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Bracing for global impact after Soleimani’s assassination

Details:

  • Major General Qassem Soleimani, was the Commander of Quds Force of the Iranian Revolutionary Guards Corps (IRGC), formed for extra-territorial operations.
  • During the past decade, Qassem Soleimani had managed to leverage the disarray in west Asia to enhance Iranian influence in Arab countries with a significant Shia population such as Lebanon, Iraq, Syria and Yemen. He was successful in creating a network of local sympathisers and proxies and waged effective asymmetric wars.
  • Mr. Soleimani was also the main architect of Iran’s recent foreign operations, mainly in Syria and Iraq, which were crucial in saving the regime of Bashar al-Assad in Syria and defeating the Islamic State (IS) in both countries.

Concerns:

The situation remains highly unpredictable after the recent escalation.

Iran U.S. ties:

  • Unlike the other recent targeted assassinations carried out by the U.S. like that of Abu Musaib al-Zarqawi (leader of the al-Qaeda in Iraq), Osama bin Laden (founder of the al-Qaeda) and Abu Bakr al-Baghdadi, (founder of the Islamic State, or the IS), Gen. Soleimani, was a state actor. Iran might see this as an act of war like any sovereign country would do.
  • Iranian authorities have reacted with predictable anger at Gen. Soleimani’s “martyrdom” and vowed vengeance.
  • The attack has already taken off even the possibility of renegotiating the nuclear deal, which alone can bring long-lasting peace to the region at large.

Volatile region:

  • The killing of Gen. Soleimani, considered the architect of Tehran’s spreading military influence in West Asia, marks a dramatic escalation in the regional shadow war between Iran and the U.S. and its allies, principally Israel and Saudi Arabia.  At the outset, it appears as a reckless and unilateral act of provocation by the U.S. that could trigger another full-scale war in West Asia.
  • The region is already struggling to cope with multiple conflicts and external interventions.
  • Iran has in the past used its foreign proxies, and it might resort to the same in the present scenario. The latest escalation could trigger multiple attacks across the West Asia region, destabilising it further and causing heavy casualties. This could help the jihadist groups such as al-Qaeda and the IS regroup and re-emerge.

Worsen the situation in Iraq:

    • Gen. Soleimani’s assassination in Baghdad is likely to worsen the already bad situation in Iraq. Iraq has been witnessing nearly three months of youth protests and is undergoing political chaos under a caretaker government. The undue foreign interference by both Iran and the U.S. would only complicate the matters more.
  • The event is likely to re-polarise Iraqi society along sectarian lines and intensify the Iran-U.S. competition for influence in Iraq. The situation could turn more volatile providing a fertile ground for the growth of terrorist organizations. The popular Iraqi clamour for political reforms and transparency may be eclipsed by the demand for eviction of the U.S. presence itself.

Oil sector as target:

  • There has been a steady increase in skirmishes between Iran and the U.S. and its allies. This latest move by the U.S. will definitely invite a response from Iran given the past precedence. It is widely believed that the latest escalation will have a profound effect on the oil sector.
  • An Iranian response may involve resumed attacks on oil tankers and other easy but high value economic targets, particularly in the oil sector.
  • The Global oil prices have already seen a 4% rise within hours of the incident due to the fear that a full scale war in West Asia would severely disrupt the global oil supplies given that a large proportion of oil comes from the gulf.
  • With very little chances of de-escalation visible, the oil prices might only rise to cause economic stress in any oil importing countries. The oil producers in West Asia will also suffer due to loss of revenue in case of infrastructure damage of the oil sector.

Potential fallout in India:

  • India has already had considerable difficulties in adapting to the U.S.-Iran cold war. Now that the conflict has escalated, its adverse impact on India could only magnify.

Oil imports:

    • The U.S. withdrew from the Iran nuclear deal and has been steadily increasing the sanctions on Iran. This has involved asking other countries to limit economic transaction with Iran to isolate it economically.
    • Iran has traditionally been one of the major sources of oil for India. The price and the payment options that Iran offers India has been the best deal for India in terms of oil purchasing. India has been pressurized into stopping oil imports from Iran post the American sanctions.
  • Given India’s huge dependence on imported oil, the reduced basket of oil exporters to India and the possibility of the disrupted supply chain will definitely lead to a rise in India’s import bill and difficulty in procuring oil.

Geostrategic reasons:

  • India’s ties with Iran, apart from being “civilisational”, have their own geostrategic significance.
  • The much touted Chabahar port in Iran is very important for India geostrategically, given the growing strength of the Chinese in the region. The Chabahar port of which India is a major player would suffer from the delays as a result of any escalations.
  • Iran has the capacity to influence the U.S.-Taliban peace process in Afghanistan, a neighbouring country. The derailment of the peace process in Afghanistan would have adverse effects on India.

Indian Diaspora:

  • Though Iran hosts very few Indians, given the fact that the Iran-US escalation will not be limited to the two nations and would spread out to the entire West Asian region, the safety of an estimated eight million Indian expatriates in the Gulf may be affected.
  • India is a large recipient of remittances and a large share of this is accounted by West Asia. Any turbulence in West Asia will adversely affect remittance flow and the Indian foreign reserves.

Domestic factors:

After Iran, India has perhaps the largest number of the world’s Shia population. The killing of Soleimani has resulted in widespread anger among the Shia community and the possibility of some of them being radicalized by this event cannot be ruled out. This will pose an additional challenge to the anti-terror apparatus in India.

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