It is a major break through that India has worked out a Rupee based payment strategy with Iran for its oil imports.
The nuclear sanctions from the West (especially U.S) are irrelevant to India. It is an established fact that 'Abdul Qadeer Khan' was running a 'nuclear walmart' and was supplying technology to Iran, Libya & North Korea. Perhaps God knows (sorry Allah knows), who else bought the technology from that 'nuclear walmart'. Did U.S impose any sanctions on Pakistan. NO.
U.S does not import any oil from Iran. That's one of the reasons for sanctions. There will not be any 'oil shock' for them. That's not the case for India, which import 12% of its oil from Iran.
If Iran is a threat, what about Saudi Arabia. It has one of the most militant forms of Wahhabi Islam. It is not just a co-incidence that '16 out of the 19 hijackers' of 9/11 were from Saudi. Osama bin laden was from Saudi. Will U.S impose oil sanctions on Saudi Arabia.? NO. It will not becuase it is second largest oil supplier to the U.S. To protect this oil interest, the 2500 member Saudi royal family is protected by U.S troops.
So, the oil sactions are irrelevant for India, even if it gets the blessing of the United Nations. U.S acts to protect its own interest, similary India should protect its interests too.
The actual brighter side of the payment agreement is mode payment being Rupee. This was done to beause the current Euro based payment that go via Turkish banks will get blocked due to new sactions. The deal is for 45% of the oil imports from Iran totalling about $ 5 billion.
It is not just $5 billon worth of oil that India has managed to buy, but also the '$5 billon U.S Dollars that India did not have to buy'. (or an equivalent billons of Euros that India did not have to buy).
China also imports oil from Iran. India & China more import oil than all of Europe combined (second only to U.S). If both these countries start paying with their own curencies for their oil imports, just imagine the impact for U.S dollar & Euros. The key demand for these currencies in the form of oil payment will get reduced. The above currencies will take a bigger impact and Indian Rupee will appreciate against them.
A stronger currency is good for stronger India. I fully understand the compulsions with which this payment arrangement was made. Irrespective of the sanctions, I think India should try to push for Rupee based payments for oil imports, for India's own benefit. This was one of the developments that i forecasted ( yes. not a wish list anymore ) in my earlier 'letter to Mr. Soros' ( http://4mythoughts.blogspot.com/2012/01/letter-to-soros.html ) . I am glad it has started already started happening. Thanks U.S, for the oil sanctions imposed on Iran.
1 comment:
I heard the news that 10 countries (the list includes India) have been excluded from the Iranian sanctions. Eventhough it is more of a face saving measure for U.S, it is a very positive news.
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