Collateral Impact on India of US sanctions on Iran

US President Donald Trump by his unilateral decision to walkout from the Iran Nuclear deal of 2015 has deserted his western allies and triggered new crisis in the Middle East.

Collateral Impact on India of US sanctions on Iran

Sheikh Manzoor Ahmed

US President Donald Trump by his unilateral decision to walkout from the Iran Nuclear deal of 2015 has deserted his western allies and triggered new crisis in the Middle East. The US decision has rippling effects around the world. It will also have collateral effect on India which has made huge investment in development of Chabahar port and Farzad B gas oil fields Iran. India is the third largest importer of crude from Iran and meets 15 per cent of India’s domestic oil requirement. Indian companies were also allowed to invest in various projects in Iran in the Indian currency. Chabahar port provides India a link to Afghanistan and the Central Asian nations bypassing Pakistan.

Indian Business groups admit that re-imposition of sanctions on Iran will hit Indian economy. However top official of the Indian Oil Corporation A K Sharma said "immediately there will be no impact, but we have to wait and watch how other nations, like European block react and act. If European nations manage to pursue their course independently, then Indian supplies to Iran will continue. It is in this context Prime Minister Narendra Modi had held talks with German Chancellor Angela Markel and now Russian President Valdmir Putin to ascertain their views as to how to nullify impact of the Trumps' decision to pull out from the deal. Top Indian officials confirmed that they are watching the situation closely and see how the Western nations would evolve their strategy to ward off the impact of the US sanctions. In the past India evolved a mechanism to maintain economic ties with Iran when the U N sanctions were imposed on Iran .However, import of Iranian crude was curtailed.

The United States has decided to impose sanctions on all those companies which would continue to do business with Iran and it is not only adversely hit Indian companies and businessmen but also multi-national companies of Europe which were in the process of making billions of dollars of investment in Iran. Even though the International Atomic Energy Agency (IAEA) and international community admitted that Iran was fully complying with the clauses of the deal, President Trump accused Iranian regime of pursing its nuclear goal and destabilizing the Middle East .

The Joint Comprehensive Plan of Action (JCPOA) was endorsed by the United Nations and withdrawal from it by Washington would further exacerbate tension in the region. Leaders of Britain, Germany and France made serious attempts to persuade Donald Trump not to exit from the deal which was concluded after a protracted negotiations between Iran and five permanent members of the security Council plus Germany. Billions of dollars European companies are at stake and now western leaders are trying to find out ways and means to see that the nuclear deal remains intact despite it is a major challenge to European Union which is now trying to evolve its own policies .European Union President Donald Tusk was right when in a stinging attack on US President said if "we have friends like him, who needs enemies". He also slammed his capricious assertiveness.

Technically, the nuclear deal itself won’t be scrapped as long as Iran and the other signatories: the U.K., France, Russia, China, Germany and the European Union remain committed to it, but the impact of unilateral US sanction on Iran will have its impact on all the commercial entities doing business with Iran.

India would expect to again win a waiver from US sanctions on Iran the way it got during the Obama administration. India, together with Iran's other major clients China, Japan and South Korea, had got the waiver from US sanctions that aimed to force Tehran to negotiate an end to its nuclear programme. In the developing situation India is in touch with Iran, Russia and the European Union to gauge the impact of US sanctions on Tehran and its impact on New Delhi’s oil payments, especially if curbs on international financial transactions through the widely used SWIFT network are imposed after a wind-down period of 180 days in the first week of November. It is worth mntioning here that during 2012-16 sanction period India had paid for its daily imports of 350,000-400,000 barrels per day from Iran through Turkey's Halkbank, It seems that this option will not work this time as Halkbank is facing Lawsuit in US for violating US sanctions on Iran.

Since Trump came to powers relations between the United States and the European Union is getting deteriorated day by day. His decision to pull out of Paris accord on Climate change was not welcomed by the international community. He appeared determined to go ahead and it became a major challenge particularly for NATO allies, it was followed by his decision to recognize Jerusalem as the capital of Israel, eventually moved the embassy from Tel Aviv to Jerusalem on May 14. The European powers were quick to respond and endorsed the resolution moved in the United Nations by many Islamic countries to oppose the move. Barring few small island nations all major nations opposed it, this isolating Washington in the international community.

Then came his decision to withdraw from the Iranian nuclear deal which made the major European powers realize that it is imprudent to rely on the United States. The European Union is now trying to chalk out its own foreign and defense policies so as not to rely on its long term friend -The United States.
Suffice it to say here that the circumvention of the US sanctions will not be easy for India but it is also true that a major oil importer like India can’t completely freeze oil imports from Iran. There will be a middle way like the 2012-2016 sanctions period where India got some waiver from US and in return it reduced the oil imports from Iran.

Last Mod: 27 Mayıs 2018, 15:35
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