West Asia Crisis — Discussion, Developments, and Bharat’s Strategy

SRajesh · Post by **SRajesh** » 06 May 2026 17:56

With OM halting the second round of war
And recent reports of one page memorandum close to agreement I am a bit concerned as to what have the US and OM have agreed to??
Have the Eyeranians again done a one up on US
Given that Pakis have been involved, I just wonder what have they just sold to US!!
There are some runours that Nuclear discussion has been put on the backburner with further negotiations at a later date!!
Hmm wonder what they will get up to before that negotiations even starts!!
And stargenly all noise in Balochistan has gone completely silent since the Iran conflict started??
If Pakis have opened overland routes to Iran through Balochistan wont it make a juicy target for BLA!!

A_Gupta · Post by **A_Gupta** » 06 May 2026 18:04

CNBC reports:
https://www.cnbc.com/2026/05/06/china-i ... talks.html

China pressed Iran on Wednesday to pursue a diplomatic resolution to the Middle East conflict and refrain from resuming hostilities, as Beijing seeks to cement its position as a key mediator ahead of a high-stakes summit with the U.S.

In a meeting with his Iranian counterpart Abbas Araghchi, Chinese foreign minister Wang Yi called for "an immediate end to the hostilities" while urging warring powers to continue diplomatic negotiations.

China also called for a "prompt resumption of shipping traffic through the Strait of Hormuz," though that point was absent in a statement posted by Iran's foreign ministry on Telegram.

A_Gupta · Post by **A_Gupta** » 06 May 2026 18:08

Amber G. wrote: ↑05 May 2026 10:36 US intelligence indicates limited new damage to Iran's nuclear program, sources say

According to this report- intelligence assessments:

Despite recent operations, Tehran’s potential timeline to produce a nuclear weapon remains largely unchanged. The program's overall trajectory—specifically the time required to accumulate enough material for a nuclear device—is considered "broadly intact."
- While earlier strikes on key facilities (such as Natanz, Fordow, and Isfahan) in 2025 reportedly set the program back by several months, the most recent round of strikes has failed to significantly extend that delay.

- Intelligence suggests that much of the critical underground infrastructure survived previous "obliteration" attempts. Iranian authorities were also reportedly successful in moving a portion of their highly enriched uranium stockpile to secure locations before strikes occurred.

The assessment contradicts more optimistic public statements from some U.S. and Israeli officials who had claimed the nuclear program was "destroyed" or "brought to ruin."

So Iran's uranium enrichment capabilities remain pretty much intact?

A_Gupta · Post by **A_Gupta** » 06 May 2026 21:06

Axios reports:
Exclusive: U.S. and Iran closing in on one-page memo to end war, officials say
https://www.axios.com/2026/05/06/iran-u ... -page-memo

The White House believes it's getting close to an agreement with Iran on a one-page memorandum of understanding to end the war and set a framework for more detailed nuclear negotiations, according to two U.S. officials and two other sources briefed on the issue.

The big picture: The U.S. expects Iranian responses on several key points in the next 48 hours. Nothing has been agreed yet, but the sources said this was the closest the parties had been to an agreement since the war began.
Among other provisions, the deal would involve Iran committing to a moratorium on nuclear enrichment, the U.S. agreeing to lift its sanctions and release billions in frozen Iranian funds, and both sides lifting restrictions around transit through the Strait of Hormuz.

Many of the terms laid out in the memo would be contingent on a final agreement being reached, leaving the possibility of renewed war or an extended limbo in which the hot war has stopped but nothing is truly resolved.

In its current form, the MOU would declare an end to the war in the region and the start of a 30-day period of negotiations on a detailed agreement to open the strait, limit Iran's nuclear program and lift U.S. sanctions.

Amber G. · Post by **Amber G.** » 06 May 2026 21:45

^^^ The amount of times Trump now says Pakistan, many people are wondering if Pakistan controlling the USA ?

Rudradev · Post by **Rudradev** » 07 May 2026 00:18

'of Pakistan and other Countries' = China. He can't say China, or even the most obtuse MAGA voters will grasp the depth of his cowardly betrayal. Meanwhile the Failed Marshal probably pays him a million $ in bitcoin every time he glazes Pakistan in a Truth Social post, so there's an incentive as well.

A_Gupta · Post by **A_Gupta** » 07 May 2026 08:09

I don't know how reliable this is:
Project Freedom halted after Saudi Arabia suspended US use of its military bases, airspace
Trump's sudden announcement of Project Freedom surprised and angered the leadership in Riyadh, which announced that it would not allow the US to use Prince Sultan Air Base or pass through its airspace, NBC reported; Other close Gulf allies also were surprised by the move
https://www.ynetnews.com/article/rj811quf0zx

---
Added: NBC News also makes the claim:
Trump’s abrupt U-turn on a plan to reopen the Strait of Hormuz came after backlash from allies
Saudi Arabia, a key Gulf ally, suspended the U.S. military’s ability to use its bases and airspace to carry out the operation, sources say.
https://www.nbcnews.com/politics/white- ... rcna343845

chetak · Post by **chetak** » 07 May 2026 21:09

Iran and US have approached Shashi Tharoor to write an agreement that no one understands and both can claim victory...

Amber G. · Post by **Amber G.** » 08 May 2026 00:20

A_Gupta wrote: ↑06 May 2026 18:08
Amber G. wrote: ↑05 May 2026 10:36 US intelligence indicates limited new damage to Iran's nuclear program, sources say

According to this report- intelligence assessments:

Despite recent operations, Tehran’s potential timeline to produce a nuclear weapon remains largely unchanged...<snip>..
The assessment contradicts more optimistic public statements from some U.S. and Israeli officials who had claimed the nuclear program was "destroyed" or "brought to ruin."
So Iran's uranium enrichment capabilities remain pretty much intact?

FWIW; Some thoughts - From a physicist somewhat familiar with Iran's scientific background:
(Rough draft)

In 2026 MOU the gap between the Trump administration's "maximum pressure" rhetoric and the technical reality on the ground, the new framework may actually leave Iran with a more sophisticated nuclear infrastructure than the original JCPOA did.

Here is a short breakdown of why some analysts view this deal as "JCPOA-minus" or potentially less effective:

1. Retention of "Nuclear Know-How"
While the MOU reportedly mandates the export of highly enriched uranium (HEU) to the United States and the freezing of certain facilities, it cannot "delete" the technical expertise Iran gained after 2018.

The JCPOA baseline: Iran’s enrichment was capped at 3.67%. (Trump's 'better deal is still looks like 3.67%

)

The 2026 Reality - Iran has already spent years enriching to 60%. Even if they stop now, the personnel and the blueprints for advanced centrifuges (IR-6s) remain. Unless these capabilities are fully dismantled—not just "paused" (per MOU)—the "breakout time" is permanently shortened compared to 2015.

2. The "Underground Facility" Loophole
The MOU calls for Iran to cease operations at underground sites like Fordow. But reports suggest the agreement focuses on a freeze rather than the dismantlement or backfilling of these bunkers. (pauses are easily reversible.)

If the infrastructure remains intact, Iran could resume enrichment within weeks if the deal collapses, a significantly faster timeline than under the original JCPOA constraints.

3. Verification vs. Trust
One of the loudest criticisms of the JCPOA was the "anywhere, anytime" inspection debate.

In current MOU is being negotiated the current framework relies heavily on Trump’s personal "deal-making" rapport rather than the rigid, multi-layered international IAEA protocols that defined the JCPOA (With Paki's reco

)

Comparison Table: JCPOA vs. 2026 MOU

Code: Select all

Feature		JCPOA (2015)			Trump MOU (2026 Framework)
Enrichment Limit	3.67%				Reported return to 3.67% (disputed by Trump)
HEU Stockpile		Shipped out / Diluted	Shipped to the U.S./ Russia
Centrifuges	Thousands dismantled/stored	Operations frozen (Dismantlement unclear)
Sunset Clauses		10–15 years			 "Permanent," (Trump says) but currently an MOU

By allowing enrichment capabilities to remain—even if paused—the U.S. may be accepting a "New Normal" where Iran remains a threshold nuclear state, just with better branding.
... Cont..

Amber G. · Post by **Amber G.** » 08 May 2026 00:42

... Cont..

Based on current reports from early May 2026, here is the technical breakdown regarding your specific points:

1. The "No Nuclear Weapons" Clause
In the JCPOA (2015), Paragraph 1 explicitly stated: "Iran reaffirms that under no circumstances will Iran ever seek, develop or acquire any nuclear weapons."

In the 2026 MOU (Draft Phase):
According to leaked reports of the "14-point one-page memo," there is an explicit commitment that Iran will abandon its pursuit of a nuclear weapon for the next 20 years.
( Trump has publicly stated he "doesn't like the 20 years" and says zero enrichment forever .. Iran, of course does not agree)

2. The 20% Enrichment for Research
In the JCPOA, Iran was allowed to keep small amounts of 20% enriched uranium for the Tehran Research Reactor (TRR) to produce medical isotopes.
In the 2026 MOU, The U.S. negotiating team (led by Witkoff and Kushner) is reportedly pushing for a total moratorium on all enrichment, including 20%.
- Iran is countering with a 5-year moratorium and wants to retain the right to enrich to 20% for "civilian research and medicine."
- The U.S. is signaling that any 20% fuel needed for the TRR must be imported rather than produced domestically,

3. Reactor Cores and Plutonium (Pu) Limits
The JCPOA famously required the core of the Arak Heavy Water Reactor to be removed and filled with concrete so it could not produce weapons-grade plutonium.

In the 2026 it is the Bushehr nuclear power plant.A "plutonium loophole" where spent fuel sitting in ponds at Bushehr could theoretically be processed into over 200 bombs.
There isn't a "concrete filling" plan currently public for new reactors, the MOU reportedly demands the routine removal of all spent fuel from Iranian soil to be sent back to Russia or a third party.

- The Khondab (Arak) site was damaged during the 2025 strikes. The MOU framework seeks to ensure it is never reconstructed as a heavy-water facility, effectively killing the "Plutonium Route" through infrastructure destruction rather than just diplomatic caps.
Summary Comparison

Code: Select all

Issue		JCPOA (2015)				2026 MOU (Negotiating)
Weapon Ban	Explicit & Permanent (on paper)	20-year vs. Permanent (The " Islamabad Sticking Point")
20% Enrichment	Allowed (small amounts for TRR)	Zero-enrichment target; 20% fuel must be imported
Plutonium	Arak core filled with concrete			Removal of all spent fuel (Bushehr focus)

Tanaji · Post by **Tanaji** » 08 May 2026 00:51

Why is Iran going down the centrifuge route for its quest for a nuclear weapon?

Amber G. · Post by **Amber G.** » 08 May 2026 00:51

Finally few more technical points - did not see it discussed much..

The "Pickaxe Mountain" facility (locally known as Kuh-e Kolang Gaz La) has become the central "ghost" in the Islamabad negotiations. While the JCPOA focused on the known quantities at Natanz and Fordow, this site represents the strategic evolution of Iran’s nuclear program following the 2018 withdrawal and the 2025 kinetic strikes.

Here is why "Pickaxe Mountain" is the single biggest hurdle to the current MOU:

1. Unlike Fordow, which is buried under approximately 80–100 meters of rock, Pickaxe Mountain is estimated to be buried up to 200 meters (over 650 feet) deep under solid granite.
( Analysts say even the U.S. GBU-57 bunker-busters might not be able to reach its core chambers)
(Because the U.S. and Israel failed to neutralize this specific site during the "Twelve-Day War" of June 2025, Iran is using it as "insurance." They argue that if they give up their current HEU stockpile, they must be allowed to keep this facility for "centrifuge assembly.")

The "Nuclear Dust" (Missing Stockpile): roughly 400–500kg of 60% enriched uranium that went "missing" or was buried under rubble during the 2025 strikes.
(Rumors from the Islamabad talks suggest the U.S. believes a portion of this material—derisively called "nuclear dust" by the administration—was moved into the Pickaxe Mountain tunnels just before the ceasefire.)
( The U.S. is reportedly demanding a physical "scoop and ship" operation where U.S. or IAEA teams enter Pickaxe Mountain to recover this material. Iran has so far "NO"

The JCPOA was designed to monitor a program that was mostly above ground or shallow. Pickaxe Mountain has forced a change in the MOU's draft language:
-The "Islamabad Sticking Point": - The U.S. wants the permanent sealing of the tunnel entrances with high-density concrete, whereas Iran is only offering a "monitored freeze."

Amber G. · Post by **Amber G.** » 08 May 2026 01:08

Tanaji wrote: ↑08 May 2026 00:51 Why is Iran going down the centrifuge route for its quest for a nuclear weapon?

Iran's preference for the centrifuge route is primarily driven by the dual-use nature of the technology and its concealability.
Unlike plutonium production, which requires large, easily detectable nuclear reactors with high thermal signatures, centrifuge cascades can be housed in relatively small, unremarkable industrial buildings or buried deep underground—such as the Fordow facility or the high-security Pickaxe Mountain site.
This allows a nation to develop its enrichment infrastructure under the guise of a civilian energy program (producing LEU for power) while maintaining the technical "know-how" to quickly pivot to weapons-grade material. Furthermore, the modular nature of centrifuges allows for an incremental and easily reversible expansion of capability, making it a more flexible and defensible strategic choice than the more visible and vulnerable plutonium-based alternative.

A_Gupta · Post by **A_Gupta** » 08 May 2026 02:21

US military strikes Iran’s Qeshm port and Bandar Abbas, Fox News reporter says

https://www.reuters.com/world/middle-ea ... 026-05-07/

Amber G. · Post by **Amber G.** » 08 May 2026 02:54

S_Madhukar · Post by **S_Madhukar** » 08 May 2026 03:18

I am surprised Han did not give Eyeran a few candies already just like they had given to Bakis in the 90s. I mean they were likely to get way more oil and gas whereas Bakis could only deliver gadhas and gobar. I guess Unkil was ok with Bakis getting candy at our expense

[edit] I guess they provided Han engineers and NoKo tech for mijjiles and drones and operating Noo Clear plants

Amber G. · Post by **Amber G.** » 08 May 2026 04:19

This Scientific American article also examines the technical and political complexities of Trump’s demand to physically remove Iran's "nuclear dust"—the enriched uranium remaining in facilities damaged during the 2025 military strikes... Conclusions similar to mine.

The Concept of "Nuclear Dust" = the fissile material (specifically 60% HEU) that remains in hardened underground facilities like Fordow and the recently targeted Kuh-e Kolang Gaz La (Pickaxe Mountain). The administration’s stance is that a diplomatic freeze is insufficient; the material must be physically extracted from Iranian soil to eliminate any breakout capability.

Experts cited in the piece highlight several "physics-based" hurdles that make the U.S. demand difficult to execute:

- The 2025 kinetic strikes caused significant structural damage to deep-buried chambers. Extracting uranium canisters from under 200 meters of collapsed granite is a high-risk mining operation, not a simple pickup.

Moving breached or unstable uranium hexafluoride (UF 6) cylinders in a damaged environment poses extreme contamination risks to personnel and the surrounding environment.
- Because of the rubble, IAEA inspectors cannot currently verify the exact mass or state of the material. There is a fear that some "dust" has already been moved to even deeper, undeclared sub-chambers.

The article notes that while the Trump administration frames this as a new "Maximum Pressure" victory, it actually mirrors the core technical goals of the 2015 JCPOA—shipping enriched material out of the country.

The current negotiation team, led by Witkoff and Kushner, lacks the specialized nuclear physics background that Moniz and Salehi brought to the table in 2015. This has led to demands (like the "scoop and ship" operation) that scientists describe as more "rhetorical than realistic."
The article discusses how the U.S. is relying on Pakistan as a technical intermediary to help verify and potentially transport the material, adding a layer of regional complexity that wasn't present in the original deal.

The piece concludes that the 2026 MOU is essentially an attempt to achieve "JCPOA results" through post-conflict coercion. It argues that the administration is discovering what was known in 2015: physical removal is the only way to ensure a multi-year breakout time, but doing so requires a level of cooperation and technical precision that is at odds with "maximum pressure" rhetoric.

Amber G. · Post by **Amber G.** » 08 May 2026 10:35

Trump yesterday: "Their missiles are mostly decimated; they have some, they have probably 18, 19 percent, but not a lot by comparison to what they had."

WaPo today: "Iran retains about 75 percent of its prewar inventories of mobile launchers and about 70 percent of its prewar stockpiles of missiles, a U.S. official said. The official said there is evidence that the regime has been able to recover and reopen almost all of its underground storage facilities, repair some damaged missiles and even assemble some new missiles that were nearly complete when the war began."
U.S. intelligence says Iran can outlast Trump’s Hormuz blockade for months

Tanaji · Post by **Tanaji** » 11 May 2026 13:56

https://www.ndtv.com/world-news/iran-us ... s-11477201

It is looking as if whatever the conclusion of this war is, Iran will claim sovereignty over SoH and free shipping as we know it will end one way or the other. Trump will happily enter into a joint agreement on fee sharing and claim it’s the best deal ever!

USA! USA!! USA!!!

A_Gupta · Post by **A_Gupta** » 11 May 2026 17:18

It is not only a Strait of Hormuz crisis, but also a (unacknowledged) Washington DC crisis.

Manish_P · Post by **Manish_P** » 11 May 2026 18:45

PM Modi has appealed to the nation

PM Modi Calls For WFH, Travel Curbs Amid Oil Price Hike. What Other Nations Did

Prime Minister Narendra Modi has urged citizens to curb fuel use, revive working from home, pause gold purchases and reduce overseas travel to deal with a surge in global energy prices amid the continued crisis in the Middle East due to the Iran war.

Addressing a rally in Hyderabad, PM Modi noted that the austerity measures -- a reminder of the Covid-19 pandemic -- would reduce India's fuel consumption and help protect the country's foreign exchange reserves.

"Patriotism is not only about the willingness to sacrifice one's life on the border. In these times, it is about living responsibly and fulfilling our duties to the nation in our daily lives," the prime minister said.

He said reducing gold imports and foreign travel would help conserve foreign currency reserves as higher oil prices increase pressure on India's import bill.

"In the current situation, we must place great emphasis on saving foreign exchange."

Rudradev · Post by **Rudradev** » 11 May 2026 21:05

https://archive.ph/3UIBI

Robert Kagan in the Atlantic says, unambiguously, that the US has "lost" the Iran war.

Why does this matter?

Robert Kagan is the supreme intellectual preceptor of the Neocon movement in the US. He is so shameless about it that he still defends the 2003 Iraq war (which he of course had advocated for very strongly) as a worthwhile effort. Yes, like many Bush-era Republicans he is generally anti-Trump; but he is so fanatical about his Neocon beliefs that he would even publicly praise Trump whenever he did something the Neocons liked (e.g. missile strike on Syria during his first term, regime change in Venezuela, sending weapons to Ukraine etc.)

In other words, unlike many political actors, Kagan is more committed to promoting the Neocon agenda than he is to being anti-Trump.

This is the kind of guy who would have been expected to defend Trump's decision to attack Iran and insist that the US should "stay the course", committing more resources to the Iran war, conducting ground operations, etc.

If even he says the US has lost the Iran war, then I don't know what else to think.

Amber G. · Post by **Amber G.** » 11 May 2026 22:49

Trump says loss of Hormuz is "genius" because countries are now looking for other regions for energy, including Texas.

Amber G. · Post by **Amber G.** » 12 May 2026 01:07

Just two Live updates:
Live Updates:Trump says ceasefire with Iran on ‘massive life support’ after he rejects Tehran’s proposal

Live Updates: Iran vows to fight on as Trump says ceasefire is "on life support"

A_Gupta · Post by **A_Gupta** » 12 May 2026 06:06

Prince Turki Al-Faisal is the former director-general of Saudi Arabia’s intelligence agency and a former ambassador. He is also the founder and Trustee of the King Faisal Foundation and Chairman of the King Faisal Center for Research and Islamic Studies.

He penned the following, reproduced in Arab News (this article first appeared in Asharq Al-Awsat.)
This is how Crown Prince Mohammed bin Salman succeeded
https://www.arabnews.com/node/2642938

Since the US-Israeli war on Iran erupted on Feb. 28, discordant voices in our region and in Western media have grown louder, questioning Saudi Arabia’s position on a conflict the Kingdom had initially worked hard to prevent, and then made intensive efforts to stop and resolve diplomatically.

When Iran and others tried to drag the Kingdom into the furnace of destruction, our leadership chose to endure the pains caused by a neighbor in order to protect the lives and property of its citizens. Had the Kingdom wanted, and it is capable of doing so, to respond in kind to Iran by destroying Iranian facilities and interests, the outcome could have been the destruction of Saudi oil facilities and desalination plants along the Arabian Gulf coast, and even deep inside the Kingdom.

Had the Israeli plan to ignite war between us and Iran succeeded, the region would have been plunged into ruin and destruction. Thousands of our sons and daughters would have been lost in a battle in which we had no stake. Israel would have succeeded in imposing its will on the region and remained the only actor in our surroundings.

As for the advocates of war, they continue in their arrogance and cawing, perhaps unaware that the rug has been pulled from under their feet.

The crown prince did not allow Iran to divide the brotherly Gulf states. He supported and stood in solidarity with all Gulf leaders, and placed the Kingdom’s trade and financing routes, through its roads, airports and ports, at the service of them and their peoples.

He also affirmed to all that their security is the Kingdom’s security, and that the Kingdom will support every step they take to preserve their security and stability.

A_Gupta · Post by **A_Gupta** » 12 May 2026 17:30

The Jerusalem Post reports:

US spy agencies examining how Iran would react to Trump declaring victory
US intelligence is analyzing the question to understand the implications of Trump potentially pulling back from a conflict that could contribute to Republican losses in the midterm elections.

https://www.jpost.com/international/article-894510

Deans · Post by **Deans** » 13 May 2026 17:27

Amber G. wrote: ↑11 May 2026 22:49 Trump says loss of Hormuz is "genius" because countries are now looking for other regions for energy, including Texas.

The US is not producing more oil. They are simply depleting their strategic reserve faster.

Cyrano · Post by **Cyrano** » 13 May 2026 20:25

Kagan is criticizing the war with Iran to take away attention from Ukraine war that he and his wife Vikki Neuland created and sold to Biden admin.

Europeans have started acknowledging that they have been condomized by the US (though Vikki was quite open about it and famously said "**** the EU"). This week Kallas the brainless EU minister started saying that the EU may start internal discussions to align among themselves before negotiating with Russia to end the Ukraine conflict. I.e. who will pick up how much of the bill. Unkil will pick up most of the post war reconstruction contracts of course... and perhaps a nobull prize

SRajesh · Post by **SRajesh** » 13 May 2026 22:45

https://www.jpost.com/middle-east/iran- ... cle-896093
Interesting piece of news.
Saudi planes attack Iran backed militias in Iraq!!
Wonder if they are really Saudimen or Pakis flying either their Bundars or borrowing Saudi planes to do the dirty work!!

Vayutuvan · Post by **Vayutuvan** » 13 May 2026 22:48

Deans wrote: ↑13 May 2026 17:27
Amber G. wrote: ↑11 May 2026 22:49 Trump says loss of Hormuz is "genius" because countries are now looking for other regions for energy, including Texas.
The US is not producing more oil. They are simply depleting their strategic reserve faster.

@Dean ji,

Here is a graph

Vayutuvan · Post by **Vayutuvan** » 13 May 2026 22:49

One can clearly see the steep decline at the start of the Iran war.

g.sarkar · Post by **g.sarkar** » 13 May 2026 22:55

https://www.rediff.com/news/interview/m ... 260513.htm
'Biggest Single Danger Is If Remittances Come Down'
PRASANNA D ZORE, May 13, 2026
When Prime Minister Narendra Modi took the stage at a Bharatiya Janata Party rally in Hyderabad on the evening of May 10, he asked Indians to stop buying gold for a year. He asked them to cut fuel use, carpool, work from home, skip foreign holidays, postpone destination weddings abroad, and even reduce how much cooking oil they use at home. 'Patriotism,' he said, 'is not only about the willingness to sacrifice one's life on the border. In these times, it is about living responsibly.'
The backdrop to that speech was not hard to read. Crude oil, already trading above $100 a barrel for more than 45 days because of the Iran war, had touched a 52-week high of $126 a barrel at the end of April.
India, the world's third-largest oil importer after China and the United States, spent roughly $175 billion on crude and petroleum products in the financial year ended March 2026 -- about 22 per cent of its total import bill.
Gold came second: Indians imported $72 billion worth of the metal in the same period, second in the world only to China.
Meanwhile, India's foreign exchange reserves, which hit a record $728 billion in February, had shed more than $40 billion in just four weeks as the Reserve Bank of India sold dollars to steady the rupee, which hit a fresh record low of 95.63 to the dollar on Tuesday morning.
The IMF has projected a current account deficit of $84 billion for India in 2026.
The jewellery and gems sector, which contributes roughly 7 per cent of India's GDP and employs nearly five million people -- from diamond cutters in Surat to gold artisans in Jaipur -- reacted immediately to Modi's remarks.
Shares in Titan and Kalyan Jewellers fell as much as 11 per cent the day after Modi's speech on May 10 when markets opened for trade.
Lost in the political noise -- Congress leader Rahul Gandhi was quick to point out that Modi was about to leave on a seven-day overseas tour to the UAE, Sweden, The Netherlands, Norway and Italy even as he asked citizens to avoid foreign travel -- was a more fundamental question: How fragile is India's external position, really?
And is the government, through Modi's unusual appeal, finally signalling what it has long been reluctant to say?
Mohan Guruswamy has spent decades thinking about exactly these questions. A senior economist and former adviser to then finance minister Yashwant Sinha, he has watched India's balance-of-payments arithmetic with a scepticism that official data has done little to dispel.
In this interview with Prasanna D Zore/Rediff, Mr. Guruswamy explains why Modi's austerity appeal is a distress signal, not a pep talk and the scenario that is likely to unfold in the weeks ahead.
'NRI deposits -- roughly $100 billion -- will move out at first sign of trouble'
Prime Minister Modi asking Indians to stop buying gold for a year, reduce fuel consumption and postpone foreign travel -- does that sound to you like an economic emergency warning dressed up as a patriotic appeal?
I wouldn't say there is a serious foreign exchange crisis imminent, but we have been on this road for a long time. We run a trade deficit of nearly $100 billion every year. We've been making up for it through remittances -- this year we received about $130 billion in remittances, which is what keeps us out of a current account deficit. But that cushion may not hold.
What could happen now is a current account deficit opening up again after a gap of a few years. Middle Eastern trade is going to come down because of the conflict, and European and American trade is also contracting -- Trump's tariffs and the general slowdown in global commerce will hit us.
Meanwhile, gold imports are running at $89 billion to $90 billion, possibly touching $100 billion. Oil imports are about $120 billion. Both have to be paid for in dollars. And your exports are not going up. So there will be a gap, and when there is a gap there is pressure on the rupee-dollar parity.
The RBI has been selling dollars to defend the rupee, which is adding to the strain. The underlying problem -- the trade balance -- isn't being dealt with.
And then there's China: We're importing over $100 billion worth of goods from them, a lot of which could honestly be avoided.
You mentioned a possible return to the current account deficit. How large could it get, and what does it mean for interest rates and the broader economy?
If the current account deficit widens, you have to keep borrowing money to bridge it, which puts upward pressure on interest rates.
And when interest rates rise alongside a widening deficit, you get pressure on the parity -- your import bill goes up, your export competitiveness comes down. The two feed each other.
......
Gautam

Cyrano · Post by **Cyrano** » 14 May 2026 01:08

Before NRIs pull out their investments it's the opportunitist FIIs that will pull out. But where to reinvest the dollahs? In the AI bubble? In gold, silver and metals? In BTC?

We as rakshaks can keep up/increase remittances to the extent possible. And encourage our fellows in desh to avoid needless spend in areas the PM has suggested.

A_Gupta · Post by **A_Gupta** » 14 May 2026 01:14

> 'NRI deposits -- roughly $100 billion -- will move out at first sign of trouble'

It would be a shame - afaik this did not happen in Pakistan or in Bangladesh. Yunus’s BD was kept afloat by remittances.

Cyrano · Post by **Cyrano** » 14 May 2026 01:19

On what basis is he predicting that NRI deposits will fly out?!

A_Gupta · Post by **A_Gupta** » 14 May 2026 01:28

AI assures me that “Remittances rose sharply during and after the Gen Z revolt, helping Nepal avoid a macroeconomic crisis despite political instability, falling investment, and rising youth migration.”

V_Raman · Post by **V_Raman** » 14 May 2026 01:29

India must cut its addiction to gold - they simply cannot afford it - put a 100% import duty if needed with super strict enforcement!! That alone can save India CAD.

Rudradev · Post by **Rudradev** » 14 May 2026 01:46

On what basis is he predicting that NRI deposits will fly out?!

Good question. Did NRI deposits move out at the 'first sign of trouble' during COVID?

It's one thing for NRI (or any) deposits and investments to leave a country because of warning signs specific to that country's economy. In that case, investors may take their money out of the country in question and put it elsewhere. What is the rationale for doing so when the indicators point to a global economic slowdown that will affect many other potential investment destinations (at least) equally badly?

Vayutuvan · Post by **Vayutuvan** » 14 May 2026 03:07

10 year US treasuries are at 4.92% and 20 years at 5%. NRI deposits in India - FDs - are at 6.5% last I looked. Falling INR and India country rating are they worh that extra 1.5% extra interest? You still have to pay US taxes on the interest you earn in India, even on zero-coupon bonds.

putnanja · Post by **putnanja** » 14 May 2026 07:35

NRI remittances is not just for investments. They send for multiple reasons and not all of them can be pulled out, like
1. Supporting family in India - many especially in Gulf send to support their families
2. Repaying education loan etc
3. investment in real estate - many NRIs have invested in their home towns, and these are not liquid assets to take back. I know many NRIs in Hyderabad, Bangalore and surrounding areas who have invested at least in 1-2 properties in India, if not more

So, while there could be some reduction in remittances, I would say it would at most be around 10-15% max.