"By reducing its oil sales, we are sending a decisive message to Iran's leaders"

On the eve of the bilateral Strategic Dialogue, U.S. Secretary of State Hillary Clinton included India in a select group of seven nations granted an “exception” from a requirement in the U.S.' 2012 National Defence Authorisation Act (NDAA) that any nation importing a significant amount of oil from Iran be slapped with sanctions from next month onwards.

On Monday, Ms. Clinton said along with India, Malaysia, the Republic of Korea, South Africa, Sri Lanka, Turkey and Taiwan “have all significantly reduced their volume of crude oil purchases from Iran,” and she would consequently report to Congress that sanctions pursuant to Section 1245(d)(1) of the NDAA “will not apply to their financial institutions for a potentially renewable period of 180 days.”

This second group of exemptions follows a preliminary round of similar grants in March for 11 other countries. Congratulating her nation's efforts to tighten the sanctions noose on Iran, Ms. Clinton noted, “By reducing Iran's oil sales, we are sending a decisive message to Iran's leaders...”

State Department officials quoted recent figures suggesting that Iranian oil exports had dropped from approximately 2.5 million barrels a day in 2011 to the range of 1.2-1.8 million barrels a day.

Fewer frictions

While the exception granted may lead to fewer frictions in the Strategic Dialogue discussions that are already under way and will culminate on Wednesday, officials earlier hinted that India continued to remain in compliance with United Nations sanctions against Iran but refused to recognise any country-specific sanctions overlay above this globally accepted level.

However, holding resolutely to this position has meant that India has had to walk the tightrope of recognising the need for Iran to abide by its international obligations in the field of nuclear capabilities development, while simultaneously not forsaking the needs of more than 400 million Indians lacking access to commercial energy.

In a background discussion, a senior administration official said to the media that the exception granted this week to India and others came after the Obama administration considered “a range of data sources...pulled together by agencies across the U.S. government, including the Department of Energy, the Energy Information Administration, the Department of Treasury, the Department of State and the intelligence agencies.”

Particularly in the case of India, the official said, the government “also took steps to publish data on its previous imports through a process of parliamentary questions. These were published on the website of the Lower House of Parliament.”

‘Indian imports falling’

Privately, officials said to The Hindu that Indian oil imports from Iran were anyway falling steeply this year given India's consistent compliance with sanctions against the Central Bank of Iran. These sanctions' knock-on effect on payment instruments, particularly, has led to imports dropping from 21 million tonnes in 2009-10 to around 18 million tonnes in 2010-11 and further still in recent months.

While the timing of the exception granted to India raised eyebrows here in Washington, the elephant in the room was the fact that China, said to be the top importer of Iranian oil globally, was not included in the list.

Dodging a direct question on whether China was therefore on track to be hit with sanctions next month a senior administration official said, “We continue discussions with China...We may have different perceptions of sanctions at different times, but one of the things that has been very important is that China has agreed to this dual-track process of pressure as well as persuasion.”

Super virus attack

Earlier this month, the U.S.' so-called “dual-track” approach came under fire when it was revealed that Washington had unleashed a cyber war targeting Iranian nuclear systems via the Stuxnet worm, a super-virus that ultimately escaped into the wider Internet from computers in Natanz.