India’s UCO Bank eyes non-oil imports from Iran to sustain rupee-rial trade
Britain will have to “accept the consequences” of having weaker economic ties with the European Union because of Brexit, German Chancellor Angela Merkel said Saturday.
Merkel hardened the tone from Berlin as Germany and its EU partners strive to draw up an agreement on future relations between Brussels and London after Britain’s departure from the bloc, AFP reported.
British Prime Minister Boris Johnson wants to be able to define the scope of those relations but “thereafter he will of course have to accept the consequences – that is, an economy less tightly linked” with its continental neighbors, Merkel said in an interview with the Europa newspaper alliance.
After leaving the EU, Britain and Brussels have been working on establishing new trade links to come into force once a post-exit transition period expires at year’s end.
Germany is meanwhile to take over the EU’S rotating presidency for six months from July 1.
“We must get away from the idea that it is we who define what the United Kingdom may wish,” indicated Merkel, who has consistently sought to help bring about an outcome which avoids a hard Brexit.
“The United Kingdom defines and we, as the EU27, make an appropriate response,” said Merkel.
“If the United Kingdom does not want regulations comparable to that of Europe in terms of the environment, the labor market or social norms, our relations will lose intensity,” she observed.
India’s UCO Bank is exploring new avenues to keep the rupee payment mechanism with Iran alive as the US sanctions on the Islamic Republic has negatively affected trade relations between the two countries.
As India has no longer been importing oil from Iran due to illegal sanctions imposed by the United States following its unilateral withdrawal from the 2015 Iran nuclear deal in 2018, the Indian lender is in talks with importers to use the mechanism for other imports, according to the bank’s A.K. Goel, Business Standard reported.
“In the last few months, there has been no fresh inflow into the payments account. We are exploring the opportunity to import other commodities, such as fresh fruits, under the mechanism. Our role here is not only settlement, but also to facilitate trade between India and Iran,” said Goel.
Rupee-rial trade mechanism
In the wake of US sanctions, India cannot engage in dollar-denominated trade with Iran. Hence, a special rupee-rial trade mechanism has been put in place, which is a barter-like arrangement by the two countries to carry out trade without using international currencies like the dollar.
Under this, oil refineries from India deposit funds into designated banks to import oil from Iran. These rupee funds are then used to clear dues of traders that export from India to Iran.
UCO Bank and IDBI Bank are the two Indian banks that support this payment mechanism, and such deposits make up for a bulk of low-cost deposits for the lenders.
However, even as oil imports have dried up, exports have not fallen as much.
According to government data, imports from Iran stood at nearly $13 billion in 2018-19, which came down to nearly $1.35 billion between April and January in 2019-20. In contrast, the fall in exports was much less. Exports to Iran stood at $3.5 billion in 2018-19, which fell to $2.80 billion between April and January of this financial year.
Rice, tea, sugar, and pharmaceutical products are key items India exports to Iran, with rice accounting for the largest share.
Iran has been an important trade partner for India.
Chabahar port
In 2015, both countries also signed a memorandum of understanding worth $195 million for the development of Iran’s Chabahar port situated in southeastern Iran. Through this port, India will get easy access to Central Asian and Afghanistan which will increase its trade relations with these countries.
Chabahar port is one of the biggest reliefs in India-iran trade relationship as it has been exempted from US sanctions and can facilitate a lot of third-country exports and imports for India.
In 2009, India constructed a road from Chabahar to Afghanistan to provide access from the Iranian port to Herat, Kandahar, and Mazar-i-sharif, the capital of Balkh Province in the north – the gateway to Uzbekistan.
US President Donald Trump on Friday signed an executive order pledging to enforce prosecution for protesters who vandalize public memorials, as he announced he was skipping a weekend at his New Jersey golf resort to ensure “LAW & ORDER” in Washington.
Trump’s order follows a wave of protests across America triggered by the killing of unarmed African American George Floyd, who died while a white police officer knelt on his neck for over eight minutes in Minneapolis on May 25, according to AFP.
The killing has revived the debate about race relations in America and prompted minority groups across the country and other parts of the world to vent their long-felt indignation about police brutality, racial inequality and systemic racism.
Moreover, monuments honoring certain historical figures, most of them racism and slavery era icons, have been removed in the United States and around the world following Floyd’s death.
In some US cities, protesters have pulled down or vandalized statues and memorials of historical figures who defended slavery.
“I just had the privilege of signing a very strong Executive Order protecting American Monuments, Memorials, and Statues – and combatting recent Criminal Violence,” Trump tweeted.
“Long prison terms for these lawless acts against our Great Country!”
Trump cancels New Jersey trip
He added: “I was going to go to Bedminster, New Jersey, this weekend, but wanted to stay in Washington, D.C. to make sure LAW & ORDER is enforced.”
Protesters across the country have knocked down monuments, mostly of Confederate generals. In Raleigh, N.C., the statues of two Confederate soldiers were torn down. And in San Francisco, a crowd toppled a bust of Ulysses S. Grant, despite the fact that he was a Union general who beat the Confederate Army, according to the New York Times.
In Washington, protesters knocked over a statue of Albert Pike, the only Confederate general honored in the city, and they tried — unsuccessfully — to take down a statue near the White House of Andrew Jackson, the nation’s seventh president.
Defending Confederate symbols
Trump has defended Confederate symbols as a part of American heritage.
Statues of Christopher Columbus, the 15th century explorer whose voyages on behalf of Spain opened the way for the European colonization of the Americas, have also been targeted as perceived symbols of imperialism, BBC reported.
The EU must additionally work its way through tough negotiations on a €750-billion ($800-billion) post-coronavirus recovery fund for countries worst hit by the pandemic.
For Merkel, the fund “cannot resolve all of Europe’s problems” but the bloc must “act quickly in the face of the pandemic given the huge hit the virus has dealt jobs and the economy”.
She warned that the result could have an “explosive political impact” that could threaten democracy.
“For Europe to survive, its economy must also survive,” she concluded.
Boris Johnson told his Polish counterpart Mateusz Morawiecki on Saturday Britain will be ready to quit its transitional arrangements with the European Union “on Australia terms” if no deal on their future relationship is reached.
Britain left the bloc on Jan. 31. A transition period, during which Britain remains in the European single market and customs union, expires on Dec. 31 and pressure is mounting to agree a free trade deal before then.
With the two sides still far apart, a round of “intensified negotiations” is due to start next week.
Australia does not have a comprehensive trade agreement with the EU. Much of Eu-australia trade follows default World Trade Organization rules, though specific agreements are in place for certain goods.