US protests India’s move to pay Iran via Hamburg

Discussion in 'Foreign Relations' started by ejazr, Feb 15, 2011.

  1. ejazr

    ejazr Stars and Ambassadors Stars and Ambassadors

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    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.
     
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  3. Tshering22

    Tshering22 Sikkimese Saber Senior Member

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    Then ask US to provide us free gas. Can they do that for us? No they can't. So how about stop bending backwards for once and do things our way. eh Manmohan? :doh:
     
  4. Yusuf

    Yusuf GUARDIAN Administrator

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    Seriously you either trade or you don't. What's this hulla gulla about finding a way that is not sanctioned. Why not impose a straight forward oil embargo on iran than trouble all and sundry in a maze of other embargos that targets iranian oil? Its only increasing hassles in buying oil but not curbing it. The US sure does not want to embargo oil completely as it knows it will spiral the oil prices, but it just inconveniences others by adopting such policies.
     
  5. Rage

    Rage DFI TEAM Stars and Ambassadors

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    India protests the U.S.' move to protest.
     
  6. amitkriit

    amitkriit Senior Member Senior Member

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    India must protest against the 3.1 Billion USD valentine's day gift from USA to Pakistan.
     
  7. pmaitra

    pmaitra Moderator Moderator

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    India needs Iran, for two big reasons:
    1. Energy security.
    2. Access to Afghanistan.

    When it comes to these two, India must politely, yet firmly, tell US that it cannot entertain US demands here.

    Moreover, US has chosen, on numerous occasions, to ignore India's concern of military aid to Pakistan. Being an astute gentleman that India is, India has every right to reciprocate.
     
  8. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    The fear maybe that the oil will be bought in Euros not dollars?? Other countries have announced similar arrangements in non dollar oil trade (China-russia). This trend if it becomes more widespread sets a dangerous trend against the dollar.
     
  9. Yusuf

    Yusuf GUARDIAN Administrator

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    LF, the US us ok with a rial rupee trade. So its not about dollars in this case.
     
  10. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    I agree Yusuf, this is more attempts to isolate Iran. Iran has strong support by all the BRIC nations and rarely have I seen USA halt any Russian or Chinese Iranian trade(except weapons) Brazil and India are pressured more.
     
  11. Oracle

    Oracle New Member

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    The dollar dominance is something the US would never let go Yusuf. It's not only oil that US is concerned about, more so it's dollar as the global currency.
     
  12. Yusuf

    Yusuf GUARDIAN Administrator

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    Oracle, here the case is less to do with dollars and more with other issues.

    Question still is the US wants to restrict oil trade of iran by coming out with hindrances. It cannot introduce an oil embargo on iran a la iraq, so its basically trying to get allies, friends and weak countries to back off. India can't as iran is a major source of energy and also strategically important. We have invested quite a bit there and chhabar is vital for us. So is the route to Astan from there.
     
  13. Oracle

    Oracle New Member

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    Yusuf, I did not disagree with your POV. You are correct, however dollar dominance is not something the Americans would like to ease away with.
     
  14. The Messiah

    The Messiah Bow Before Me! Elite Member

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    Agreed.

    The yanks should be informed either to provide gas and oil or shut up. Or more importantly to stop aid money and weapons on pakistan.
     
  15. pmaitra

    pmaitra Moderator Moderator

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  16. Oracle

    Oracle New Member

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    /\/\/\ You're bang on!
     

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