Nepal Foreign Affairs (KATHMANDU, July 31) – When Nepal’s Ministry of Foreign Affairs published a statement welcoming Iran Nuclear Deal, famously known as the Iran Deal, one comment heard across the board the was that it was irrelevant for Nepal, and that welcoming it demonstrated Nepal’s euphoria over an insignificant issue for the country.
Agreed, Nepal has more important things to do. But Iran deal has important implications for Nepal in two specific areas.
The deal in its current form came out as a better alternative than what was available on the table: a no deal or a war. The cost of a no deal would eventually lead to a war, which would severely undermine the regional as well as global peace. A war in the Gulf region directly impacts hundreds of thousands of Nepali youths working in several countries. Peace in the Gulf region is important for Nepal’s remittance economy.
Second and the most important result of Iran deal would reflect in the stabilization of global fuel prices, equally applicable for Nepal. At $50 per barrel, crude oil prices at present have come down to mid-1990s level. After the sanctions are lifted, Iran expects to raise its oil production to 6.3 million barrel per day in the next three years from the current 1.2 million barrel, restricted by sanctions. This would directly increase fuel supplies to India, from where Nepal buys all petroleum products. This increase in production would allow the global oil market to stabilize low energy prices during which the struggling economies like Nepal will have larger window of time to push important economic and energy reforms.