U.S. withdrawal from Iran nuclear deal: Reason behind and Consequences

In news:

President Donald Trump recently decided to unilaterally pull the U.S. out of the Iran nuclear deal and to re-imposing nuclear sanctions against that country.
It is a huge setback to multilateral diplomacy and the rules-based international order.

Iran nuclear deal (The Joint Comprehensive Plan of Action):

The agreement, signed in 2015 by Iran with the five permanent members of the UN Security Council, Germany and the EU, curtailed its nuclear programme in return for withdrawing economic sanctions. 
It was reached after 18 months of painful negotiations. 
Under the deal, most of Iran’s enriched uranium was shipped out of the country, a heavy water facility was rendered inoperable and the operational nuclear facilities were brought under international inspection.

Reason behind the decision:

Mr. Trump’s decision is not about Iran acquiring nuclear weapons. If it was the actual concern, it would have supported a deal that closes the path towards nuclear weapons for Iran. 
Instead, the bigger concern for Mr. Trump as well as Washington’s closest allies in West Asia — Israel and Saudi Arabia — is Iran’s re-accommodation in the global economic mainstream. 
They fear that if Iran’s economic profile rises, it will embolden it to increase its regional presence, posing a strategic threat to the interests of the U.S.-Saudi-Israel axis.

Iran’s response:

Iranian President Hassan Rouhani declared that his government remains committed to a nuclear deal with world powers, despite the US decision to withdraw, but is also ready to resume uranium enrichment should the new sanctions against Iran become effective. 
Undoubtedly, the US exit from the nuclear deal comes as a great defeat for Rouhani against the Iranian hardliners who warned him against diplomacy with the Americans.

Fallout:

In Iran, the moderate government of President Hassan Rouhani went ahead with the deal despite strong opposition from hardliners. Mr. Trump has wrecked all the efforts, despite numerous reports, including from American intelligence agencies, that Iran is 100% compliant with the terms of the agreement.

• The U.S. action doesn’t necessarily trigger an immediate collapse of the agreement. For now, Europe, Russia and China remain committed to it. 
  But the challenges will emerge, not only for Europe but also for other nations with strong trade ties with Iran, including India, once American sanctions are in place.
• Trump’s decision to reinstate US nuclear-related sanctions against Iran could cripple the Iranian economy and most probably create new urban riots around the country. 
  But, worsening domestic problems in Iran could spell widespread geo-political trouble for the whole region.
• Trump’s decision could make a war scenario much more likely, unless there is a regime change in Iran, which is very unlikely.

For India:

The reintroduction of sanctions against Iran is bad news. Iran is now India’s third largest source of oil. Apart from supply disruptions, a further surge in crude prices will worsen India’s current account imbalance and fuel inflation, at a time when the economy is just beginning to show signs of returning to a high growth trajectory. 
For global corporations too, there will be considerable pain. For example, there are said to be around 200 French companies operating in Iran and some like Renault have plants there. They will now have a 90-day period to wind down operations. India’s Chabahar port project in Iran, which was just showing signs of moving forward, could be in trouble.

Way ahead:

The U.S. stands isolated in its decision. Europe and other powers (UN permanent members) should stick together to respect the mandate of an international agreement. Any sanctions imposed by U.S. will hurt the global economy and may force Iran to stock nuclear weapons, further complicating the situation. Thus, the need of the hour is to standby with the agreement even after the U.S. has withdrawn.

Connecting the dots:

• The U.S. has unilaterally decided to withdraw from the Iran nuclear deal. Discuss the reason behind. Also, analyse the consequences of such a decision and how it would impact India.