President Donald Trump wants to give teeth to his “America First” policy irrespective of how far-reaching consequences it may have if discretion is divorced. Can the US afford to pursue an isolationist policy?

The US Treasury Department says that a network has transported millions of barrels of Iranian crude oil, generating hundreds of millions of dollars in revenue, which is used to fund Iran’s armed forces and Tehran’s allies in the region.

A secret fleet of oil tankers and transport management firms involved in smuggling Iranian oil have also been blacklisted, the Iran International reported on February 10. Additionally, several individuals and three oil tankers registered under Panamanian and Hong Kong flags have also been sanctioned.

The Threat

During his election campaign, Donald Trump had promised that if he returned to office, he would resume his so-called ‘maximum pressure’ policy against Iran. What drives the Trump administration to take stringent action against Iran is the apprehension that Tehran might be closer than ever to a nuclear weapon.

A Treasury spokesperson said, “We will use all available tools to hold Iran accountable for its destabilizing activities and pursuit of nuclear weapons. The Trump administration asserts that these steps are necessary to protect national security and that of its allies.”

Overall Impact

The US will pursue buyers of Iranian crude, particularly China, to halt the purchase of Iranian crude, thereby strangulating Iran’s foreign currency reserves. This could also mean stopping port activity at Iranian ports, such as Chabahar development projects in which India has invested billions of rupees.

The Trump administration intends to target the financing sources of Iranian Revolutionary Guards, a force responsible for exporting Iran’s Islamic Revolution propaganda at different levels to Asia’s vulnerable regions.

From a political standpoint, we have to visualize what will be the reaction of Iran’s allies like Russia and China once Iranian oil exports are stopped or its commercial channels are strangulated. Speculations are rife that Iran is just a step away from making the nuclear bomb, an ambition that has proved disastrous for Tehran so far.

On its part, Iran has been constantly accusing Trump that it was he who, during his first stint in office, had unilaterally withdrawn from the Joint Comprehensive Plan of Action (JCPOA) created in July 2015. Trump had alleged that the JCPOA was one-sided and did not practically stop Iran from manufacturing the bomb.

India Affected

The national security memorandum of President Trump also brings Iranian port operations under sanctions. India has invested a fairly large amount in the development of the Iranian port of Chabahar as a connecting route to the ‘Islamic Emirate of Afghanistan,’ Central Asia, and Europe.

India has been indirectly informed to stop its operations in Chabahar. The threat of US sanctions during Trump’s first term forced India to stop buying crude oil from Iran, which until then was among New Delhi’s top three oil suppliers.

Hindsight

Previously, when sanctions were imposed on the export of Iranian oil, India had succeeded in obtaining a waiver. The US granted a waiver for delivering humanitarian aid to Afghanistan.

India had argued that since Pakistan refused permission for India to transport aid through its territory, India was forced to look for an alternate route. Thus, the idea of developing the Chabahar port came up. The focus was on a new Central Asian trade route that bypassed Pakistan.

Professor Harsh Pant of International Relations at the King’s College in London observes, “Cancellation of the US sanctions waiver on Chabahar is certainly going to seriously impact the port project. India has invested considerably, and it is seen as very important for India’s connectivity.”

India signed an agreement with Iran in 2016 to develop the Iranian port of Chabahar close to Iran’s border with Pakistan. Islamabad had refused to allow India to send aid to Afghanistan through its territory.

Pakistan argued that an India-Afghanistan axis threatened its security. However, the truth is that Islamabad had always talked of “strategic depth.” Of using Afghan territory if another war started between India and Pakistan.

India has invested US$370 million in the Chabahar project. In May 2024, a long-term deal was signed between the Indian Ports Global Limited (IPGL) and the Port and Maritime Organization of Iran. IPGL was supposed to invest US$120 million and provide an additional US$250 million in financing.

Conclusion

In the first week of February, Trump signed a National Security Presidential Memorandum to start a “maximum pressure” campaign against Iran.

One of the provisions in the memo was that the US secretary of state “shall modify or rescind sanctions waivers, particularly those that provide Iran any degree of economic or financial relief, including those related to Iran’s Chabahar port project.”

For India, the Chabahar project is of strategic importance. It is significant not only for trade and commerce in the region and for providing India with connectivity to Central Asia but also as a counterweight to the China-Pakistan Economic Corridor (CPEC).

India must explain to the US the strategic importance of the Chabahar project in countering China’s increasing influence in the region so that this critical project is kept out of the purview of sanctions.

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