Neigh­bor

The EU and U.S are al­ready forc­ing chief im­porters of Ira­nian crude to cut down their quo­tas ahead of the sanc­tions. What would be the reper­cus­sions of iso­lat­ing an im­por­tant en­ergy-rich coun­try?

Southasia - - Contents - By Huza­ima Bukhari & Dr. Ikra­mul Haq

The game is about to get more com­plex for Iran

Uni­lat­eral sanc­tions im­posed by United States against Iran, could have se­ri­ous reper­cus­sions for global peace and the in­ter­na­tional econ­omy. Rus­sia and many oth­ers be­lieve that these sanc­tions may ul­ti­mately back­fire, dis­suad­ing Iran to con­tinue any fur­ther ne­go­ti­a­tions on the is­sue of nu­clear pro­lif­er­a­tion. Rus­sian Deputy For­eign Min­is­ter, Gen­nady Gatilov, re­cently dis­missed the pos­si­bil­ity of im­pos­ing any new sanc­tions against Iran by the UN Se­cu­rity Coun­cil. He em­pha­sized the sig­nif­i­cance of adopt­ing strate­gies to lift sanc­tions against Iran, which showed co­op­er­a­tion dur­ing talks in Is­tan­bul. The United States and its al­lies, how­ever, have ex­pressed in­flex­i­bil­ity over the nu­clear is­sue and in­ten­tions to im­pose strin­gent sanc­tions.

In­dia has made it clear that it only abides by the United Na­tions’ sanc­tions on Iran, and is not obliged to ad­here to the uni­lat­eral curbs im­posed by the US on hy­dro­car­bon pur­chase from the Is­lamic Repub­lic. US Sec­re­tary of State, Hil­lary Clin­ton, dur­ing her three­day visit to In­dia in early May 2012, pres­sur­ized In­dia to cut trade with Iran. Af­ter her visit, the In­dian Gov­ern­ment promised to cut down crude im­port from Iran by 11% in 2012-13. Though Clin­ton ex­pressed sat­is­fac­tion over cuts in In­dian im­ports of Ira­nian oil, she called for fur­ther slashes, say­ing, “If the in­ter­na­tional com­mu­nity eases the pres­sure or wa­vers in our re­solve, Iran will have less

in­cen­tive to ne­go­ti­ate in good faith to aban­don its nu­clear am­bi­tions.” Like their in­ter­na­tional coun­ter­parts, In­dian cor­po­ra­tions and banks are fac­ing the prospect of tough US penal­ties, start­ing end-June, for do­ing busi­ness with Ira­nian banks. In con­junc­tion with a Euro­pean em-

bargo, the Amer­i­can leg­is­la­tion aims at chok­ing Iran’s oil ex­ports and crip­pling the Ira­nian econ­omy.

Though the EU and US sanc­tions tar­get­ing Iran’s oil ex­port rev­enues have yet to come fully into force, the im­mi­nent threat has al­ready led coun­tries and com­pa­nies to take steps to re­duce their pur­chases of crude oil from Iran. An EU ban on the im­port and trans­port of Ira­nian oil, agreed to in Jan­uary and mod­i­fied in March, is not due to take ef­fect un­til July 1, 2012 but many of Tehran’s cus­tomers in Europe have al­ready be­gun re­plac­ing their Ira­nian sup­plies. Re­cent com­ments from Ira­nian oil of­fi­cials sug­gest that Iran’s to­tal crude ex­ports have al­ready fallen by 200,000 bar­rels per day (b/d) from last year’s lev­els. Mohsen Qam­sari, head of in­ter­na­tional af­fairs at the Na­tional Ira­nian Oil Com­pany, told a news con­fer­ence in Tehran on April 20 that cur­rent ex­ports stood at 2.1 mil­lion b/d, clearly avoid­ing any com­par­i­son against pre­vi­ous lev­els.

Ja­pan’s crude oil im­ports from Iran fell 36.4% in March from a year ear­lier, with the world’s third largest oil con­sumer star­ing at a com­plete halt in im­ports from the OPEC mem­ber due to tight­en­ing Western sanc­tions. Kuwait and top ex­porter Saudi Ara­bia are the main ben­e­fi­cia­ries of the fall in Ira­nian ship­ments, along with new sup­pli­ers such as Gabon, as Ja­pan buys more oil for fir­ing gen­er­a­tors fol­low­ing last year’s nu­clear dis­as­ter. North Asian states im­ported 305,114 bar­rels of crude oil from Iran in the first quar­ter, down 31.2% from 2011, when they pur­chased 443,535 bar­rels. The United States and Europe are try­ing to squeeze the rev­enues Iran makes from its oil ex­ports to force it to halt a nu­clear pro­gram that al­legedly would be used to make weapons but which Tehran ar­gues is for power gen­er­a­tion. In ad­di­tion, tough new Euro­pean Union sanc­tions aimed at stop­ping Iran’s oil ex­ports to Europe also ban EU in­sur­ers and rein­sur­ers from cov­er­ing tankers car­ry­ing Ira­nian crude oil any­where in the world from July 2012. Around 90% of the world’s tanker in­surance is based in the West, so the mea­sures threaten ship­ments to Iran’s top Asian buy­ers as well.

China’s crude im­ports in the first quar­ter of this year from Iran were a third lower at 346,183 bar­rels com­pared to a year ear­lier, while South Korea cut im­ports by 22% to 195,000 bar­rels. South Korea’s largest re­finer SK En­ergy, also the coun­try’s top buyer of

Iran is bound to lose rev­enues, but more sig­nif­i­cantly, it will suf­fer in­ter­na­tional iso­la­tion. The United States is us­ing In­dia as an ally to achieve this.

Ira­nian crude, is se­cur­ing al­ter­na­tive sup­plies to make up for a po­ten­tial cut in Ira­nian im­ports. En­ergy-de­fi­cient In­dia is look­ing for liq­ue­fied Shale Gas from the United States as the Pe­tro­leum Min­istry de­cides to cut crude oil im­ports from Iran sub­stan­tially. Suc­cumb­ing to US pres­sure, other states in­clud­ing Sri Lanka are also toe­ing the same line.

Iran is bound to lose rev­enues, but more sig­nif­i­cantly, it will suf­fer in­ter­na­tional iso­la­tion. The United States is us­ing In­dia as an ally to achieve this. In Fe­bru­ary, af­ter months of hes­i­ta­tion, In­dia voted for a Western-backed resolution in the UN Se­cu­rity Coun­cil against the Syr­ian regime of Pres­i­dent Bashar al As­sad, Iran’s re­gional ally. In re­turn, dur­ing her visit to In­dia, Hil­lary Clin­ton signed agree­ments to buy rice, sugar and soya beans. Ad­di­tion­ally, the United States is en­cour­ag­ing closer ties be­tween Bangladesh and In­dia for coun­ter­ing Ira­nian and Chi­nese in­flu­ence in the re­gion. Dur­ing re­cent vis­its to Bangladesh and In­dia, Clin­ton em­pha­sized the ad­van­tages of en­hanced In­dian trade with South East Asia, declar­ing that Kolkata would be­come a hub for a new ‘Silk Road Strat­egy’ con­nect­ing coun­tries in East, South and Cen­tral Asia.

It is elec­tion year in the United States and the Obama ad­min­is­tra­tion is pleas­ing the in­flu­en­tial Jewish Lobby by pres­sur­iz­ing Iran on all fronts, de­mand­ing that it make ma­jor con­ces­sions at talks while threat­en­ing sanc­tions and mil­i­tary ac­tion. US ag­gres­sion is sharply in­creas­ing ten­sions not only in the Mid­dle East but also in South Asia. The US Spe­cial En­voy to In­dia, Car­los Pas­cual, will soon force In­dia to sharply re­duce its crude oil im­ports from Iran. In this sce­nario, In­dia will be a gainer; not only get­ting al­ter­na­tive sources of hy­dro­car­bon from the US but also strate­gic ad­van­tages in the re­gion.

Iran has shown rec­on­cil­ia­tory ges­tures in talks with the Group 5+1 (the five per­ma­nent UN Se­cu­rity Coun­cil mem­bers plus Ger­many). All the ne­go­ti­at­ing sides must find a po­lit­i­cal set­tle­ment to the is­sue. Af­ter two rounds of fruit­ful talks with six world pow­ers, Tehran is jus­ti­fied for de­mand­ing with­drawal of sanc­tions. Sanc­tions pose hur­dles in fu­ture talks be­tween Iran and the world pow­ers. If peace has to be given a chance, both US and Iran hard­lin­ers will have to re­treat from their present po­si­tions.

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