To engage Iran, India looks to beat US, UN sanctions by being ‘creative’

[EjazR]

To engage Iran, India looks to beat US, UN sanctions by being ‘creative’

In the clearest indication so far of New Delhi’s intent to do business with Tehran despite the growing international isolation of Iran over its nuclear weapons programme, the Ministry of External Affairs (MEA) has proposed “creative mechanisms” to insulate Indian enterprises from the adverse impact of UN and US sanctions.

Last week, a Committee of Secretaries headed by the National Security Advisor decided to first approach Washington to keep Indian entities out of the sanctions using the exemption clause wherein the US President certifies that the waiver is vital to US national security interests.

Pending that, Indian enterprises would be advised to consider venturing into Iran in consortium with Russian, Chinese or Kuwaiti companies to make it harder for the US or the European Union to single out a country or company.

Another option from the Ministry of External Affairs is to create new corporate entities that will not have any financial exposure in the US or EU so that they are insulated from any retaliation.

“Political engagement with Iran, while of great importance, may not be sufficient to ensure that our interests are protected. Economic engagement with Iran is also necessary and would help us in promoting our energy security, connectivity and opening of new markets, and to underpin our political objectives,” said the MEA paper on “International Sanctions on Iran and Way Forward for India-Iran Relations”.

While the prime reason for India’s continued interest in Iran is the need for energy security through steady flow of crude oil and natural gas and acquisition of oil and gas fields there, a concern was raised at the July 20 CoS meeting that India’s withdrawal would give China an additional handle to enlarge its presence in Iran.

The MEA said that China was taking “a conscious decision to step into the vacuum created by the exit of western and other companies” since sanctions were strengthened in 2007. It had stepped up its petroleum product exports to Iran and signed three pacts on oil and gas fields.

Other “creative mechanisms” recommended by the MEA were:

1. A Rupee-Rial arrangement for settling bilateral trade to avoid a ban on Indian banks from access to the US or EU financial system.

2. An arrangement to open letters of credit in Rial, as suggested by the Iranians at the 16th session of the India-Iran Joint Commission.

3. Investment by Indian firms through joint ventures in mining, fertilizer, food processing, pharmaceuticals and automobile projects that are not currently sanctioned.

4. Opening of warehouses for fast-moving Indian products in Iranian Free Trade Zone with a mechanism to provide insurance cover for political and economic risks.

n Possible involvement of state-run companies to develop the Chabahar port and rail project for access to Afghanistan and Central Asia.

 

[jha]

Good article...

 

[Hafizzz]

Good article...

What's so good about it ?

The West will just hate India for opposing them on the sanction on Iran !!

 

[jha]

What's so good about it ?

The West will just hate India for opposing them on the sanction on Iran !!

Just wait and watch for the bold part...you will be shocked once this goes through...

 

[USSR]

India-Iran has strong alliance. But nobody can stand to uncle sam execpt china.

 

[Cheetah786]

So India is trying to came back into it after realizing Chinese did not buckle under West pressure and continue to secure energy for their economy.

better late then never kudos to Indians for realizing whats important for their economy and finding ways to keep it growing.

Oh wait a minute could that be the reason indian and chinese economies grow as they actually make desicions that benefit them and not the west.i wonder if this concept could be adopted by some muslim leaders (hey i can dream)

But on another note when Mr. zardari comes back from England with more western Aids deposited in English banks at the expense of our dignity we will be more obedient and do any thing to please the master no matter what the say.

 

[Cheetah786]

India-Iran has strong alliance. But nobody can stand to uncle sam execpt china.

Agreed but the new economic picture shows uncle sam needs india and china more then they need uncle sam so it will be intresting to see how this game is played.

 

[gowthamraj]

India-Iran has strong alliance. But nobody can stand to uncle sam execpt china.

your comment like same as your avatar

 

[Spring Onion]

Agreed but the new economic picture shows uncle sam needs india and china more then they need uncle sam so it will be intresting to see how this game is played.

The world indeed moves according to own interests. It will have to be seen if India will outrightly opposed the sanction or will find ways to make way for doing partnership with Iran.

AFGHANISTAN issue is really kicking India to come back to Iran.

 

[Chanakyaa]

So India is trying to came back into it after realizing Chinese did not buckle under West pressure and continue to secure energy for their economy.

Come Back ?

When did India Leave ? Think Beyong IPI and Sanctions.

In July 2009, Indian Prime Minister Manmohan Singh congratulated Iranian President Mahmoud Ahmadinejad on his June re-election, stating that “[t]here is no doubt that your continued cooperation will further enhance the bilateral ties between Iran and India in a way that will serve the two countries' national interests."[1]


Nuclear:

India has publicly supported Iran’s right to peaceful nuclear technology, but [now former] Indian External Affairs Minister Pranab Mukherjee has said that Iran must pursue a nuclear enrichment program “in accordance with its own international commitments and obligations, [and must] satisfy the international community that its program is indeed peaceful."[2] Although India voted in 2005 to take the issue of Iran’s enrichment activities to the UN Security Council, it has since repeatedly insisted on a peaceful resolution to the conflict and stated it will not support any threats of violence made against Iran for its nuclear program.[3]

On December 31, Iranian Foreign Minister Manouchehr Mottaki expressed his country’s disappointment to his Indian counterpart Somanahalli Mallaiah Krishna over India’s vote in favor of a recent resolution by the IAEA regarding Tehran’s nuclear program. In his letter, Mottaki drew a parallel between Iran’s nuclear program and India nuclear tests. Krishna, however, responded by saying that the two cases lack similarity and that India’s non-proliferation record is free from blemishes. Krishna added that New Delhi has always kept its commitment towards the International Atomic Energy Agency.[4]

India and Saudi Arabia have together backed ongoing international efforts to resolve the controversy over Iran's nuclear program through dialogue and have requested that Tehran respond positively to efforts that could remove "doubts.” In a declaration issued after a March 2010 meeting between visiting Indian Prime Minister Manmohan Singh and Saudi King Abdullah, the two leaders called for continuation of these efforts.[5]

In March 2010, the Indian government stressed that it now perceives additional sanctions against Iran as counterproductive.[6] Moreover, during a visit to Washington, Indian Foreign Secretary, Nirupama Rao, announced her government’s opposition to any sanctions that would negatively affect the Iranian people, saying that "t continues to be our view that sanctions that… cause difficulties to the ordinary man, woman and child would not be conducive to a resolution of this question."[7]


Economic Relationship:

Iran-India bilateral trade has increased in recent years, totaling $14 billion in 2010— a $1.4 billion increase over the previous year’s numbers.[8] Iranian hydrocarbon exports to India constitute most of this trade.[9] India has sought to buy oil and gas from Iran to help feed its energy needs, generated by the country’s rapid development. India’s cooperation with the United States, however, has slowed the development of relations with the Islamic Republic, particularly as the US and Iran have clashed over the latter’s nuclear enrichment activities.[10]

The two countries have long been exploring the feasibility of the Iran-Pakistan-India Pipeline (IPI), which would provide India with a steady source of Iranian natural gas.[11] The project has been opposed by the United States as it would provide Iran with extra revenue, undermining sanctions targeting the Iranian nuclear program. As of May 2009, India remained noncommittal due to a combination of factors, including price disputes with Pakistan, anti-Iranian pressure from the United States, security concerns, and the possibility of less expensive domestic alternatives.[12] Consequently, that same month, Iran and Pakistan signed a deal to begin construction without India’s participation.[13] Iranian Foreign Minister Manouchehr Mottaki has said that, in lieu of cooperation from New Delhi, China is keen to join the Pakistan-Iran project. Mottaki noted that work on the gas pipeline would begin soon and that Beijing is likely to join the project. According to a poll taken in February 2010, a majority of Pakistanis believes that the project would be more useful if China joins it.[14]

Although India’s participation in the Iran-Pakistan-India pipeline appears in doubt, India and Iran nonetheless expanded in other endeavors, with the two entering into a new round of negotiations in July 2009 regarding the development of the Farzad B offshore gas field. According to the Iranian Mehr News Agency, a consortium of Indian oil firms intends to invest $4-5 billion in the first phase of the project, located in the Persian Gulf.[15]

In June 2009, India’s Reliance Industries Ltc halted gasoline exports to Iran to avoid possible restriction on sales in the United States, which has increased pressure on companies selling gasoline to Iran.[16]

A joint-venture between India’s state-owned Oil and Natural Gas Corporation and the Hinduja Group has obtained a 40% stake in Phase 12 of Iran’s South Pars gas field. The agreement for the project, which is, in total, valued at $7.5 billion, was announced in December 2009.[17] Iran had previously assigned 60% of the project to the Indian pair, however reduced the share due to concerns over slow progress and US pressure on India.[18]

[Click here for more information about India’s business activity with Iran.]
Diplomatic/Military Relationship:

Although India has voted in favor of imposing UN sanctions against Iran for its nuclear program, the two countries have continued to pursue a cordial diplomatic relationship. [20] As two powerful countries in close proximity, India and Iran share geopolitical interests as well as commercial interests, which arise from Iran’s capacity to provide India with the energy it requires. According to Iranian President Mahmoud Ahmadinejad, Iran and India “must get prepared through strengthening bilateral ties for big changes in the world and filling the power gap in the region."[21] Highlighting possible future avenues of cooperation, both countries are also observers of the Russia and China-dominated Shanghai Cooperation Organization (SCO).

Cooperation on security issues has largely centered on the conflict in Afghanistan and Pakistan. At a March 2009 SCO summit held in Moscow, Iran, India, and Russia discussed options to contain the Taliban in Afghanistan.[22] In November 2009, India held discussions on the expansion of military cooperation with Iran. Improved military relations would include Indian training of Iranian troops, satellite services, and joint naval exercises in the Gulf. [23] Previous instances of military interaction include the training of senior judge advocates general from the Iranian Army by India’s Institute of Military Law in Kamptee since 2008.[24]

In February 2010, Iranian Ambassador to India Seyed Mehdi Nabizadeh expressed his country’s support for India’s opposition to the concept of “good” and “bad” Taliban, dismissing recent western overtures to members of the militant organization. “Our experience is not to believe in the ‘good-and-bad’ Taliban theory. Taliban is Taliban. Extremists should not be part of any government in Kabul,” Nabisadeh said. He cautioned that the return of the Taliban would cause the regional security situation to further deteriorate and advocated a regional approach, involving India, to address the Afghan issue, saying that Tehran, like New Delhi, has a large stake in Afghanistan stability.[25]

Indian Foreign Secretary Nirupama Rao met with Iranian leaders in the first week of February 2010 to discuss bilateral relations between the two countries. During her two-day visit to Tehran, the sides exchanged views on issues including Afghanistan, cross-border terrorism, as well as other matters of regional and global importance. Rao was in the Iranian capital for the seventh round of Foreign Office Consultations/Strategic Dialogue between the two countries at the invitation of her counterpart, Deputy Foreign Minister for Asia & Oceania Mohammad Ali Fathollahi.[26]

During a May 2010 meeting of the G-15 developing nations, Indian External Affairs Minister SM Krishna met briefly with President Ahmadinejad for a conversation that aids described as “warm and cordial.” The two touched on the issue of security in Afghanistan and Pakistan, with the Iranian president “underlin[ing] the desirability [and] need for India and Iran to be in touch [and] work together.”[27] In discussing Krishna’s planned visit to Tehran, Indian officials had previously stressed in March 2010 that "Iran is an important ally when it comes to dealing with Afghanistan and its help is crucial to ensure that elements hostile to India don't have a free run in Afghanistan, allowing Pakistan the strategic depth which it so dearly seeks over India."[28]

AFGHANISTAN issue is really kicking India to come back to Iran.

Jana Ji Kindly Explain This.

[ Without Telling me that India needs Iran's Support to Move a needle in Afganistan ( Against Pakistan ) ... We All Know Whats the Reality ]

 

[SEAL]

Any reaction from Israel on Indian mechanism?

 

[Choppers]

Indian Govt has to show guts and engage in trade with Iran and secure/gain strategic interests there.

 

[Hafizzz]

Indian Govt has to show guts and engage in trade with Iran and secure/gain strategic interests there.

Ha ha ha....India has no guts because she is hiding behind China and other countries to avoid being seen by Uncle SAM :

Pending that, Indian enterprises would be advised to consider venturing into Iran in consortium with Russian, Chinese or Kuwaiti companies to make it harder for the US or the European Union to single out a country or company.

 

[Cheetah786]

XiNiX i dont have the habbit of spoon feeding if u want to play i am dumb and cant remmeber any thing thats your progotive please spare us all from article without link.

Article below will show what the reality and how Indians are now trying to use the exemption offered to chinese and Russian (not asked by the Chinese but dictated by them to Washington) to get back yes i said get back into Iran.you wanna play around that go nuts feel free to to come up with any fantacy you like.



The Obama administration is pressing Congress to provide an exemption from Iran sanctions to companies based in "cooperating countries," a move that likely would exempt Chinese and Russian concerns from penalties meant to discourage investment in Iran.

The Comprehensive Iran Sanctions, Accountability, and Divestment Act is in a House-Senate conference committee and is expected to reach President Obama's desk by Memorial Day.

"It's incredible the administration is asking for exemptions, under the table and winking and nodding, before the legislation is signed into law," Rep. Ileana Ros-Lehtinen, Florida Republican and a conference committee member, said in an interview. A White House official confirmed Wednesday that the administration was pushing the conference committee to adopt the exemption of "cooperating countries" in the legislation.

Neither the House nor Senate version of the bill includes a "cooperating countries" provision even though the administration asked the leading sponsors of the Senate version of the bill nearly six months ago to include one.

The legislation, aimed at companies that sell Iran gasoline or equipment to refine petroleum, would impose penalties on such companies, up to the potentially crippling act of cutting off the company entirely from the American economy. It also would close a loophole in earlier Iran sanctions by barring foreign-owned subsidiaries of U.S. companies from doing business in Iran's energy sector.

Although Iran is one of the world's leading oil exporters, it lacks the capacity to refine as much oil into gasoline as its domestic economy uses. Three years ago, the Iranian government imposed gasoline rations on the population.

"We're pushing for a 'cooperating-countries' exemption," the White House official said. "It is not targeted to any country in particular, but would be based on objective criteria and made in full consultation with the Congress."

Mrs. Ros-Lehtinen, however, said the exemption "is aimed at China and Russia specifically."

"The administration wants to give a pass to countries for merely supporting a watered-down, almost do-nothing U.N. resolution," she said.

All past sanctions against Iran have included a waiver that lets the president refrain from penalizing foreign companies that are doing business with Iran.

The "cooperating countries" language that the White House is pressing would allow the executive branch to designate countries as cooperating with the overall strategy to pressure Iran economically.

According to three congressional staffers familiar with the White House proposal, once a country is on that list, the administration wouldn't even have to identify companies from that country as selling gasoline or aiding Iran's refinement industry.

Even if, as current law allows, the administration can waive the penalties on named companies for various reasons, the "cooperating countries" language would deprive the sanctions of their "name-and-shame" power, the staffers said.

The prospect that China and Chinese firms would be exempt from penalty follows reports that Beijing is cooperating with Iran's missile program. On April 23, Jane's Defense Weekly reported that China broke ground on a plant in Iran this month that will build the Nasr-1 anti-ship missile.

Mark Dubowitz, executive director of the Foundation for the Defense of Democracies, where he directs the group's Iran energy project, said the "'cooperating-country' status would send a signal to the energy sector that the Obama administration is not serious about penalizing those companies that continue to do business with the Iranian energy sector, the lifeblood of the men who rule Iran."

Indeed, Christophe de Margerie, chief executive of the French national oil concern Total, told Reuters news agency on Tuesday that his company would stop business in Iran only if required to do so by the law.

"I've been asked by certain people to reconsider," he said. "I say, 'OK, make it official.'"

However Patrick Clawson, the deputy director for research at the Washington Institute for Near East Policy, said U.S. policy objectives should not be to penalize foreign companies, but instead to persuade countries like China to enforce their own trade restrictions with Iran.

"If the administration can use this 'cooperating-countries' waiver to get cooperation from a country like China on enforcing the U.N. sanctions and on suspending investment in Iran's oil and gas industry, then this bill will be a great success for U.S. objectives about Iran's nuclear program and support for terrorism," he said.

One congressional staff member working on the bill told The Washington Times that Mr. Obama personally asked the House leadership this month to put off the sanctions bill until after the current work period. Shortly after that meeting, both the House and Senate named conferees for the legislation.

U.S. unilateral sanctions aimed at freezing foreign companies out of American markets have been irritants in U.S. diplomacy. Foreign countries complain that imposing such "secondary sanctions" is just a form of protectionism.

The Obama administration has promised to pursue sanctions at the U.N. Security Council and also has indicated it would pursue unilateral sanctions targeted at Iran's banking sector and the companies that insure shipping to and from Iranian ports.

Keith Weissman, a former Iran specialist for the American Israel Public Affairs Committee, said he did not think the current refined-petroleum sanctions would be effective.

"Of all the sanctions I have been around, this is one of the dumber ones," Mr. Weissman said. "We have been talking about this for so long, the Iranians are ready for this. Not only are they building the capacity for refining the fuel, they will have more capacity to purchase it from regional countries."

Nonetheless, a number of foreign companies have announced in recent months that they would end business in Iran in anticipation of U.N. and U.S. sanctions. Some companies that provide Iran with refined petroleum, such as the Indian firm Reliance and the Kuwaiti trader IPG, have announced they would end the gasoline shipments.

Mr. Weissman was accused in 2005 by the federal government of conspiring to leak classified information to a Washington Post reporter. The Justice Department dropped the charges last year.

Because oil-refining sanctions would end up increasing the price of gasoline and heating oil for average Iranians, they have been opposed by many in Iran's "green" opposition movement, such as Shirin Ebadi, the Nobel Peace Prize-winning human rights lawyer.

Mojtaba Vahedi, a former chief of staff to opposition leader Mehdi Karroubi, said in a telephone interview that he would prefer to see targeted sanctions aimed at Iran's Revolutionary Guard Corps and its front companies.

"The main problem in Iran is the management of the country, everything that helps to remove [Iranian President Mahmoud] Ahmadinejad is good for the people, especially smart sanctions that target the regime," he said.

White House seeks to soften Iran sanctions - Washington Times

 

[T-Rex]

What's so good about it ?

The West will just hate India for opposing them on the sanction on Iran !!

The west will simply ignore this alliance for the time being. They are not in a position yet to dictate to India what should be its foreign policy. However, that time is approaching fast.