ID :
192303
Fri, 07/01/2011 - 14:41
Auther :

India now cautious in expanding relationship with Iran: CRS

Washington, Jul 1 (PTI) A series of actions by India
over the last year, including not signing a deal on the
Iran-Pakistan-India gas pipeline, signal New Delhi's steps to
join the US-led efforts "to shut Iran out of the international
financial system", a Congress report says.
The Congressional Research Service (CRS) in its latest
report prepared for US lawmakers, many of whom had in the past
voiced concerns over India-Iran ties said that steps taken in
late 2010 to prevent some banking transactions with Iran,
could suggest that New Delhi is now cautious about any
expansion of energy or other commercial relations with Iran.
"Previously, the threat of imposition of US sanctions
had not dissuaded Indian firms from taking some equity stakes
in various Iranian energy projects," said the report by CRS,
which is a bi-partisan research wing of the US Congress.
CRS said India was almost out of the USD 7 billion
Iran-Pakistan-India gas pipeline project.
"India did not sign a memorandum between Iran and
Pakistan finalising the deal on June 12, 2010.
"India reportedly has been concerned about the
security of the pipeline, the location at which the gas would
be officially transferred to India, pricing of the gas,
tariffs, and the source in Iran of the gas to be sold," it
said.
Former Secretary of State Condoleezza Rice on several
occasions had "expressed US concern" about the pipeline deal
or called it "unacceptable".
Possibly contributing to India's hesitancy to move
forward, US' Af-Pak envoy, the late Richard Holbrooke, during
his 2010 trips to Pakistan, raised the possibility that the
project could invite sanctions if it is undertaken, it said.
CRS said India may envision an alternative to the
pipeline project, as a means of tapping into Iran's vast gas
resources.
During high-level economic talks in early July 2010,
Iranian and Indian officials reportedly raised the issue of
constructing an underwater natural gas pipeline, which would
avoid going through Pakistani territory.
However, such a route would presumably be much more
expensive to construct than would be an overland route, it
said.
India has generally been considered friendly towards
Iran and it seemed unlikely to impose any national sanctions
on that country, the report said.
"Therefore, many experts were surprised when India's
central bank, in late December 2010, announced that it would
no longer use a regional body, the Asian Clearing Union, to
handle transactions with Iran," CRS said.
The Asian Clearing Union, based in Tehran, was set up
in the 1970s by the United Nations to ease commerce among
Asian nations.
There have been allegations in recent years that Iran
might be using the Clearing Union to handle transactions so as
to avoid limitations imposed by European and other banks.
"The Indian move complicated India's purchases of
about 350,000-400,000 barrels per day of Iranian oil, and
Indian officials subsequently undertook negotiations with Iran
to find an alternate mechanism to clear Indian payments for
that oil and other Iranian goods," it said.
"Still, the Indian move — and the reported difficulty
in agreeing to a replacement payments mechanism — appeared to
signal that India was taking steps to join US/European-led
efforts to shut Iran out of the international financial
system," CRS said, pointing out that the Indian move followed
President Barack Obama's visit in November 2010.
In mid-February 2010, India and Iran agreed to use
Europaisch-Iranische Handelsbank (EIH) to clear the payments.
EIH has accounts with National Iranian Oil Company as
well as with the Central Bank of Germany, rendering the bank
able to process Indian payments to Iran.
Some Members of Congress have previously characterised
that bank as one of Iran's few remaining access points to
European financial system and had asked the German government
to order it closed.
"On May 23, 2011, the EU named EIH and about 100 other
entities as Iran proliferation related activities, meaning the
bank might be forced to close and India and Iran will again
have to seek an alternative payments mechanism," the report
said. PTI LKJ
RCJ

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