New York: Iran on Wednesday slammed as "hostile" new US sanctions aimed at preventing importers from buying Iranian oil using foreign currencies. The US sanctions, which took effect on Wednesday, will make it even tougher for Iran to get paid in cash for crude it sells to large oil buyers such as India and China.
"This is the latest ring in the series of hostile actions against Iran," said Iranian Foreign Ministry spokesman Ramin Mehmanparast.
"We are seeking methods to neutralise the new pressure," he said, quoted by Mehr news agency.
The measures will compel Iran to engage in barter arrangements with importers of its oil.
"Iran since last year already has found it difficult to find enough Indian products it wants to buy with the rupees it is earning. That problem is likely to get worse as Tehran is forced to accept payments in local currency for its entire $10 billion crude exports to India," reported The Wall Street Journal.
"Iran had planned to barter large quantities of Indian wheat in exchange for its oil. But the deal foundered due to fungal infections in India's wheat crop, which pushed Tehran to back out of a plan to purchase around 3 million tons of the crop," added the Journal.
Everything is far from smooth sailing, but Iran will probably work around the US sanctions by importing Indian food stuff, pharmaceuticals and health care products in lieu of hard cold cash.
India is likely to step up to the plate by sending Iran life-saving medicines as a lot of Western-made medicines are no longer shipped to Iran. Hundreds of thousands of Iranians with serious illnesses have been put at risk by Western sanctions, which have led to shortages of key chemotherapy drugs for cancer and bloodclotting agents for haemophiliacs.
The Guardian reported that according to an Iranian organisation representing 8,000 Iranians suffering from thalassaemia, an inherited blood disorder, some of its members are beginning to die because of a lack of an essential drug, deferoxamine, used to control the iron content in the blood. An estimated 23,000 Iranians with HIV/Aids have had also their access to the drugs they need to keep them alive severely restricted.
An Indian delegation spearheaded by the Pharmaceuticals Export Promotion Council of India (Pharmexcil) visited Tehran in December to get a better fix on Iran's need for generic drugs and Active Pharmaceutical Ingredients (APIs) used in making medicines.
"India is known for supplying good quality generic drugs and APIs. We also have trade in other areas with Iran," said P V Appaji, director general, Pharmexcill. "That's the reason they approached us."
The US has tried to pressure India to alienate old friend and oil supplier Iran but it hasn't really worked. On the strategic side, it's important for India to have a close relationship with Tehran as Iran is India's only corridor for land access to Afghanistan, through which is routed most of its development and reconstruction assistance to Afghanistan. Both India and Iran oppose Pakistan's attempts to influence policy in Afghanistan, especially as America gets ready to leave the country next year.
Still, India has repeatedly voted against Iran at the International Atomic Energy Agency, and encouraged it to abide by the provisions of the non-proliferation treaty it signed. But India endured its own years of sanctions and isolation over the nuclear issue; it doesn't like the policy, and it doesn't believe it works.
The Indian government feels it is unfair for the West and the US in particular, to put India in a position where it has to lecture or choose one friend over another. However, India realises it also needs to keep on the right side of the US with whom its interests have aligned more closely in recent years due to closer cooperation on regional security.
Indian refiners are targeting an 11 percent overall reduction in crude imports from Iran this fiscal year. Indian refiners plan to import around 15.5 million metric tons of crude from Iran in the 2012-13 fiscal year, down from the 17.44 million tons purchased in 2011-12 and 18.50 million tons in 2010-11, according to Minister of State for Petroleum and Natural Gas RPN Singh.
Indian oil companies should be prepared for some fallout with tough US sanctions on Iran signed into law last August going into effect on Wednesday. California-headquartered CalPERS, the world's largest pension fund, has already shaved its investments in the shares of state-run Oil India and Petronet LNG due to their business exposure to Iran.