29 Mar 2024
Saturday 5 January 2013 - 14:49
Story Code : 16514

Under fire, Iran bolsters India ties

Iran's chief negotiator Jalili speaks during an anti-U.S. Gathering in TehranIran has sent a top official to India to reaffirm its ties with the South Asian country at a time when Tehran is facing tough U.S. economic sanctions.
Over the past two days, Irans Supreme National Security Council Secretary and Chief Nuclear Negotiator Saeed Jalili has met Indias national security advisor Shiv Shankar Menon, Finance Minister P. Chidambaram and Foreign Minister Salman Khurshid.

The visit comes at a tricky time for Iran, one during which its crucial to maintain its relations with India.

U.S. economic sanctions, which threaten to punish countries that do business with Iran by shutting them out of the U.S. financial system, have hurt Iranian businesses and the governmentby forcing the countryto cut its oil exports.

The sanctions are meant to force Tehran to give up its nuclear program, which Washington says is an attempt to produce nuclear weapons but which Iran argues is for peaceful purposes.

The U.S. has pressured countries that buy oil from Iran to reduce purchases or face sanctions. India was among countriesthat won a reprievelast month for significantly cutting back its imports from Tehran. According tonews reports, India bought 12% less Iranian crude between April and September compared to a year earlier. New Delhi has pledged to reduce its purchases of Iranian crude in the current fiscal year through end-March by 11% to 15.5 million tons.

At the same time, India faces pressure from Tehran to continue to purchase oil. With the U.S.-dollar financing system out of bounds for Iranian companies, India and Iran have begun a barter system in which Tehran accepts Indian rupees in payment for crude oil. It then uses these rupees to buy Indian goods like wheat.

Tehran also sells oil to Turkey and South Africa, among others. But India, the second-largest buyer of Iranian oil after China, is an especially important ally. (All these countries won waivers from U.S. sanctions last month after reducing purchases.)

India is our friend, said Mr. Jalili at a news conference Friday. There are very good relations between the two countries.

The question now is to what extent Iran can continue to rely on India given the U.S. pressure.

India says it needs to buy some Iranian oil to meet its huge energy import needs, despite attempts to source more crude from Saudi Arabia and elsewhere. The two countries interests coincide in other areas, too. Both nations oppose Pakistans attempts to influence policy in Afghanistan, for instance.

But India also needs to keep on the right side of the U.S., with whom its interests have aligned more closely in recent years due to a civil nuclear pact and closer cooperation on regional security, including Afghanistan.

Signs are that India will continue to comply with U.S. demands on Iran. The Obama administration is set to increase its financial pressure on Tehran in the coming months, according to U.S. officials.

In February, countries gaining exemptions must comply with new payment restrictions. In particular, the U.S. will require that these countries make payments into accounts at banks within their own borders. The funds can then be used only to purchase authorized goods or services.

Iran knows India cant do much about the sanctions. Iran is also likely to make bilateral visits to Russia and China, countries which Iran thinks are more assertive on the world stage, said Sunjoy Joshi, director of the Observer Research Foundation in New Delhi.

Mr. Jalili remained optimistic that Irans oil supplies will continue to keep it tight with India. We have rich energy resources that can help our neighbors, he said. He added that Tehran still is interested in extending a natural gas pipeline to India via Pakistan.

India dropped out of the project a few years ago under pressure from the U.S. Now, Washington isexhorting Pakistanalso to back out.

On Friday, Mr. Jalili took a swipe at the U.S. pressure. Sanctions are against the principles of free-market and democracy which they talk about, Mr. Jalili said. He said that the sanctions have hurt U.S. companies more than Iranian ones, but did not elaborate.

Mr. Jalili also suggested the two nations work more closely on nuclear energy development. Clearly thats a nonstarter given Indias deal with the U.S. in 2005 to import civil nuclear equipment. The U.S. and other nuclear power suppliers allowed the deal to reward India for its history of nonproliferation since developing nuclear weapons in the 1970s.

Mr. Jalili, whos in India on invitation of Mr. Menon, said he also discussed issues of common interest and threats with Indian officials. Mr. Jalili said terrorism and organized crime is a major threat to both the countries and more cooperation is needed.

By The Wall Street Journal

 

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