Will India Defy US Sanctions on Iran?

Indian Prime Minister Narendra Modi with Iranian President Hassan Rouhani during his recent visit to India

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Washington, DC – The Trump Administration on Monday outlined strict reimposition of sanctions on the present Iranian regime, but questions remain if some energy hungry countries like India and China will be able to adhere to these.

A senior administration official told journalists during a conference call on Monday morning that, “At 12:01 a.m. tomorrow, August 7, 2018, sanctions will come back into full effect on the purchase or acquisition of US dollar banknotes by the government of Iran; Iran’s trade in gold and precious metals; the sale or transfer to or from Iran of graphite and metals such as aluminum and steel, coal, and software for integrating industrial processes; certain transactions related to the Iranian rial; certain transactions related to the issuance of Iranian sovereign debt; and Iran’s automotive sector.”

The sanctions will take another turn after the 180-day wind-down period ends on November 4, 2018, when, “the US government will re-impose the remaining sanctions that had been previously lifted under the JCPOA. The final round of snapback sanctions, as articulated in the executive order, will include the re-imposition of sanctions on Iran’s oil exports and energy sector, financial institutions conducting transactions with the Central Bank of Iran, as well as sanctions related to Iran’s port operators and shipping and shipbuilding sectors, and sanctions on the provision of insurance and financial messaging services,” added the senior administration official.

On a very specific question on energy starved China (and India for that matter), the senior administration official’s response was not very forthcoming, saying, “(The US is) working to build a global coalition to counter Iran’s malign activity. What I can tell you very specifically is that we have made it very clear that we’re going to aggressively enforce this executive order and the other authorities that we have pursuant to statute.”

“We will work with countries around the world to do so, but make no mistake about it, we are very intent on using these authorities. We will use them aggressively,” the senior administration official added.

The officials in New Delhi are hopeful about keeping the flow of oil from Iran and food including tea plus rice from India on a mutually agreeable ongoing Rupee-Rial deal, while the US is demanding oil imports from Iran to be cut down to zero by November 4. With domestic industry in India demanding more and more energy, such a demand from the US seems utopian and India may not be keen to adhere to it.

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Although Indian Prime Minister Narendra Modi was openly courting the US especially during the Obama Administration, there has been a realization to ease tensions with Beijing and invest in a long-standing trusted relationship with Moscow. Taking initiatives, Modi recently held separate summit meetings with Chinese President Xi Jinping and Russian President Vladimir Putin in Wuhan and Sochi, respectively. In Washington, these haven’t gone unnoticed and the experts are now waiting for the repeatedly postponed 2+2 Dialogue between the two democracies in September in New Delhi.

With the Indian situation not very flexible, will the US give India, its new-found trading and defense partner, room to maneuver? Also note that the aim is to keep India as a close ally with an eye on the latest geopolitical game in the Indo-Pacific region — reining in an increasingly manipulative and expanding China.

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