Aletho News

Iran trade is not vulnerable to US sanctions

By M K Bhadrakumar | Indian Punchline | February 28, 2018

The fear mongers among the Indian elite spread a canard that India needs to be watchful of American wrath if it expands economic ties with Iran. Of course, that is plain baloney. The Modi government has announced a decision to sequester India-Iran relations from US sanctions by allowing Indian companies and entities to use the national currency. This decision coincided with President Hassan Rouhani’s recent visit and becomes a landmark event in the chronicle of India-Iran relations.

Interestingly, European countries are also moving in the same direction as India. Their plan is to offer euro-denominated credits to Iranian buyers of their goods and services, which will keep the transactions beyond the reach of any US sanctions. France has already announced its intention to offer dedicated, euro-dominated export guarantees to Iranian buyers, which dispense with any US link, whether to the dollar or otherwise.

Like India, European countries also are staunch supporters of the Iran nuclear deal. Like India, they also are on the lookout for increasing their trade with Iran. The head of France’s state-owned Public Investment Bank (Bpifrance) Nicolas Dufurcq said last week with a touch of sarcasm, “This is a completely separate flow (of money). There is no dollar in this scheme… no one holding a US passport.” (One might say about the Indian elite, perhaps – “no one holding a Green Card.”)

Dufurcq was addressing French lawmakers in Paris. He disclosed that there is a pipeline of about 1.5 billion euros in potential contracts for French exporters in the Iranian market. France used to have close business ties with Iran and French manufacturing plants are still operating in Iran. Other European countries such as Germany, Belgium, Austria and Italy are also following the French example to insulate their economic relations with Iran from US sanctions. Italy and Iran agreed recently on a framework agreement that provides Italian credit up to 5 billion euros for its companies making investments in Iran. The credit agreement is between state-owned agencies in the two countries.

Unfortunately, Indian analysts largely go by the jaundiced opinions about Iran disseminated by the US media. The stunning reality is that in the last financial year the post-sanctions Iranian economy surged by 16%. Importantly, Iran is unique among the petrodollar states of the Persian Gulf in having a concerted strategy to grow its non-oil economy. And that is where lucrative business opportunities lie for Indian trade and industry.

Of course, the stabilization of oil prices above $50 per barrel also helps boost Iran’s income. Thus, the Modi government’s plans for a huge expansion of economic relations with Iran are based on a sound assessment. This is what Professor Juan Cole, the noted American expert on the Middle East wrote in his blog Informed Comment :

• US pressure on Iran is not insignificant and does slow its economic progress. But if you tallied up wins and losses, there does not seem much question that Iran is gradually winning. That progress by Tehran is because of the nuclear accord, which reassured most of the world. Tehran should stick with it.

To be sure, Iran intends to stick to the nuclear accord and keep its part of the bargain so long as the international community abides by the July 2015 agreement. Tehran places great store on the support from European countries. (Read a piece in LobLog by former British diplomat Peter Jenkins, A Nuclear Deal With Iran Remains The Least Bad Option)

Iranian foreign policy is making an historic shift in its integration with the international community. The Supreme Leader Ali Khamenei said on February 19 in a national address, “In foreign policy today, the top priorities for us include preferring East to West.” Of course, it is another side of the Iranian ideology of preserving the country’s strategic autonomy. Yet, importantly, Khamenei didn’t exclude the West.

Détente with the US was Iran’s expectation in negotiating the 2015 nuclear deal but the growing feeling is that this will not be possible so long as the Trump administration is in power. It was an historic mistake on the part of the Obama administration not to have taken the nuclear deal to its logical conclusion by removing the residual US sanctions that hamper banking ties and, secondly, by engaging Iran constructively on issues of regional security and stability. The bottom line is that Iran has a surprisingly flexible foreign policy – pragmatic to dealings with the West. It’s the Israeli lobby, stupid – in Washington and Delhi!

February 28, 2018 - Posted by aletho | Economics, Fake News, Mainstream Media, Warmongering, Wars for Israel | Iran, Obama, Sanctions against Iran, United States, Zionism