India: Saying No to Iranian Oil to Please America


“[A]n assessment of whether India is fully and actively participating in United States and international efforts to dissuade, isolate, and, if necessary, sanction and contain Iran for its efforts to acquire weapons of mass destruction, including a nuclear weapons capability (including the capability to enrich uranium or reprocess nuclear fuel), and the means to deliver weapons of mass destruction, including a description of the specific measures that India has taken in this regard. . . .” — Section 104g(2)E(i) of the Henry Hyde Act of 2006 regarding the Annual Implementation and Compliance Report to be submitted by the US president to the congress

India has been getting 12 per cent of its crude oil imports from Iran.  This amounts to around 400,000 barrels per day.  These supplies may stop in August since India has not made payments for oil shipments for the past few months and around $5 billion are due to the Iranian oil companies.

Iran has indicated that it may be forced to stop supplying oil if no arrangements for the payments are made.  How has such a situation come about?  The Indian government has succumbed to US pressures to curtail its trading and commercial links with Iran.  In July 2010, the United States imposed wide ranging sanctions against Iran aimed at scuttling its oil and gas industries.  These sanctions went much beyond the June 2010 UN Security Council sanctions which were adopted through Resolution 1929.  The United States along with the European Union has placed prohibitive restrictions on banking and foreign exchange transactions with Iranian banks and financial institutions.

India is abiding by the illegal and unilateral sanctions imposed by the US and the European Union and not just the UN Security Council sanctions.  Under pressure of these sanctions, the Reserve Bank of India in December 2010 disallowed all trade related payments with Iran through the Asian Clearing Union (ACU).  This mechanism was being used for a long time to make payments to Iran.  Once this was stopped, the problem arose of how to make the payments.  Subsequently, the Iranian and Indian governments agreed that payments for the oil imports can be made through an account with the German Central Bank, the Bundesbank.  The Bundesbank would transfer the money to the European-Iranian Trade Bank (EIH) based in Hamburg.  This bank was not subject to sanctions.

However, after a few weeks under pressure from the United States and Israel, the German government stopped these transactions.  Since then, the Iranians have continued to supply oil but India has not made payments.

Iran has been the second largest supplier of crude oil to India after Saudi Arabia.  The UPA government is now engaged in finding out how to arrange for alternative sources of oil imports rather than ensuring that oil trade with Iran continues.  The United States is asking India to source its oil imports from Saudi Arabia as against Iran.

Ever since the Indo-US nuclear deal, the traditional relations with Iran have been endangered.  The United States had made it clear that the nuclear deal entails acceptance of India making its foreign policy congruent to that of the United States.  Further the Hyde Act which allowed nuclear cooperation with India clearly states that the president of the United States should annually provide an assessment report to the US congress on how India is cooperating with the United States to sanction and isolate Iran.  The Left parties had strongly opposed this infringement of national sovereignty and the abridgement of India’s foreign policy to suit US interests.

Within weeks of the Indo-US joint statement signed by President Bush and Prime Minister Manmohan Singh in July 2005, India voted for a resolution against Iran in the IAEA in September while the Non-Aligned group of countries either voted against or abstained.  This vote against Iran was repeated in February 2006.  These facts were appreciatively mentioned by the US government when the Hyde Act was discussed in the US Congress.

The next target was the Iran-Pakistan-India gas pipeline.  India was warned publicly many times by America not to proceed with the gas pipeline project with Iran.  India has complied though it still formally does not admit to having abandoned the project.  After waiting for more than two years, Iran and Pakistan decided to go ahead with the project.  Iran is now laying the pipeline up to the Pakistan border.  India decided to go for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project at the behest of the United States.  The earlier 25-year agreement to buy liquefied natural gas from Iran fell through after India voted in the IAEA.  Step by step, the Indian commercial projects in Iran are being abandoned.  Reliance has stopped gasoline exports to Iran worth $280 million due to the US threat.

Finally, the major component of trade with Iran which is the oil imports is now on the verge of being scuttled.

Incidentally, a curious news report appeared during the visit of the US secretary of state, Hillary Clinton to India, last week.  A US official accompanying Clinton during her stay in Chennai was quoted as saying that a solution to the seven month long payments issue between India and Iran on the crude oil imports “is in sight”.  He said that the US treasury is working with Indian officials on the issue.  This reveals that India has approached Big Brother to find a way out.  The responsibility for sabotaging oil supplies from Iran lies with the United States.  Oil supply as such has not been brought under any sanctions whatsoever.  Yet India, instead of standing up to such illegal measures, is beseeching the US for permission to import oil from Iran.

The import of oil and gas from Iran which is beneficial for India is being sacrificed at the altar of the United States’ goal to isolate Iran and to establish its hegemony over West Asia.  It is shocking that the Indian government goes along with the United States’ project which is against its own national interests while close allies of the United States like Japan and South Korea continue to import oil from Iran and have worked out arrangements to make payments despite the US and EU sanctions.  Turkey is another country in the Nato which has entered into new contracts in the oil sector with Iran.  China has stepped up its oil imports from Iran.  Its imports in June registered an increase of 53.2 per cent year on year.

Bound by the iron fetters of the nuclear deal, which is the centre-piece of the strategic alliance with the United States, the Manmohan Singh government is doing everything to ensure that as per the Hyde Act adopted by the US congress, India is seen to be fully cooperating with the US to isolate and sanction Iran for developing nuclear technology that includes “the capability to enrich uranium or reprocess nuclear fuel”.  As per the Hyde Act, the US president has to give his annual certification to the US congress that “India is fully and actively participating in United States and international efforts to dissuade, isolate and if necessary, sanction and contain Iran”.

India can get its crude oil requirements from other countries.  But what cannot be retrieved by this craven and servile attitude to the United States is the country’s self respect and damage to national interests.

This article was first published in People’s Democracy on 31 July 2011; it is reproduced here for non-profit educational purposes.  Cf. “Iran’s oil payments row with India has been resolved before any interruption in crude exports to its second-biggest customer, the Iranian Oil Ministry’s website SHANA said on Sunday.  After a successful test payment in euros through Turkey’s Halkbank, Indian refiners are expected to clear over $5 billion of debts built up with Iran during a lengthy U.S.-inspired payment impasse” (Ramin Mostafavi, “Iran Says Oil Payment Row with India Resolved — SHANA,” Reuters, 31 July 2011).

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