[No doubt, this week’s
diplomatic choreography — with the Americans on one side of the capital and the
Iranians on the other — could easily have been interpreted as a deliberate
provocation at a moment when the once-shiny partnership between India and the
United States seems to have dulled. But if the scheduling was poorly planned,
the situation actually provided an illuminating window into the realpolitik of
Iranian sanctions and of how the United States and India, as well as China, are
all trying to achieve their divergent goals.]
By Jim Yardley
 |
Mustafa
Quraishi/Associated Press
Secretary of State
Hillary Rodham Clinton and the Indian opposition leader Sushma
Swaraj
met in New Delhi on Tuesday |
NEW DELHI
— Admittedly, the timing was awkward. Secretary of State Hillary Rodham Clinton arrived
in New Delhi this week after declaring that India should reduce
imports of Iranian oil and comply with Western sanctions. Yet across town,
India and Iran were trying to
figure out ways to do business together.
In the main ballroom of
a five-star hotel, an Iranian trade delegation met with Indian exporters,
exchanging cards, sipping tea and nibbling on cookies. The Iranians met one
Indian trade group on Monday, another on Tuesday and had more meetings planned
in the country’s financial capital, Mumbai — a business courtship seemingly in
open defiance of Mrs. Clinton’s hard line.
“I am sure the future of
India-Iran trade is very good,” said Yahya Al Eshagh, president of the Tehran
Chamber of Commerce, Industries and Mines and the leader of the Iranian
delegation.
No doubt, this week’s
diplomatic choreography — with the Americans on one side of the capital and the
Iranians on the other — could easily have been interpreted as a deliberate
provocation at a moment when the once-shiny partnership between India and the
United States seems to have dulled. But if the scheduling was poorly planned,
the situation actually provided an illuminating window into the realpolitik of
Iranian sanctions and of how the United States and India, as well as China, are
all trying to achieve their divergent goals.
The Obama
administration, in trying to squeeze Iran by choking off foreign currency that
might be used for its nuclear program,
is pressuring Iran’s oil customers to reduce imports sharply or face punitive
sanctions as soon as next month. Earlier this year, Mrs. Clinton announced
exemptions for Japan and 10 European nations but provided no such waiver to
India and China, the biggest importers of Iranian crude and the rising powers
of Asia.
China and India had
already rejected the threat of sanctions and vowed to act in their national
interests. The Obama administration called on both countries to make
significant reductions of imports. But behind the scenes, officials from all
three countries were exploring ways to reduce Iranian oil exports while
engineering workaround mechanisms so that India and China could pay for the oil
they do buy. Indeed, both countries now have arrangements to buy Iranian oil in
their domestic currencies — rather than the dollar — that could increase their
exports to Iran and also make Iranian oil cheaper.
“It is a lot more
complicated with India and China than with Japan or South Korea,” said Valerie
Lincy, executive director of the Wisconsin Project on Nuclear Arms Control,
which tracks Iran’s nuclear program. “The economies are structured differently,
the amount of oil they are importing from Iran is different and the geopolitics
are different.”
The Obama
administration, which has courted India as a geopolitical partner, recognizes
that India has its own interests to defend: Indian leaders want to maintain
good relations with Washington, and avoid crippling sanctions, yet India is
heavily dependent on foreign oil, meaning that drastic reductions could damage
an already wobbling Indian economy.
Moreover, Indian
politicians are loath to appear to be doing the bidding of Washington, even if
quietly they are working to comply. Analysts say the Indian government has
ordered domestic refineries to reduce imports of Iranian oil by more than 15
percent.
“India is clearly making
an effort to reduce its dependence on Iran, and this is recognized by the
U.S.,” said Harsh V. Pant, an India specialist at King’s College in London, in
an e-mail. “But domestically, the Indian government cannot be seen to be
buckling under any sort of U.S. pressure. So there is a lot of talk of
expanding trade ties with Iran.”
Mrs. Clinton’s visit to
India was the last stop in an Asian tour that began in China. Her agenda in
China was overtaken by the plight of the blind dissident Chen Guangcheng, but
Mrs. Clinton also spoke to Chinese leaders about their progress on reducing oil
purchases from Iran.
In New Delhi, Mrs.
Clinton discussed Iran and other issues with Prime Minister Manmohan Singh,
while also meeting with Sonia Gandhi, president of the governing Indian
National Congress Party. On Tuesday, she used a brief news conference to praise
India as “a strong partner,” adding that India and the United States share a
common goal of preventing Iran from getting a nuclear weapon.
“We commend India for
the steps its refineries are taking to reduce its dependence on imports from
Iran,” she said. “And we have been consulting with India, and working with them
on some areas on alternative sources of supply. There’s no doubt that India and
the United States are after the same goal.”
India’s external affairs
minister, S. M. Krishna, appearing with Mrs. Clinton, portrayed India as acting
in its own self-interest, while noting that Iran and India have longstanding
cultural, economic and religious ties that cannot be reduced to the single
issue of oil.
“It is natural for us to
try and diversify our imports of oil and gas to meet the objective of energy
security,” Mr. Krishna said.
Even as India reduces
its oil imports from Iran, officials have been trying to figure out how to pay
for its remaining Iranian oil purchases. Banking restrictions now make normal
transactions with Iran almost impossible. This is why the Iranian trade
delegation is in town: Iran has agreed to accept payment for 45 percent of oil
sales to India in rupees, the Indian currency, much of which will be used to
buy Indian exports.
Mrs. Clinton never
mentioned the presence of the Iranian delegation, nor the rupee payment system,
yet American officials do not seem to mind. Mark Dubowitz, an Iran specialist
in Washington, said a primary purpose of sanctions is to starve Iran of the
dollars and euros it needs to finance the country’s nuclear program. In the
past, India paid for most of its oil purchases in dollars; under the new
arrangement, India will buy nearly half its Iranian oil in rupees, which are
not a fully convertible currency.
“This rupee account is
very helpful,” said Mr. Dubowitz, executive director of Foundation for Defense
of Democracies. “They can’t convert rupees into dollars or euros. They can’t
repatriate rupees back to Iran. So the only thing they can do is buy Indian
goods.”
At almost precisely the
moment on Tuesday that Mrs. Clinton was speaking at her news conference, the
Iranian trade delegation was a few miles away, in a basement conference hall of
one of the city’s most prominent cultural centers, watching a slide show on
Indian exports, including photos of Indian rice, tractors, auto spare parts,
pharmaceuticals and more.
“We are very keen to
work with you,” said Anil K. Agarwal, a businessman and officer with the
Associated Chambers of Commerce and Industry of India.
In fact, the new payment
arrangement for oil may help India reduce its enormous trade imbalance with
Iran. Last year, India spent $988 million on Iranian imports, mostly on oil,
more than 10 times the $91 million in goods that India exported to Iran.
Iranian leaders deny
that they are developing nuclear weapons and
say their nuclear program is for the peaceful development of energy. Mr.
Eshagh, the leader of the Iranian delegation, never directly mentioned the
sanctions, nor the fact that Mrs. Clinton was in town. But he did allude to
“certain circumstances” and “some problems” that made trade more complicated.
Still, he struck an upbeat tone.
“There is a vast
potential for exports and imports between the two countries,” Mr. Eshagh told
the audience, speaking through an interpreter. “We feel there is no difficulty
regarding goods and their prices.”
It remains to be seen
how extensively, or effectively, the new rupee payment system will be used.
American officials will also be watching to ensure that no goods that are
banned under the sanctions are exported to Iran under the system. Wheat, rice
and pharmaceuticals are currently outside the sanctions, but sales of certain
technologies, for example, are a cause of concern.
The question now is
whether India has made the “significant reductions” required for exemptions.
Indian officials believe they have now met the American demand, and many
analysts expect the Obama administration officials to grant an exemption during
a high-level Strategic Dialogue between the two countries next month in
Washington.
Gardiner Harris and Hari Kumar contributed
reporting.
