US protests India's move to pay Iran via Hamburg
Just as India thought it has found a way to pay for its crude oil imports from Iran, fresh complications have arisen. Washington has made it clear that it cannot overlook the fact that the European bank through which New Delhi proposes to channel its payments is under US sanctions.
The problem here is the Hamburg-based Europaish-Iranische Handelk AG (EIH) bank, which holds most of Iran's key accounts. Two weeks ago, it was decided at a high-level meeting that the Reserve Bank of India would make payments to the Deutsche Bundesbank (German Central Bank) which, in turn, would pay the EIH bank and it would then settle it with the Iranian Central Bank.
This route was mapped because the US had increased pressure to stop payments through the Asian Clearing Union, the route the RBI has traditionally taken to settle accounts to Iran.
The RBI asked the government to secure an assurance from the US that it had no objections to the EIH route of payment. Washington has conveyed that EIH cannot be involved.
The issue here is that while EIH is under US sanctions, it is not included in the sanctions imposed by the United Nations and the European Union. India has tried to tell the US that it must understand New Delhi's compulsions given that 14 per cent of its crude oil imports are from Iran and an estimated $1 billion is pending in payments.
The US has told India that the Iran Central Bank (ICB) is not barred from settling petroleum accounts under the US sanctions regime so New Delhi has the option of letting ICB open an account in a bank in India and then make the payment in Euros.
Washington has further clarified that payments can be channeled to ICB through any European central bank but without EIH being brought in. Alternatively, India could consider a Rupee-Rial arrangement like what Japan and South Korea have done. But with virtually no exports to Iran, officials argue, such an arrangement could be economically disadvantageous to India.
While India continues to impress upon the US to find a solution given the bilateral strategic partnership between both countries, Washington has its own reasons. The EIH Bank, owned by Iranians, has apparently been involved in transacting large amounts of money for Iran-based banks that the US blacklisted. US authorities have claimed that EIH played an important role in channelising funds meant for the Iranian nuclear programme.
Just as India thought it has found a way to pay for its crude oil imports from Iran, fresh complications have arisen. Washington has made it clear that it cannot overlook the fact that the European bank through which New Delhi proposes to channel its payments is under US sanctions.
The problem here is the Hamburg-based Europaish-Iranische Handelk AG (EIH) bank, which holds most of Iran's key accounts. Two weeks ago, it was decided at a high-level meeting that the Reserve Bank of India would make payments to the Deutsche Bundesbank (German Central Bank) which, in turn, would pay the EIH bank and it would then settle it with the Iranian Central Bank.
This route was mapped because the US had increased pressure to stop payments through the Asian Clearing Union, the route the RBI has traditionally taken to settle accounts to Iran.
The RBI asked the government to secure an assurance from the US that it had no objections to the EIH route of payment. Washington has conveyed that EIH cannot be involved.
The issue here is that while EIH is under US sanctions, it is not included in the sanctions imposed by the United Nations and the European Union. India has tried to tell the US that it must understand New Delhi's compulsions given that 14 per cent of its crude oil imports are from Iran and an estimated $1 billion is pending in payments.
The US has told India that the Iran Central Bank (ICB) is not barred from settling petroleum accounts under the US sanctions regime so New Delhi has the option of letting ICB open an account in a bank in India and then make the payment in Euros.
Washington has further clarified that payments can be channeled to ICB through any European central bank but without EIH being brought in. Alternatively, India could consider a Rupee-Rial arrangement like what Japan and South Korea have done. But with virtually no exports to Iran, officials argue, such an arrangement could be economically disadvantageous to India.
While India continues to impress upon the US to find a solution given the bilateral strategic partnership between both countries, Washington has its own reasons. The EIH Bank, owned by Iranians, has apparently been involved in transacting large amounts of money for Iran-based banks that the US blacklisted. US authorities have claimed that EIH played an important role in channelising funds meant for the Iranian nuclear programme.
