<p class="bodytext">Two months after the United States and Israel launched an unprovoked attack on Iran, and after multiple rounds of talks, peace and stability remain elusive. While the Islamabad-brokered two-week ceasefire brought respite, the current truce is fragile at best. Iran’s partial closure of the Strait of Hormuz, a vital channel through which about 20% of global oil supplies pass, has been countered by a total blockade of the strait by the US. Both sides have made threats and counter-threats, and tensions have been building since then. The conflict has once again placed the spotlight on the inability of global bodies such as the United Nations to restrain nations that do not respect international law, especially Israel. It has also exposed the limitations of regional forums such as NATO and BRICS. Given this gloom and doom, any effort to dial down the tensions must be welcomed.</p>.No excuses: Bengaluru can’t afford poll delay.<p class="bodytext">A recent IMF report highlights the global economic pressure caused by this conflict. It notes that in a ‘more severe scenario’ where energy prices further increase, and energy infrastructure is further damaged, the impact on Emerging Market and Developing Economies (EMDEs) ‘would be almost twice that of advanced economies.’ In other words, the longer the conflict, the greater the impact on countries like India. For India, the risks include rising energy prices threatening retail inflation, which will feed into consumer goods, fertilisers, and transport, and subdued capital inflows weakening the rupee, thereby further raising import bills. The country’s strong foreign exchange reserves and low current account deficit offer short-term relief, but prolonged uncertainty could decelerate growth momentum and weaken fiscal balance. Of particular concern are the lives and livelihoods of over 10 million Indians in the region.</p>.<p class="bodytext">This conflict has been a wake-up call for energy-importing countries, including India: a reminder to diversify supply networks away from overreliance on the Gulf region, to increase strategic energy reserves, and to accelerate the adoption of renewable energy. New Delhi’s diplomatic heft must be put to work to secure shipping lanes to ensure a steady flow of fuel. It is in everybody’s interest that this conflict comes to an end, and that too soon. When it happens, India must be prepared to engage with the region’s new realities. In prioritising its interests, one such decision will be how New Delhi envisages its ties with Tehran vis-à-vis sanction threats from the US. Will India buy oil from Iran? Will it continue its operations at the Chabahar port? India will have to take bold decisions.</p>
<p class="bodytext">Two months after the United States and Israel launched an unprovoked attack on Iran, and after multiple rounds of talks, peace and stability remain elusive. While the Islamabad-brokered two-week ceasefire brought respite, the current truce is fragile at best. Iran’s partial closure of the Strait of Hormuz, a vital channel through which about 20% of global oil supplies pass, has been countered by a total blockade of the strait by the US. Both sides have made threats and counter-threats, and tensions have been building since then. The conflict has once again placed the spotlight on the inability of global bodies such as the United Nations to restrain nations that do not respect international law, especially Israel. It has also exposed the limitations of regional forums such as NATO and BRICS. Given this gloom and doom, any effort to dial down the tensions must be welcomed.</p>.No excuses: Bengaluru can’t afford poll delay.<p class="bodytext">A recent IMF report highlights the global economic pressure caused by this conflict. It notes that in a ‘more severe scenario’ where energy prices further increase, and energy infrastructure is further damaged, the impact on Emerging Market and Developing Economies (EMDEs) ‘would be almost twice that of advanced economies.’ In other words, the longer the conflict, the greater the impact on countries like India. For India, the risks include rising energy prices threatening retail inflation, which will feed into consumer goods, fertilisers, and transport, and subdued capital inflows weakening the rupee, thereby further raising import bills. The country’s strong foreign exchange reserves and low current account deficit offer short-term relief, but prolonged uncertainty could decelerate growth momentum and weaken fiscal balance. Of particular concern are the lives and livelihoods of over 10 million Indians in the region.</p>.<p class="bodytext">This conflict has been a wake-up call for energy-importing countries, including India: a reminder to diversify supply networks away from overreliance on the Gulf region, to increase strategic energy reserves, and to accelerate the adoption of renewable energy. New Delhi’s diplomatic heft must be put to work to secure shipping lanes to ensure a steady flow of fuel. It is in everybody’s interest that this conflict comes to an end, and that too soon. When it happens, India must be prepared to engage with the region’s new realities. In prioritising its interests, one such decision will be how New Delhi envisages its ties with Tehran vis-à-vis sanction threats from the US. Will India buy oil from Iran? Will it continue its operations at the Chabahar port? India will have to take bold decisions.</p>
