![Bl[i]tZ](/data/avatars/m/41/41754.jpg?1322350299){kind=avatar}
Bl[i]tZ
FULL MEMBER
- Joined
- Jul 30, 2011
- Messages
- 1,374
- Reaction score
- 0
NEW DELHI: As new US sanctions on Iran's oil sector take effect, India, which expects to be hit, will ask the US for waivers to minimize the effect of the curbs that may be given to Washington's key allies like Japan, Turkey and South Korea, who, like New Delhi, are all importers of Iranian oil.
National security adviser Shivshankar Menon met US ambassador Peter Burleigh on Friday, and it is expected that senior officials will begin consultations with the US. Foreign secretary Ranjan Mathai will be making his first trip to Washington soon, where this issue is likely to be discussed further. Both Japan and South Korea have said they would start negotiations with the US for similar waivers.
US president Barack Obama signed into effect a new sanctions law - Iran Threat Reduction Act on December 31 - that would bar foreign banks from the US if they conducted transactions with the Central Bank of Iran (CBI), a move intended to choke off Tehran's oil incomes, its main source of revenue. The US legislation calls for American financial sanctions on anyone settling oil trades with the CBI by June 28, 2012, unless the White House issues a waiver or determines the oil market is too tight to implement the legislation. On Thursday, European countries too agreed in principle to put an oil embargo on Iran by end-January.
India has been struggling for the past year to pay Iran for its oil, ever since the Reserve Bank of India dismantled the Asian Clearing Union that was used as a clearing house for trading with Iran. Subsequently, India routed its payments through a German bank and later a Turkish bank, but both routes dried up because of impending sanctions by the US. Since most large Indian banks too will not touch payments to Iran for the same fear, New Delhi has been using a small nationalized bank, Union bank of India, to route its payments to Iran.
India even asked Russia to help route payments to Tehran, but it is believed Moscow was not forthcoming.
India has begun diversifying oil supplies but it has no intention of moving away from Iran because it considers Tehran to be a major player in West Asia. From providing 16% of India's crude supplies, Iran now provides 12%, with Saudi Arabia taking the top spot as the chief source.
India is sourcing crude from countries such as Kazakhstan, Azerbaijan, Mexico, Australia and Venezuela. Between storing oil in large crude carriers and a strategic petroleum reserve, India is unlikely to hurt for oil in the short term. Indian oil companies are likely to fix oil contracts for this year next week, where a further diversification of supplies will be in evidence.
But the trouble is about how India pays for the oil. Paying in dollar and euro is out. India is hamstrung because its export basket to Iran is not particularly big for it to be able to do the kind of barter trade that is now the norm between Iran and China or South Korea.
The RBI has traditionally been wary of paying Iran in Indian rupees, still carrying the scars of the rupee-rouble trade of the 1990s. But South Block plans to put some innovative plans on how Iran can best utilize rupees this will be discussed with both the Indian finance ministry as well as Tehran.
Earlier, Iran has been reluctant on rupee trade, preferring hard currency to Indian currency. But as the sanctions bite, Iran may be persuaded to think out of the box as well.
There is of course the theoretical option of using one of the East Asian currencies like yuan or won. India is unwilling to go down that road because it would be held hostage to the Chinese Central Bank, which New Delhi does not want. China has rejected the US sanctions against Iran and will continue to trade openly with Tehran, but China's economic leverage with both the US and Iran is enormous, which does not hold good for India. Beijing is also demanding and may get discounted crude from Tehran.
The bottom line for India is that it wants to stay engaged with Iran, particularly at a time when Iran feels globally isolated. "China made enormous inroads into Myanmar, when Myanmar was treated like a pariah. We don't want to lose influence in an important country like Iran by backing out at this point," said sources.
India seeks waivers on Iran sanctions - Times Of India
National security adviser Shivshankar Menon met US ambassador Peter Burleigh on Friday, and it is expected that senior officials will begin consultations with the US. Foreign secretary Ranjan Mathai will be making his first trip to Washington soon, where this issue is likely to be discussed further. Both Japan and South Korea have said they would start negotiations with the US for similar waivers.
US president Barack Obama signed into effect a new sanctions law - Iran Threat Reduction Act on December 31 - that would bar foreign banks from the US if they conducted transactions with the Central Bank of Iran (CBI), a move intended to choke off Tehran's oil incomes, its main source of revenue. The US legislation calls for American financial sanctions on anyone settling oil trades with the CBI by June 28, 2012, unless the White House issues a waiver or determines the oil market is too tight to implement the legislation. On Thursday, European countries too agreed in principle to put an oil embargo on Iran by end-January.
India has been struggling for the past year to pay Iran for its oil, ever since the Reserve Bank of India dismantled the Asian Clearing Union that was used as a clearing house for trading with Iran. Subsequently, India routed its payments through a German bank and later a Turkish bank, but both routes dried up because of impending sanctions by the US. Since most large Indian banks too will not touch payments to Iran for the same fear, New Delhi has been using a small nationalized bank, Union bank of India, to route its payments to Iran.
India even asked Russia to help route payments to Tehran, but it is believed Moscow was not forthcoming.
India has begun diversifying oil supplies but it has no intention of moving away from Iran because it considers Tehran to be a major player in West Asia. From providing 16% of India's crude supplies, Iran now provides 12%, with Saudi Arabia taking the top spot as the chief source.
India is sourcing crude from countries such as Kazakhstan, Azerbaijan, Mexico, Australia and Venezuela. Between storing oil in large crude carriers and a strategic petroleum reserve, India is unlikely to hurt for oil in the short term. Indian oil companies are likely to fix oil contracts for this year next week, where a further diversification of supplies will be in evidence.
But the trouble is about how India pays for the oil. Paying in dollar and euro is out. India is hamstrung because its export basket to Iran is not particularly big for it to be able to do the kind of barter trade that is now the norm between Iran and China or South Korea.
The RBI has traditionally been wary of paying Iran in Indian rupees, still carrying the scars of the rupee-rouble trade of the 1990s. But South Block plans to put some innovative plans on how Iran can best utilize rupees this will be discussed with both the Indian finance ministry as well as Tehran.
Earlier, Iran has been reluctant on rupee trade, preferring hard currency to Indian currency. But as the sanctions bite, Iran may be persuaded to think out of the box as well.
There is of course the theoretical option of using one of the East Asian currencies like yuan or won. India is unwilling to go down that road because it would be held hostage to the Chinese Central Bank, which New Delhi does not want. China has rejected the US sanctions against Iran and will continue to trade openly with Tehran, but China's economic leverage with both the US and Iran is enormous, which does not hold good for India. Beijing is also demanding and may get discounted crude from Tehran.
The bottom line for India is that it wants to stay engaged with Iran, particularly at a time when Iran feels globally isolated. "China made enormous inroads into Myanmar, when Myanmar was treated like a pariah. We don't want to lose influence in an important country like Iran by backing out at this point," said sources.
India seeks waivers on Iran sanctions - Times Of India
