Match Japan to avoid sanctions: America

In its most direct message that India, along with other nations importing oil from Iran, could face sanctions by July if it did not “significantly” reduce such imports, the U.S. State Department warned in a conference call this week that if such countries, “in addition to having imported petroleum products, may have had other kinds of sanctionable activities, it could actually become liable to sanctions even before [June 28]”.

The remarks raised brows here as sanctions against countries such as India, China, and South Korea appeared more imminent following the White House's push for upping the ante against Iran through its 2012 National Defence Authorisation Act (Section 1245).

A senior State Department official said on Tuesday the NDAA provisions gave nations 180 days from the start of this year to attain levels of oil import cuts similar to those of Japan, which was said to have decreased its imports of Iranian crude by between 15 and 22 per cent.

During a testimony last month, Secretary of State Hillary Clinton praised Japan's decision as a reduction achieved “despite the hardships and the loss of energy capacity after Fukushima”. The senior State Department official addressing media this week stressed that the 12 nations who continued to import Iranian crude could get a sense of what kind of import reduction the U.S. was expecting by looking at the Japanese case as an example.

Referring to the NDAA text, the official admitted that its “legislation specifies significantly reduce [but] doesn't define what significantly reduce is.” Underscoring the 15-22 per cent cut he said, “That gives some indication. And again with the European Union, they have gone to zero. So we look forward to hearing from countries [such as India] what their views are and what they can do.”

The European nations that appeared to have given the U.S. cause for cheer on this front are Belgium, the Czech Republic, France, Germany, Greece, Italy, the Netherlands, Poland, Spain, and the United Kingdom.

Recent weeks saw media reports quoting unnamed U.S. government officials suggest that India was on track to be slapped with sanctions. Attention in Washington has in particular focused on alleged remarks on continuing business transactions with Iran, made by officials in the Indian Ministry of Commerce and by private business leaders. The pro-Israel lobbies have also sought to increase pressure on New Delhi to abandon these ties with Iran and seek oil supplies elsewhere in West Asia.

Following these developments, earlier this month the Indian embassy here hit back with sharply-worded retort to allegations “which have presented a distorted picture by basing their conclusions on speculation and inaccurate information.”

In that statement embassy Spokesman Virander Paul stoutly refuted the allegations, and pointed out that “Allusions in the media that India's overall oil imports from Iran are increasing just because its monthly uptake of Iranian oil reportedly increased in January this year are based on selective use of information, misrepresenting the fact that in aggregate terms, crude imports from Iran constitute a declining share of India's oil imports.”

Even as the U.S. appeared to wave the threat of sanctions in the face of the 12 nations that continued to import Iranian crude, it also proffered two prior steps to mitigate the potentially difficult transition that these nations may face in cutting out Iranian oil imports entirely.

First, the State Department official said, under the NDAA provisions President Barack Obama would be making a determination by March 30 whether or not price and supply conditions in the market allowed for countries to switch from Iran to other suppliers of crude oil. If the President did make that determination, the official said, that would trigger a set of sanctions that come into effect on June 28.

Second, the official said that some nations “that... have the capacity to reduce their imports of Iranian crude oil [and are] still importing Iranian oil... have begun... discussions with us... and we are very interested to continue to pursue them in great seriousness.”

Starting February 29, the U.S. has put sanctions in place against any entity engaging in financial transactions with the Central Bank of Iran that were related to non-petroleum products “except in the circumstance of a country sending refined petroleum products to Iran.” Such entities have essentially been excluded from access to the U.S. banking system from the time this NDAA provision came into law.