The Passionate Attachment

America's entanglement with Israel

Israeli Embassy Attack — A false flag designed to derail India’s long-term partnership with Iran?

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Update: Reuters reports:

India’s determination to pursue trade with Iran despite Western sanctions could be undermined as wary exporters back away from fresh deals after a bomb attack in New Delhi blamed on Tehran, a trade association chief said on Tuesday.

Might the recent attack on the Israeli embassy in New Delhi have something to do with the fact that India has now surpassed China as Iran’s number one crude oil customer? As M K Bhadrakumar recently commented:

Now, coming back to India’s oil imports from Iran, Washington will continue to dissuade Delhi from trading with Tehran. The US state department spokesperson told reporters Tuesday that the talks with the visiting Indian foreign secretary in Washington included “how India might find alternative sources… This is a two-track policy, both to encourage countries to wean themselves from Iranian oil, but also to work with suppliers around the world to help countries find alternative sources of supply.”

However, what Washington overlooks is that India’s economic relationship with Iran as such is also at stake here. Without oil imports, India-Iran trade virtually packs up. Delhi’s robust efforts to work out a reliable payment mechanism for the trade with Iran underscores that it intends to not only sustain the present level of trade but do all it can to boost the trade by stepping up India’s exports to Iran. The government is mounting a “huge” business delegation to Iran in end-February to explore the opportunities for tapping those sectors that are being vacated by the western countries following their embargo against Iran. It is a long-term approach that India is adopting, keeping in view the fact that Iran is a rich country potentially which offers a big market for India’s exports.

The new payment mechanism — providing for 45% of Iranian oil to be settled for in Indian rupees — opens up interesting possibilities. Of course, Iran has the option to leave the money in the Indian state-owned UCO Bank at an interest rate of 4% or so. But to obviate currency risks, Iran may perhaps prefer to use the money to import from India or to use India as a trading hub to buy from third countries. Iran also can invest the money in Indian bonds or equities, which Delhi might welcome. In sum, the payment mechanism acts as a catalyst to build up the momentum of economic ties as well as broadening and deepening the partnership.

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Written by Maidhc Ó Cathail

February 15, 2012 at 8:29 am

Posted in Uncategorized

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