What The Chinese Have To Say On Iran Oil Import Issue Imposed On India Unilaterally
The US recently announced that it would not extend sanctions waivers for Iran oil importers, dictating that all oil buyers will have to end imports from Iran or be subject to US imperial sanctions after May 2. Given that Iran is an important energy and trade partner of India, the US move will highly likely affect US-India ties. …..as India us certainly not going to bend to such dictates.
India relies on imports for 80 percent of its oil demand. When the US withdrew from the Iran nuclear deal, Iran was India’s third largest oil supplier.
Previously, the US has granted exemptions to India, according to which, as of March 2019, India had to restrict its monthly oil purchase from Iran to 1.25 million tons, equivalent to 70 percent of what India had been importing from Iran before Washington quit the Iran nuclear deal. ……in fact India has breached this dictate already.
By importing oil from Iran, India saves around a quarter of combined costs due to favorable conditions such as prices, transportation and insurance. Though India has used one of the conditions listed in the exemptions, that the Iranian oil should not be traded in US dollars, lest Iran’s export earnings be used to finance international terrorism. India pays to Iran in rupees for oil imports. The sum of money is deposited in a special account in India.
Iran uses it to purchase humanitarian supplies such as rice and medicines from India. For India, this situation worked to its advantage and even Iran has welcomed this step of not dealing in American dollars.
Judging from the current political situation in the US, the country is unlikely to compensate India economically. Instead US oil exporters hope to take the opportunity to expand oil exports to India.
However, their trade terms are not attractive while the trade volume is limited. Nor does India want its energy security to be navigated by the US.
Therefore, once the sanction waiver expires, India’s oil import costs, its US dollar payouts will rise and its export revenue will decrease, thus leaving no choice to India but to continue the oil trade with Iran.
India’s economic growth and exchange rate’s stability will be under great pressure if it has to import oil at higher rates. This is not acceptable to India.
In addition, if the US tightens sanctions on Iranian oil exports, it will push up international oil prices, thereby increasing India’s overall oil import bills. Once India’s economic interests are impaired, India-US relations are sure to be hurt.
Moreover, cooperation between the US and India on issues such as Afghanistan will be impeded. India-Iran relations transcend the oil trade.
The two nations also share a long-term strategic consensus on issues such as Afghanistan and Pakistan. Iran hopes to strengthen its ties with Afghanistan.
Similarly, India also hopes to reach out to Afghanistan through Iran and extend its influence to Central Asia.
According to The Economic Times, India has “committed $3 billion in assistance to Afghanistan since 2001,” so as to cultivate Afghan’s goodwill toward India.
In addition, India is investing in Iran’s Chabahar port in order to build a new link between India and Afghanistan through the port and to have more connections between the two countries.
Now, the US has announced its withdrawal of troops from Afghanistan, which jeopardizes Afghanistan’s stability and India’s investment in the country.
Moreover, US sanctions would severely stymie cooperation between India and Iran over the port of Chabahar, which is again not acceptable to India.
All that is likely to undermine the relationship between India and US , thwart US-India defense cooperation on Afghanistan as well as counter-terrorism efforts that started since the September 11 attacks.
The divergences between US and India on Iran are impairing their strategic relations and mutual understanding.
US wants to maintai close military cooperation with India and is involved India in Washington’s Indo-Pacific strategy.
However, policy changes by the US on the Iran nuclear issue make India worried about Washington’s real interests, long-term strategy and uncertainty in ties with the US.
Most Indians believe that the US does not care for India’s interests and strategy, but merely intends to use New Delhi to contain Beijing.
They say India will never become a strategic pawn of the US but can be friends only as an equal partner. There is resentment among Indians because the US has demanded that India cut ties with Iran, but keeps providing assistance to Pakistan.
In fact, since last year, India has begun to distant itself from the US Indo-Pacific strategy and reverted to its strategic independence and autonomy.
India’s frosty relations with Russia and China have also improved. Probably, US-India relations will only be normal and sustainable under multilateral framework.