India is now free to resume normal trading ties with Iran that were disrupted by US and EU sanctions related to Tehran’s nuclear weapons program that were lifted on Saturday.
India will also be able to release payments its state-owned refineries owed to Tehran for crude oil purchases that were held up because of international sanctions, around $6.5 billion.
The sanctions were lifted after the International Atomic Energy Agency certified on Saturday — Implementation Day — that Iran had completed its part of the agreement with western powers.
Under the Joint Comprehensive Plan of Action, as the agreement was called, Iran has shipped out of country 25,000 pounds of enriched uranium, cutting its stockpile by 98%.
It has removed two-thirds of its centrifuges. And filled the core of core of Arak Heavy Water Research Reactor with concrete, eliminating its potential source of weapons-grade plutonium.
And, Iran has allowed IAEA inspectors, who will for the first time be equipped with modern safeguard technologies, unprecedented access to its nuclear facilities and supply chain.
Iran’s breakout time — time it would take to make a nuclear bomb — has been increased six foldas a result, from two months to a year, a senior US official told reporters in DC.
The US and Iran also announced on Saturday a swap of prisoners under which Washington Post journalist Jason Rezaian would be heading home to freedom after 18 months in jail.
President Barack Obama signed executive orders lifting the sanctions including those called “secondary”, which applied to non-US individuals and entities, such as Indian refineries.
Gone, effective Saturday, were sanctions on Iran’s energy and petrochemical sectors, those related to banking and financial institutions, underwriting services, insurance and re-insurance. In short, every sanction that curtailed trading with Iran.
Sanctions related to Iran’s alleged support of international terrorist groups such as Hezbollah and rights abuse remain in place. But those don’t impact India in any significant way.
India was Iran’s second largest crude client till July 2012, after China — briefly becoming its top buyer and picking up a whopping 13% — when EU oil embargo was announced,.
It came down to 11% when US sanctions kicked, and Iran soon dropped to number seven seller to India, which switched to Saudi Arabia and Iraq to make good the shortfall.
India was initially reluctant to honour sanctions not mandated by the UN — but caved in under US pressure and threat of denying sanction-violators access to its financial system.
The US monitored Iran’s clients closely, with the secretary of state certifying compliance every six months, allowing them to buy only a certain volume well below their requirements.
Additionally, US sanctions made it difficult for India to pay for crude purchased from Iran as it was prohibited under the sanctions from dealing with designated Iranian banks.