In a recent development, the P5+1 (Britain, France, Russia, China and the United States—five permanent members of the UN Security Council plus Germany) have lifted the sanctions from Iran which were imposed on the Islamic state some 30 years back. The ongoing sanctions have been lifted from Iran’s financial and energy sectors. The sanctions which have been imposed on Iran have expanded over 30 years, politically and economically isolating the Islamic republic from the international community. Iran’s neighbours are weighing up on the vast oil resources and economic opportunities in the post-sanctions Iran.

Though the culmination of the deal between U.S. and Iran can be termed as the biggest diplomatic achievement of the Obama Presidency but at the same time evaluation is needed regarding what and how this deal with rise above from the present status of the two nations, taking into consideration the past decades of coups, hostage crises, terrorism and sanctions. It is nearly impossible to think that after the shackles have been removed from Iran’s financial and energy sector that U.S. could be removed altogether from the scene. Whereas in reality, the trade relations between the regional neighbours or that of the far partners will only be at the will—request, command, order—of U.S. position as trading partner with the Islamic republic. At the same time, it seems that Iran could emerge as the major regional power directing the political and economic circumstances of many of its neighbours which can seriously affect India’s relations with Iran as well as the concerned countries. The removal of sanctions could turn Iran in a hub of connectivity.

One of the most significant arguments arising out of this western rush to bring the sanctions to an end could be the untapped Iranian markets which are economically crucial to both U.S. and European economies. In addition to this, the Iranian population of 80 million, comprising mainly of the younger generation making it an upcoming market for the nations around the world vying for the trade relations with this Islamic republic. At the same time, lifting of the sanctions from Iran will bring about the significant changes not only in the economic status of the Islamic republic in the region, but also in the geopolitical chessboard of the Middle East. Economically, when the sanctions are lifted, Iran will re-enter the world trade market in full speed impacting mostly the regional business competitions. Iran’s support to the proxy groups across Middle East, its development of the missile technology, and it’s strengthening of conventional military capabilities, are the strategic decisions borne by Iran’s self-perceived vulnerabilities.

With a stabilized Islamic region, Afghanistan is the nation that could benefit immensely from the secure Iran as its neighbour. India, being the major partner with this landlocked country is constrained in its relations with Afghanistan considering the instability in the country as well in the region. The benefits for Kabul are also clear. The port—in addition to facilitating more commerce with the trade partner India—will help open up new markets for Afghanistan in the Middle East and Europe, and can present a list of diversifying trade partners. Another reason why the nuclear deal could be a boon for Afghanistan is the possibility of stepped up U.S.-Iran cooperation in Afghanistan. One of the important points to remember here is that India’s economic rival China has invested in the construction of the Gwardar Port (72 kilometers away from Chabahar Port) in Pakistan. China wants to link the Gwardar Port as part of China’s Maritime Silk Road Project. With China’s strong head start in Central Asia, a post sanctions Iran is India’s key to effective competition. With the Indian trade in the region amounting to measly $ 1 billion (approx.) against Chinese investment of $ 50 billion in the region, there is definitely long road ahead for India to gain pace.

At the same time, Iran nuclear deal and lifting of sanctions have major implications for South Asia. Both Indian and Pakistani policymakers realized that since they had curtailed their relations with Iran during the sanctions period, both the countries will have to make an extra effort in order benefit from the economic and strategic opportunities arising from the rapprochement with Iran. It is a major foreign policy challenge for both India and Pakistan will be balancing of the re-engagement with Iran, against their current ties with Saudi Arabia, which have stridently opposed the Iran deal. An additional dimension to take into consideration is India’s burgeoning defense ties with Israel, an acknowledged opponent of the Iran deal. Iran deal has unveiled the new dynamics clearly bringing to light the fundamental implications on the regional balance of power vis-à-vis India and Pakistan.

Central Asia is one of the least connected regions in the world. Surface connectivity is complicated in the region due to geography and geopolitics and in Indian case geography poses the major problem. With the opening of Iran, it opens the profitable prospects for India as against the TAPI (Turkmenistan, Afghanistan, Pakistan and India) pipeline project. Though it is profitable for India to have its energy demands met by the TAPI pipeline but both Pakistan and Afghanistan present obstacles to achieve these objectives wherein at the same time India is trying the viable option of investing in the Chabahar port in Iran to develop an alternate land and sea route to bypass Afghanistan and Pakistan. India’s success in the region is blocked by China and Pakistan in the region. At the same time, India should look into the process for its own benefit on the condition that it will not rival both China and Russia in the Central Asian region. India needs to keep in mind that a settlement between Iran and the west would serve India well. Strengthening ties with a rising global power like India would help Iran overcome its waning political status. With the go ahead of the nuclear deal with U.S. including Iran’s own strategic profile will be expanding—to places such as the economically pivotal Gulf of Aden and even South East Asia—and a partnership with India, a growing naval power in the Indian Ocean, would also be mutually beneficial for both the nations.

Given the complexities of the relationship between the regional and the international actors in the region, yet it remains to be seen how Iran’s potential rise to be a hegemon in the region can change the political, economic and strategic power in the region and in turn affect the security situation. The lifting of sanctions gives Iran a significant leverage over regional issues concerning the neighbouring countries. There will be strict competition among Iran’s neighbours to capitalize on Iran’s lifting of sanctions and nuclear deal with U.S. At the same time, India will find itself placed between increased Iranian leverage and the regional composition which will dictate the trade relations of Iran. It will just be a matter of time to see whether Iran is a risky gamble for India for the energy companies or the future ‘El-dorado’.

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