India’s negotiating skills are being put to test as it continues to convince the US that if Washington goes after oil exports from Iran, the ripple effect will be felt on the global economy..
As the clock ticks towards the deadline set by the US President Donald Trump on economic sanctions on Iran, New Delhi has been talking to the US to ensure that business with Iran, which is among the top three oil suppliers to India, is not impacted.
Officials who have been part of the talks told
“It is not only about crude supplies. Remember that 80 per cent of the contractors and sub-contractors in the oil and gas business are either American or have an American base. So, any such sanctions will impact that entire exploration business,” said the official.
Though Indian refiners have not been given an official communication to cut purchase from Iran, the refiners are not tying up new contracts with the Islamic nation.
Besides, there arises a foreign policy issue when dealing with this, said another official. “India has maintained that its bilateral relations with Iran stand on its own and are not influenced by New Delhi’s relations with any third country. So, if India gives anything in writing to the US it would mean accepting the American sanctions.”
On May 8, the US announced that it would withdraw from the Joint Comprehensive Plan of Action with Iran and re-impose American sanctions, including that on petroleum related transactions involving Iran.
Kabir Taneja, Associate Fellow with Strategic Studies programme, Observer Research Foundation, while stating that India clearly needs to communicate with the US, said “record needs to be put straight on the fact that India is a partner with the US and not an ally, yet. The two are very different. Though Iran is an important trade partner, US cannot be ignored in the future trade trajectory.”
Oil imports from Iran are on a decline, but when the State refiners start cutting down buying from there, then it is a signal of a policy decision, he pointed out.
During the visit of Hassan Rouhani, President of the Islamic Republic of Iran, in February, during the bilateral talks, the President and the Indian Prime Minister Narendra Modi, agreed on deepening trade and investment cooperation between the two countries, and in this context, they recognised the need to put in place an effective banking channel for business transactions. This was when opening of the Iranian Pasargadbank branch in India was decided.
It was also agreed to set up a Joint Committee of officials to examine feasible options, including rupee-rial arrangement, Asian Clearing Union mechanism to establish functional payment channels.
Asked if the setting up of the Iranian bank branch in India will help overcome the payment challenge, experts believe that this clearly indicates how India wants to deal with the Islamic state.
(with inputs from Twesh Mishra)