India Caught Between Western Sanctions and Iran

The European Union (EU) will ask India to use its diplomatic relations with Iran to pressure the Islamic Republic to abandon its nuclear weapons program.

EU President Herman Van Rompuy told the Times of India newspaper: I plan to ask Indian leaders to apply their considerable leverage to Iran and help in convincing the Iranian leadership to give up their sensitive nuclear program and return to the negotiating table.”

The EU and the United States have already intensified economic sanctions against Iran and its oil sector in hopes of forcing Teheran to give up its nuclear ambitions.

Iran has long insisted that its atomic program is designed for peaceful purposes and now claims the sanctions will have no influence on its policymaking.

Moreover, India is highly dependent on Persian oil and may not heed demands from the west that it buy its crude elsewhere.

Reuters reported that 12 percent of India’s oil imports come from Iran – western sanctions on Iranian oil transactions pose a grave danger to New Delhi.

In fact, Indian may be seeking to increase its economic ties to Iran.

The New Delhi government will be sending a delegation to Iran later in February to seek ways to increase the size of India’s export business to Iran while at the same time enabling the payment for Iranian oil in rupees. (India was previously using the Turkish bank Halkbank as a conduit to pay for Persian oil, but now that route may be blocked by US sanctions.)

According to Reuters, Iran has agreed to accept rupee payment for almost half (45 percent) of India’s estimated annual $11-billion oil bill from Teheran.

The semi-official Fars news agency of Iran reported Thursday that India was its largest oil buyer in January, supplanting China, in defiance of western sanctions.

Crude oil exports to India climbed to 550,000 barrels per day last month, a 37.5 percent jump over the year-ago figure.

India’s higher purchases partially offset a 50 percent reduction in crude exports to Beijing. Fars noted that the china presently imports about 250,000 barrels of oil per day from Iran.

Indeed, India may have little reason to abide by the US and EU’s harsh actions against Teheran. Regarding the west’s sanctions on Iran, India’s trade secretary Rahul Khullar told reporters: There are UN sanctions which India honors, those don't cover the export of vast range of products which India can export to Iran. If the EU and the US both want to stop exports to that country, please tell me why I should follow suit? Why shouldn't I take up that business opportunity?

Khullar added: “If Europe and the U.S. believe they wish to sanction exports of a large number of items to that country that is their choice. But for us we shall continue business.”