WHITESMOKE
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NEW DELHI: A reputed Israeli intelligence website has claimed that India is opting for gold to repay crude oil supplies from Iran. Given the US and EU embargo on Iran, payment in hard currency, such as the US dollar or euro, is very difficult; hence, this barter.
The website, Debkafile, said the transaction will be routed through UCO Bank, the Kolkata-based public sector lender. However, when contacted, a senior bank executive said he had not heard of any plans to settle oil payments in gold. A senior finance ministry official said he did not wish to comment on the issue. When reached over the phone, economic affairs secretary R Gopalan, who has been leading the talks with Iran, said he was busy in a meeting and did not respond to a text message.
The report on the Israeli website coincides with the visit of an Indian official delegation to Tehran last week to find ways to continue the bilateral trade between Iran and India in spite of the sanctions imposed for forcing Iran to forsake its alleged plans for developing nuclear weapons.
While the use of gold as currency may help India get around the proposed freeze on Iranian central bank's assets and the oil embargo that the EU foreign ministers have agreed to impose on Monday, any outflow of sovereign gold will not go undetected, bringing in the political consequences of flouting the West-imposed embargo.
Keeping the Iran crude oil tap running is crucial for India which depends on imports to meet around 80% of its oil requirements. Iranian crude accounts for a 12% share in India's total oil imports and any threat to this would have grave implications for the Indian economy.
On Wednesday, petroleum minister S Jaipal Reddy made clear India's stance on the sanctions and said that New Delhi would continue to explore "options" for paying oil from Iran. He added that India would abide only by UN sanctions, and not those imposed by a group of countries.
Officials said another option that the government was looking at was to pay with the Indian currency (India has had a rupee-rouble agreement with Russia). According to the mechanism discussed with Iran, the exports and imports will be netted out and India will pay in rupees through Uco Bank. India is a net importer due to crude from Iran.
India and Iran have been negotiating a payment settlement mechanism for over a year but a stable tool is yet to emerge. Under the last deal, payments by Indian oil firms were routed through Union Bank of India which transferred funds to a Turkish bank.
The website, Debkafile, said the transaction will be routed through UCO Bank, the Kolkata-based public sector lender. However, when contacted, a senior bank executive said he had not heard of any plans to settle oil payments in gold. A senior finance ministry official said he did not wish to comment on the issue. When reached over the phone, economic affairs secretary R Gopalan, who has been leading the talks with Iran, said he was busy in a meeting and did not respond to a text message.
The report on the Israeli website coincides with the visit of an Indian official delegation to Tehran last week to find ways to continue the bilateral trade between Iran and India in spite of the sanctions imposed for forcing Iran to forsake its alleged plans for developing nuclear weapons.
While the use of gold as currency may help India get around the proposed freeze on Iranian central bank's assets and the oil embargo that the EU foreign ministers have agreed to impose on Monday, any outflow of sovereign gold will not go undetected, bringing in the political consequences of flouting the West-imposed embargo.
Keeping the Iran crude oil tap running is crucial for India which depends on imports to meet around 80% of its oil requirements. Iranian crude accounts for a 12% share in India's total oil imports and any threat to this would have grave implications for the Indian economy.
On Wednesday, petroleum minister S Jaipal Reddy made clear India's stance on the sanctions and said that New Delhi would continue to explore "options" for paying oil from Iran. He added that India would abide only by UN sanctions, and not those imposed by a group of countries.
Officials said another option that the government was looking at was to pay with the Indian currency (India has had a rupee-rouble agreement with Russia). According to the mechanism discussed with Iran, the exports and imports will be netted out and India will pay in rupees through Uco Bank. India is a net importer due to crude from Iran.
India and Iran have been negotiating a payment settlement mechanism for over a year but a stable tool is yet to emerge. Under the last deal, payments by Indian oil firms were routed through Union Bank of India which transferred funds to a Turkish bank.
