Photo: AP/Charles Dharapak
The Obama administration could impose sanctions on India this summer if it fails to reduce its purchases of Iranian oil, government officials told Bloomberg earlier this week.The U.S. law, ratified in December applies to any country that doesn’t make a “significant” reduction in its Iranian crude oil purchases during the first half of this year. So if India does not cut back enough on Iranian oil imports, Obama could bar access to the U.S. banking system for any Indian bank processing oil payments through Iran’s central bank.
However, the claim was called “highly speculative” by officials on Friday, the Indian newspaper Hindustan Times reports. Officials also said they were having “productive conversations” with their Indian counterparts on possible alternatives (Saudi Arabia and Iraq) to Iranian oil for India, which imports almost 80 per cent of its crude.
While India hasn’t stopped purchasing Iranian crude, the government has told processors to seek alternate supplies and gradually reduce dependence on Iran due to increasing pressure from the U.S., according to The Times Of India. However, the Indian commerce ministry’s well-publicised efforts to ramp up trade with Iran in other areas has been a thorn in the side of the powerful pro-Israeli lobby in U.S.
India says reduction in Iranian imports would begin to show only next month, since annual crude contracts with Iran run from April to March. But already, New Delhi’s dependence on Tehran has gone down, from 16.5 per cent in 2008-09 to 13 per cent in 2009-10 and 11 per cent in 2010-11.
“In fact, I think in a number of instances, the actions of countries and their banks are better than the public statements that we sometimes hear them making,” Secretary of State Hillary Clinton said at a Congressional hearing earlier this month.
Oil Minister S. Jaipal Reddy, Finance Minister Pranab Mukherjee and Foreign Secretary Ranjan Mathai have said India will continue to buy Iranian oil to meet its growing energy needs. While India has followed UN sanctions against Iran, it continues to oppose unilateral U.S. sanctions, according to The Economic Times.
“…given the imperative of meeting the energy needs of millions of Indians, an automatic replacement of all Iranian oil imports, is not a simple matter of selection, or a realistic option,” the Indian embassy said in a statement.