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India: The weakest link?

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22 February 2012 08:58

While no economic sanctions regime can ever be watertight, the ones enacted against Iran have been well targeted and undoubtedly have caused pain. But the problem with unilateral action, or multilateral action without UN agreement, is that the impact of sanctions dissipates as states assert their sovereign right to trade with whoever they choose, and business people target the opportunities that non-universal sanctions present. 

On Iran and Syria, differences are widening between Western policy and that of Russia and China. But although India has been equally dismissive of Western calls for tighter sanctions, its attitude has elicited far less comment.

India has taken note of the bargains on offer in the energy sector, and the opportunities Iran offers as a market starved of goods and services. Already there are reports that oil exports from Iran to India have increased by more than 37% from last year. India's keenness to sidestep US/EU sanctions has also involved some commercial wizardry regarding payments, with the latest solution being to use rupees rather than dollars as the trading currency.

The primacy of business over politics in India's dealings with the Islamic republic has been highlighted by the Indian Commerce Minister's announcement that a large Indian business delegation would still visit Iran despite accusations that Iran was responsible for a bomb attack against an Israeli diplomat in Delhi last week. 

Business with Iran is already over US$13 billion annually and India's Chamber of Commerce and Industry is looking to push it to over US$30 billion by 2015, so it's little wonder the Commerce Minister observed that terrorism and trade were separate issues.

India and Syria also enjoyed good commercial relations, with the overseas investment arm of India's state-owned oil and gas company having a joint venture interest in the Syrian oilfields, an arrangement which has proven politically problematic since the sanctions regime hit. Nevertheless, India has been keen to benefit from Syria's straitened circumstances by buying oil from Damascus at depressed prices (although moving the oil poses some unique challenges).

India takes its non-aligned status seriously, and business development even more seriously. Entreaties from the West to tighten the economic screws on its enemies in the Middle East are likely to continue to fall on deaf ears in Delhi.

 

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