The U.S. officially began imposing sanctions on India May 3 for buying oil from Iran, after waivers for the country and seven others ended a day earlier.
Last November, after pulling out of the landmark U.S.-Iran nuclear agreement, the Trump administration granted six-month waivers to India, China, Greece, Italy, Japan, South Korea, Taiwan, and Turkey to find other sources of fuel before it imposed sanctions. On April 22, U.S. Secretary of State Mike Pompeo announced there would be no extension of the waivers, which were scheduled to end May 2.
India — one of the top two purchasers of Iranian oil, along with China — was believed to be working with the U.S. to get a continuance on the waiver. But a State Department spokeswoman told India-West May 10 that no extensions are being granted.
“We are not looking to grant licenses or waivers, as doing so would reduce the pressure on Iran, which is a critical to an effective pressure campaign,” said a State Department spokeswoman. “We initially issued Significant Reduction Exceptions to eight countries and at the time, we made it clear they would be temporary. The historic announcement in April that no more SREs will be granted makes this very clear,” she said.
“Our goal has always been to get countries importing oil from Iran to zero as quickly as possible. Iran’s oil exports have plummeted due to our pressure and with this announcement, purchases of Iranian crude oil will soon be at zero,” said the spokeswoman, noting that U.S. sanctions have denied Iran as much as $10 billion in oil revenue since May 2018.
“Since President Trump announced our withdrawal from the nuclear deal in May 2018, over 1.5 million barrels of Iranian oil have been taken off the market, reducing the regime’s revenue by billions of dollars,” she said, claiming: “The (Iranian) government uses this revenue to support terrorist proxies and fuel its missile development.”
Revenues from oil represent about 40 percent of Iran’s economy.
India bought 23.6 million tons of Iranian oil in the financial year ending in March 2019. Iran is the third largest oil supplier for India after Iraq and Saudi Arabia. Imports account for more than 80 percent of India’s oil needs.
Former House Foreign Affairs Committee chair Ed Royce, who has retired from politics, told India-West in 2015 that he was an ardent supporter of providing India with liquefied natural gas — LNG — to reduce its need for crude oil from Iran.
At a May 3 press briefing as sanctions went into effect, Ministry of External Affairs spokesman Raveesh Kumar — in response to a question as to whether India was still negotiating with the U.S. to get an extension on the waiver — said: “The decision to import oil is based on many factors including commercial considerations and keeping our legitimate energy and economic security interests in mind.”
“We are prepared to deal with the impact of the decision. There will be additional supplies from other major oil producing companies based on a robust plan which has been drawn up by the Ministry of Petroleum and Natural Gas,” said Kumar.
“Whatever decisions we take, it will be a combination of different factors, energy security is one of them, commercial considerations will be number two and the third will be the economic security interest in mind. So when we combine all these interests, we will take a decision.”
The MEA had stated in June 2018 that it recognizes no sanctions other than those imposed by the United Nations. Kumar did not state directly whether the U.S. and India are still in negotiations over the sanctions.
In an interview with India-West May 8, Indian Member of Parliament Shashi Tharoor justified India’s need for oil from Iran. (See India-West interview here: https://bit.ly/30j1EkM)
“There are good objective reasons why we need Iranian oil namely they're the closest supplier,” he said, noting that oil is purchased from the country in rupees, mitigating foreign exchange issues. Transport costs are also significantly lower than purchases from elsewhere.
“All of these factors cannot just be cast aside; on the other hand, nor can you lightly disregard the prospect of sanctions because our economy is significantly entwined with the U.S. economy,” said Tharoor, who had just finished campaigning from Kerala to retain his seat in the Lok Sabha, where he has served for two terms.
“There would have to be very serious cost-benefit analysis which may prove that despite the advantages of Iranian oil the disadvantages of undergoing sanctions may oblige us to rethink our approach,” he said, noting, however: “No sovereign nation likes being dictated to by another country, least of all about its relations with the third country.”
“But we are also good calculators of self-interest and we will do whatever is right for the Indian people,” Tharoor told India-West.