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Relief for India? US could grant waivers for some oil imports from Iran

The US said it would consider granting waivers on a case-by-case basis, which will depend on evidence of reduced purchases by parties seeking waivers.

world Updated: Jul 03, 2018 00:09 IST
Yashwant Raj
Yashwant Raj
Hindustan Times, Washington
A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag in the Persian Gulf. India is the second largest buyer of Iranian crude, and it was alarmed by a senior US official’s remarks last week that countries which do not cut their imports from Iran to zero by November 4 will be subject to “secondary sanctions”.(Reuters File Photo)

Dialling back the inflexible position it had taken before, the United States on Monday said it will consider waivers for countries such as India that buy Iranian crude when energy-related sanctions are enforced in November.

Such waivers will be granted on a case-by-case basis and will depend on evidence of reduced purchases by those seeking waivers. A similar condition was imposed in the past too when the US granted waivers for Iran-related sanctions.

Arguing that Washington is “not looking to grant licences and waivers broadly” as that will substantially reduce the pressure it intends to mount on Tehran to change its behaviour, Brian Hook, head of policy planning at the state department, told a news briefing on Iran-related sanctions that the US is “prepared to work with countries that are reducing their imports on a case-by-case basis”.

But he added, “As with our other sanctions we are not looking to grant waivers of licences.”

Hook’s remarks on waivers came in response to a question about plans by India and Turkey to continue importing crude from Iran.

India is the second largest buyer of Iranian crude – China is the first – and it was alarmed by a senior US official’s remarks last week that countries which do not cut their imports from Iran to zero by November 4, when the energy-linked sanction are reimposed, will be subject to “secondary sanctions” and that there will be no waivers or exemptions.

Nikki Haley, the US envoy to the UN, said last week she had raised the issue of Iranian oil imports during a meeting with Prime Minister Narendra Modi and told him that the Trump administration hopes “they would lessen their dependence on Iran” as the US and India build a strong relationship.

Like the rest of the world, India had expected the US to gradually bring back sanctions after President Donald Trump withdrew from the Iran nuclear deal on May 8, so that buyers had time and chances to scout around for other suppliers, as was done the last time.

India imported 705,000 barrels per day (bpd) of Iranian crude in May, and an average of 583,500 bpd over the first five months of 2018, according to Reuters.

Hook said joint teams of officials from the state and treasury departments are travelling to world capitals to convey plans about the reimposition of sanctions with the intended goal of mounting pressure on the Iranian government to change its behaviour. The US, he clarified, as has been said by officials before is pushing for regime change.

The first phase of sanctions target automotive parts and trade in precious metals and go into effect from August 6. The next phase will focus on the energy sector, crude exports and the central bank and will be effected from November 4.

While India has asserted it will continue to buy Iranian crude, arguing it will go along only with UN sanctions as in the last round, it has also indicated it will start dialling down purchases that will be become untenable as they attract secondary sanctions from the US, which could include being blocked from the American financial system.

As a result of the last round of sanctions, India was forced to cut Iranian crude purchases from an average of 320,00 bpd in 2011 to 190,000 bpd on the day the Iran deal - the Joint Comprehensive Plan of Action - went into effect in 2016, ending the sanctions.

India’s imports of Iranian crude never went down to zero, as was also the case with China and South Korea. The Obama administration had allowed them to cut purchases in phases through waivers, which were available only to those seen to have made “significant” reductions in reviews conducted every six months.

The Trump administration may have come around to it as well, it appears, but no details have been announced yet of the mechanism through which these waivers will be granted on a case-by-case basis.

First Published: Jul 02, 2018 23:38 IST