(This is a reprint from NewsBred).
wants India to cut down its oil
imports from Iran which
stands as its third biggest supplier after Iraq
and Saudi Arabia.
President Donald Trump has followed his pre-election promise with withdrawal
from the 2015 Joint Comprehensive Plan for Action (JCPOA) which had enabled China, Russia,
France, Germany UK, European
Union and the US itself to
dilute the economic sanctions against Tehran.
Now the sanctions are back in place with the deadline of November 6, 2018 and
the world is in turmoil, no less India.
The Trump administration has chosen a new way to browbeat
the countries which don't fall in line. Last August, it introduced CAATSA
(Countering America's Adversaries Through Sanctions Act) to scare those away
from trade relations with "hostile" countries such as Russia, North Korea
International banks and companies which defy the sanctions would bear the
brunt. Less oil imports from Iran
would hike up the prices and import bills, not just of India but of
many around the world. It would hit both inflation and Indian rupee. Since US
dominates the re-insurance and payment gateways, bypassing them is difficult.
dilemma is apparent. Before 2005, it paid $12-14 billion annually to oil bills
But signing the 2005 Indo-US Nuclear Civil Deal, gave New Delhi's leash in US hands. India voted against Iran in the IAEA General Conference
in September the very year; dithered on the Iran-Pakistan-India Pipeline and
sounded the death knell of Turkmenistan-Pakistan-India (TAPI) gas pipeline project.
By 2014, India
had reduced the Iranian oil imports to $4 billion annually.
treasury methodically shut down the banking options for India who then began paying Turkey by cash which then converted it to gold
bars and sent it across to Tehran.
was in no position to pay oil bills in US dollars. India
did try the balancing act: while Reserve Bank of India (RBI) ceased dealing
with Tehran-based Asian Clearing Union in 2010, it came to an understanding
to pay half of its bill in Indian rupees in 2012.
But once the JCPOA came into being, India-Iran trade
relations grew back to 2012 days. India
also decided to pay out $6.5 billion it owed to Iran, held up due to sanctions. Modi
government renewed the stalled Chahbahar port project. Its' ministers made a
beeline to Tehran
with promises of oil and infrastructural projects. Iran obliged on its part by
granting Oil and Natural Gas Commission (ONGC) the gas fields of Farzad B for
exploration. The air of optimism only grew better when Iranian president Hassan
Rouhani visited New Delhi
this February with his oil minister Bijan Zanganeh. India
pledged it would double its oil imports from Iran in 2018-2019. Iran, on its
part, promised to cut down the freight by $1 per barrel. India pledged to increase import by
500,000 barrels a day.
But now comes the fresh US imposition. Even though foreign
Swaraj has reiterated India
would only abide by the mandates sanctioned by the United Nations (UN), it's
easier said than done. India
and US have a booming trade of $140
billion which could take a grave hit, as well as around $31 billion of
bilateral trade surplus advantage India has. Chahbahar port project,
which could save millions in trade and increase Afghanistan's
tilt towards India,
stands to lose steam. Besides, it just would give a bigger fillip to China to snug closer to Iran, shutting the doors on India.
would be encouraged by the stand of UK,
France, Germany who have expressed "regret
and concern over Trump's disruptive action. The Modi government meanwhile has
started to flex its own muscles: in reaction to US postponing the 2+2 dialogue,
has declined US' offer to host
Defence Minister Nirmala Sitharaman. India
also seems steadfast in increasing its military deals with Russia which faces similar offensive sanctions
from United States.
The one fall-out of all this, including trade barriers
ratcheted up by both US and India, is Modi government swinging back appreciably
into the China-Russia zone. India
has this strategic advantage where countries are looking to wow India rather
than the other way around. However, India-US relations for the moment are
several notches down than they have ever been since Trump came to power.
Ashish Shukla is an Indian journalist and author who has his new book:"HOW UNITED STATES SHOT HUAMNITY: Muslims Ruined Europe Next" released worldwide.
He also runs a website: www.newsbred.com which is antidote to boardroom bulletins that (more...)