saudi Arabia & Iran based on principled understanding, mutual cooperation & respect will be a game changer & propitious on many fronts – protecting Muslim world from Zionist designs, disintegration & present crises on one hand & forging economic turnaround in this part of the world in particular.
Former Executive President J & K Bank, former member of board of directors of J&K SFC and MetLife India Tafazal Hussain writes regularly on business, trade & financial matters. [email protected]
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