Iran oil supply : Issue resolved

Virendra

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It's not that we don't want to or don't have money to pay. Problem is, we have run out of options to transfer funds. $5billion is peanuts really for India.
I know Kunal, just playing with your point about the embarassing Iranian stance vis a vis our situation :)
West has been choking Iran as hard as they can. Lets see where it goes.
 

Yusuf

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TR, we pay in cash or pay by cheque or whatever, how does it make a difference? We are buying oil from them. That is open to all. So what's the fuss. Cash or kind?
 

Iamanidiot

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It was the Israelis who did the rabble rousing wrt to Iran not the americans on both the counts
 

thakur_ritesh

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Yusuf,

ideally, cash or kind shouldnt matter and so i did acknowledge that to a certain extent it must also be happening, and if we can have a mechanism where we can in clear terms certify that we are using the money for the crude purchase, that should end the matter there. but if we are in a spot where the means of certifying the amount is not there then its not a very safe position to be in. then what ever the mode of transportation will have to be very highly insured as well, imagine a plane worth a few million dollars being insured for quite a few billions, but still its doable, provided it gets certified. if the paper work is well in place, nothing really should hamper the process.
 

Yusuf

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I think the hawala channel is workable. It's easy via Dubai. We have a huge Indian diaspora there as well. Fronts can be created easily.
 

ejazr

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India's slippery Iran Policy

India's slippery Iran Policy | Iran policy | NDA | The New Indian Express

Energy supplies from Iran are back in the news and for all the wrong reasons. For years, Iran captured the limelight over the much-hyped and yet to materialise gas pipeline project through Pakistan. This was followed by a host of controversies — the energy-related investments, pressure from Washington, payment rows and now the threats of oil supply disruptions. The lack of foresight and clear thinking is visible for anyone willing to see.

Wishful thinking and temporary amnesia appear to be the twins running India's Iran policy. In their eagerness to cosy up to Washington, various Indian governments have adopted ostrich as India's national bird. If the politicians sidestepped tougher issues, the mandarins avoided uncomfortable questions. For both, civilisational links with Iran became the theme song.

Even when the US figured prominently in their calculations, both the NDA and UPA governments ignored, overlooked and failed to internalise the prolonged tension and conflict between Washington and Tehran. They were seen as bilateral issues and would not affect India's relations with both these countries. For over a decade, Indian leaders, officials and elite failed to read the American concerns correctly.

A careful perusal of the WikiLeaks would reveal that Iran has been high on the American foreign policy agenda. Not just in New Delhi, but American officials posted in Tel Aviv, Manama, Riyadh, London and Paris have periodically discussed and expressed their concerns over India's ties with Iran.

The US officials were not content with the diplomatic channels but expressed their concerns in public. India's energy ties with Iran, for example, figured prominently during the visit of secretary of state Condoleezza Rice in March 2005. In a not so subtle manner some American leaders even reminded India of the provisions of the Iran Libya Sanctions Act of 1996 (later re-named as Iran Sanctions Act).

Rather than handling them sensibly and with foresight, New Delhi ignored American concerns. Driven by populism the left-wing of the Congress even publicly questioned the right of the US to 'dictate' Indian policy. Far from addressing the issue, they competed for brownie points.

Unfortunately, the American sanctions, coupled with various measures by the UN Security Council are slowly shrinking India's options. If these were not enough, India is complicating the problems. Imitating their foreign policy counterparts, the mandarins in the Reserve Bank of India suddenly abandoned the payment route that was effective since 1975. Nine Asian countries — Bangladesh, Bhutan, India, Iran, Nepal, Pakistan, Maldives and Sri Lanka — have been using the Asian Currency Union (ACU) to settle their foreign trade payments. On December 23 last year the RBI cancelled this arrangement and thereby jeopardised the payment for the oil imported from Iran. While the RBI decision was the result of the prolonged pressures from the US Department of Treasury, it never worked out an alternative arrangement when it decided to cancel the ACU route.

After weeks of negotiations India found the Hamburg-based and Iran-owned Europäisch-Iranische Handelsbank AG (EIH Bank) to organise the payment dues. This proved to be a temporary measure and buckling under American pressure, the German authorities scuttled the plan. Then there were suggestions that the both countries would agree on rupee-rial payment. Under the arrangement, India would settle its dues through the Indian currency which Iran could use for its imports from India or for investments in select areas.

This was not a trouble-free option either. During the Cold War India had a similar arrangement with USSR whereby its imports from Russia, especially the military hardware, were paid in rupees which the USSR invested in various economic and political activities within India. This led to unintended controversies. The spiralling of friendship societies, progressive associations and sponsored trips to Moscow were partly the spin-off of the rupee-rubble trade.

This experience should make India wary of repeating some of these mistakes. There are sufficient indications that Iranian diplomats have intensified their propaganda machinery within India. According to WikiLeaks, in September 2005, US diplomats in India found out that Shia Muslim leaders in Lucknow, "expected Shia groups funded by the Iranian embassy to organise anti-US protests on Friday, September 23".

Another August 2006 document was more revelling: "Qari Mian Mazari, a leading Maulvi politician from the moderate Barelvi school, was less complacent than Imam Bukhari. He maintained that Muslim emotions were being fired-up by a steady stream of propaganda from the Urdu press. He pointed out that there are over 100 Urdu newspapers in India with an enormous influence over Muslim attitudes. Mazari claimed that the Iranian embassy had paid for the placement of 15 anti-Israel/anti-US articles in the Urdu press since hostilities began in Lebanon and planned to continue to spending large sums to play up the Lebanon story. He was particularly angry with the Urdu newspaper Nai Duniya (New World), which is published by Shahid Siddiqi, a Muslim MP from the Samajwadi Party. Mazari noted that Siddiqi had published a special edition of the paper with 24 pages devoted to the glorification of Hezbollah and had distributed 50,000 copies free of charge throughout India. He claimed that the entire project was funded by Tehran." Hence, any rupee-rial arrangements with Iran would only intensify the propaganda campaign in India.

Meanwhile, citing the non-payment to the tune of $2 billion, in late June Iran threatened to stop oil supplies to India from August. Latest reports suggest that India is working out an arrangement whereby the oil dues would be paid through state-owned Turkiye Halk Bankasi in Istanbul and in euros through the Central Bank of the UAE. How long will this arrangement work?

The chain of developments amply indicates that India has no clear-cut policy towards Iran. It is immaterial if one endorses closer ties with Washington or not; but not factoring in the concerns of the latter vis-à-vis Iran is proving to be costly as well as slippery for India.

P R Kumaraswamy is chairperson, Centre for West Asian Studies at Jawaharlal Nehru University
 

KS

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A balanced article coming out from the environs of the JNU and frankly I was a little surprised as I expected an out-and-out anti-imperialism (read US) tirade when I saw the letter Jawaharlal Nehru University.

Ye the concerns expressed are very valid. While it is utterly beneficial for India to pursue closer ties with US, doing it in a shoddy and reactionary way without taking into account other crucial factors at play is immature and lacks foresight that has been the bane of Indian foreign policy, save few moments of brilliance.
 
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Yusuf

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What concerns me is the issue about Iranian Embassy bankrolling Urdu media to spread their propaganda. Not good news at all. This with the incidents of phone calls from Iran offering crores to plant bombs. Iran is turning hostile. What's the scene on our port investment in Chhabar? Will we lose it?
 

debasree

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what is the result with hobnobing with iran for so many years,except oil,every time they are gang up with pakis in oic summit and issuing hostile propaganda agaist us we can get enough oil from oman quatar and russia,dump the rouge state once for all.
 

Yusuf

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I blame the US foreign policy for Iran mess. They should try to patch up with Iran else it will be gobbled up by China. China will give it nukes. China,Pakistan & Iran is a very heady mix.
 

KS

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I blame the US foreign policy for Iran mess. They should try to patch up with Iran else it will be gobbled up by China. China will give it nukes. China,Pakistan & Iran is a very heady mix.
We have no one else except ourselves and the dumasses in South Block to blame.

US pursues a policy which is in the best interests of US, something we cannot accuse as wrong as every nation has the right to do that.

That cannot be a reason/excuse for our incompetence or lack of foresight about our priorities,interests.
 
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Yusuf

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No I am not saying we should not follow an independent policy. I am actually commenting on the folly of the US foreign policy towards Iran. It's location is just too important to not have good relations with.
 

KS

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No I am not saying we should not follow an independent policy. I am actually commenting on the folly of the US foreign policy towards Iran. It's location is just too important to not have good relations with.
Well they think that is their best strategy. Who knows what is going inside their head ?

And of course you can't forget the influence Israel has over them.
 

ejazr

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what is the result with hobnobing with iran for so many years,except oil,every time they are gang up with pakis in oic summit and issuing hostile propaganda agaist us we can get enough oil from oman quatar and russia,dump the rouge state once for all.
Actually Iran played a very prominent role in 1994 when the OIC was sponsoring a UN resolution on HR violations against India which would have resulted in sanctions. OIC works as a consensus body so that means that any member can veto a resolution. And this is what Iran did for India by vetoing the HR violations resolution against India then. We didn't have good relations with GCC countries that were aligned with the US. The US and EU were also supportive of the resolution against India and there was the recent backdrop of the 92-93 riots that had been broadcast around the world.

You can read up more here in this article
Revealed: Why Iran did for India and why it hurts


What we need here is a bunch of carrot and stick levers that we can provide Iran to change its behavior. And that eventually means acting as a mediator between Iran on one hand and the US/Saudi-GCC/Israeli combine on another. If required, even act as a security guarantor in the Persian Gulf along with the US. Although we might not have the naval capacity to do so now, we do know that starting this year, we have a West Asia strategic dialogue with the US and this should be a major part of how we manage this region and not let Indian interests override US/Israeli/Saudi-GCC interests vis a vis Iran. We already had to suffer the consequences of the ill timed Iraq invasion, we don't want more instability and oil shocks for our economy at this time.

In the meantime, it seems that some sort of oil repayment deal has been made with the US
Solution in sight for India-Iran oil payments issue: U.S. official
 
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ejazr

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The damage may be done though by delaying the repayment for about six+ months

No Iran oil for Indian refineries for August - Corporate News - livemint.com

The tough stand by a nation that supplies 12% of India's oil needs has forced refiners to buy extra crude from Saudi Arabia, Kuwait, United Arab Emirates and Iraq while sending the government scrambling for a conduit to clear $5 billion in overdue bills


New Delhi: In signs that Iran is serious about shutting off crude oil supplies to India over unpaid bills, the Islamic Republic has not allocated any volumes for supply to any of the Indian refiners for August.

The tough stand by a nation that supplies 12% of India's oil needs has forced refiners to buy extra crude from Saudi Arabia, Kuwait, United Arab Emirates and Iraq while sending the government scrambling for a conduit to clear $5 billion in overdue bills.

Iran, which has been selling crude oil on credit since late December when Reserve Bank of India halted use of a clearing mechanism under US pressure, had on 27 June written about stopping supplies from August if the dues are not paid.

Mangalore Refinery (MRPL), Essar Oil, Hindustan Petroleum (HPCL), Indian Oil (IOC) and Bharat Petroleum (BPCL) have not received any intimation from National Iranian Oil Co (NIOC) on the quantity of crude they will get from Iran in August, officials at the refiners said.

MRPL, the largest buyer of Iranian crude at 1,42,000 barrels per day, has sought additional volumes from Saudi Arabia to meet the shortfall, they said adding Essar already has alternate supplies tied-up for two-third of the 110,000 bpd of oil it had contracted from Iran.

HPCL is talking to Saudi Arabia and UAE to make up for the shortfall of 2 cargoes per month it gets from Iran under its 68,000 bpd annual supply contract.

Officials said BPCL had signed up for import of 1 million tonnes (20,000 bpd) from Iran this year. The supplies were to start in August but uncertainty over payments has meant that it will not get any crude.

Sources said a team of RBI officials last week visited Russia to explore paying $12 billion for annual imports from Iran while routing payments through Turkey and UAE were also being explored.

Routing payments in lira through state-owned Turkiye Halk Bankasi in Istanbul and in Euro through the Central Bank of the UAE were under finalization.

The identified banks were agreeable to the US which is creating hurdles against routing money through Iranian banks like Germany-based EIH, which was briefly used to clear some outstanding earlier this year before that route was blocked.

India's debt to Iran for unpaid oil has mounted to more than $5 billion after RBI last December stopped using the Asian Currently Union, winning praise from the US which is using sanctions to force Tehran to halt its nuclear programme.

Meanwhile, the government has asked its officials not to speak anything on the issue of alternative mechanism being worked out to pay for Iranian oil.

It fears any such news leaks could lead to US exerting pressure to block the conduit.
 

thakur_ritesh

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Meanwhile, the government has asked its officials not to speak anything on the issue of alternative mechanism being worked out to pay for Iranian oil.

It fears any such news leaks could lead to US exerting pressure to block the conduit.
there you go, there is nothing more to it than the US, but still good to know there is some mechanism being worked out and since there is so much US pressure then what does this mean? kind of leaves me confused

In the meantime, it seems that some sort of oil repayment deal has been made with the US

Solution in sight for India-Iran oil payments issue: U.S. official
 

no smoking

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No matter what reason behind it, it is not right that receiving your purchase without paying it.
Why did not GOI just tell Iran to halt their supply from the day they deceided to stop the pay? Isn't that kind of fraud?
 
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sukhish

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No matter what reason behind it, it is not right that receiving your purchase without paying it.
Why did not GOI just tell Iran to halt their supply from the day they deceided to stop the pay? Isn't that kind of fraud?
well if china feels so bad they can pay on our behalf. yes we are bad mean indians who don't pay outstanding balances. but atleast we don't steel
 

no smoking

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well if china feels so bad they can pay on our behalf. yes we are bad mean indians who don't pay outstanding balances. but atleast we don't steel
If you don't pay what you buy, that is kind of 'steel'. And we don't steel others resources, we steel only technology, which I am very proud of: it saves us billions of dollars and years of time.
 

Yusuf

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No smoking, I think you have not read the complete thread. india wants to pay. Problem is, all banking channels have been cut off because of sanctions and we are finding it difficult to route the money.
 

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