The Communist Party of India (Marxist) on Friday charged the Manmohan Singh government with succumbing to U.S. pressure by not clearing payments to Iran for crude. This could result in stoppage of supplies, he said.

“India has been getting 12 per cent of its crude oil imports from Iran. This amounts to around 4,00,000 barrels per day. These supplies may stop in August since India has not made payments for oil shipments for the past few months and around $5 billion (approx Rs.25,000 crore) are due to the Iranian oil companies. Iran has indicated that it may be forced to stop supplying oil if no arrangements for the payments are made.

Beyond U.N. sanctions

“How has such a situation come about?” CPI(M) general secretary Prakash Karat asked in an article in the latest edition of party organ People's Democracy.

The Indian government, he said, succumbed to U.S. pressure to curtail its trading and commercial links with Iran. In July last year, Washington imposed wide-ranging sanctions on Iran, aimed at scuttling its oil and gas industries. These went much beyond the June 2010 U.N. Security Council sanctions. The U.S., along with the European Union (EU), placed prohibitive restrictions on banking and foreign exchange transactions with Iranian banks and other financial institutions.

Payment mode

Mr. Karat said India was abiding by not just the UNSC sanctions but also the “illegal and unilateral” coercive measures imposed by the U.S. and the EU. Consequently, the Reserve Bank of India last December disallowed all trade-related payments to Iran through the Asian Clearing Union. This mechanism had been being used for a long time to make payments to Iran. Once this was stopped, the problem arose of how to make the payments.

Subsequently, the Iranian and Indian governments agreed that payments for oil imports could be made through an account with the German central bank, Bundesbank, which would transfer the money to the Hamburg-based European-Iranian Trade Bank that was not subject to sanctions.

However, after a few weeks, under pressure from the U.S. and Israel, the German government stopped these transactions. Since then, the Iranians had continued to supply oil but India had not made payments.

Saudi source

The UPA government, Mr. Karat said, was now engaged in finding out how to arrange for alternative sources of imports rather than ensuring that oil trade with Iran continued. The U.S. was asking India to source its oil from Saudi Arabia instead of Iran, which has been the second largest supplier of crude India after Saudi Arabia.

Nuclear deal

Mr. Karat said that ever since the India-U.S. nuclear deal was signed, traditional relations with Iran had been endangered. “The United States had made it clear that the nuclear deal entails acceptance of India making its foreign policy congruent to that of the United States.”

Further, the Hyde Act, which allowed nuclear cooperation with India, clearly states the U.S. President should annually provide an assessment report to Congress on how India is cooperating with the U.S. to sanction and isolate Iran. The Left parties strongly opposed this infringement on national sovereignty and the abridgement of India's foreign policy to suit U.S. interests.

“India can get its crude oil requirements from other countries. But what cannot be retrieved by this craven and servile attitude to the United States is the country's self-respect and damage to national interests,” Mr. Karat said.

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