India Trade Delegation Bucks US Sanctions on Iran

A major Indian trade delegation to Iran has pronounced the trip a success. The development underscores how difficult it will be for the Obama administration and the European Union to impose ‘crippling’ sanctions on Iran.

India imports $11 billion a year in petroleum from Iran, its second-largest supplier. The Indian economy is growing rapidly and the number of cars and trucks in the country is expanding along with it. 70% of petroleum in the world is used to fuel vehicles. The unilateral US and EU financial sanctions on Iran have crippled its international banking access. As a result, Iran is seeking barter arrangements. Instead of important things from Europe, Tehran instead will buy Indian-made goods, essentially bartering them for petroleum. Iran will also buy Indian goods with gold bullion. At the moment, Iran imports less than $3 billion in goods annually from India, but this trade imbalance is likely to be redressed soon.

India has also just exempted rupee payments made by Indian firms for Iranian petroleum from steep taxes, encouraging the trade.

Here are the reasons India is resisting US, European and Israeli pressure to cut Iran off:

1. It is not clear how India would replace the bulk of petroleum products it buys from Iran; international oil markets are relatively tight. India’s monthly imports from Iran are down slightly over the two previous years, but it is hard to see how they could go much lower unless Indian over-all petroleum demand feel (unlikely) or unless the world suddenly produced 2 million barrels a day more than the world demand, also at the moment unlikely.

2. The Indian manufacturing lobby sees an enormous opportunity for India in stepping into the vacuum left in Iranian imports by the US and EU sanctions.

3. Muslim voters are something like 12% of the Indian electorate, and the ruling Congress Party in particular is beholden to the Muslim vote. Indian Muslims generally do not approve of the US and Israeli attempt to isolate Iran.

4. India’s rivalry with Pakistan impels it to seek regional allies to offset Pakistan’s soft power in the Muslim world.

5. India’s economy is sufficiently big and diverse that it can probably arrange for some firms to deal with the US and other firms to deal with Iran, avoiding the worst impact of possible US Treasury Department sanctions. Moreover, Washington may be reluctant to follow through on its threats against India in this regard, since the US has wanted to play India off against China and would be deprived of that chip in global politics if relations soured with New Delhi.

8 Responses

  1. It will be interesting to see how this will reflect on the competitive position of SWIFT and to its monopoly. Using a private co-operative as a tool in a geopolitical struggle is rather questionable for that institution. Others, banks and countries, who do not like the power of those who control SWIFT have to create their own “SWIFT” and the monopoly of the SWIFT is over.

    US and especially EU are crazy if they believe that others will allow them to control as and when they want the worlds banking system and trade. Will we see a Asian and Latin American “SWIFT” in the near future?

    USA already has used the information of SWIFT to sanction money transfers between European partners. One Danish businessman bought Cuban cigars from the German importer with USD 26,000. USA seized that money transfered from a Danish bank to a German bank. The justification for the seizure the US Treasury stated was that the Danish businessman violated the United States embargo against Cuba. Rather absurd because SWIFT is a European company, operates under Belgian laws and EU has no embargo against Cuba.

    • Wouldn’t India’s Muslims disaprove of Iran’s support for Assad in Syria, and perhaps by extension be less likely to support Iran?

  2. Does this imply that India dismisses the accusation of Iranian involvement in the terrorist attack on the Israeli embassy?

  3. No. 3 I doubt any indian muslim support for Iran is an issue that has any bearing on this issue. Or that such support exists in the first place. As an Indian Muslim, I can definitely verify this.

  4. What about the growing supply of oil and gasoline from Iraq?
    Where has the Iranian oil been going? I should think that those importers would be distressed at the Indian grab.
    Does it make any difference that most of the Muslims in India are Sunni?

  5. I have long wondered about the real purpose of SWIFT. I make money transfers and am never sure of the SWIFT code, but it never seems to matter. I read that it is really the US tracking “terrorist transfers ” of money, and the EU did not like the interference of the USA in its transactions.
    I hope SimoHurtta is right, and other arangements are made.
    India would be foolish to abandon all its former nonaligned benefits to join the US crusade against “enemies”.

  6. The number one reason for the deal must be that Indian politicians are accountable to their own citizens and not the right wing Israeli interest.

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