Interview with RT News on Iran sanctions and US-India ties

Here’s a transcript of an interview I gave with RT, the Russian news channel, on May 8th, 2012, on Secretary of State Hillary Clinton’s visit to India. The questions focused mostly on the Iran sanctions regime and its effects on India.

Hillary Clinton visits India as New Delhi ‘faces dilemma’

Published: 08 May, 2012

Hillary Clinton is visiting India in the hope of persuading the country to halt oil imports from Iran or face sanctions itself. RT discussed the subject with Neil Padukone, an expert in geopolitics at the Takshashila Institution.

­RT: The US and other Western nations have been ramping up pressure on the Iranian nuclear program for a long time now. But why bring India into it?

Neil Padukone: For the last five or ten years or so, Indian companies have been increasing their presence in the Iranian energy sector. So much so that a number of Indian oil refineries are specifically designed to refine Iran’s particular blend of crude oil. As a result of this engagement, India has become, along with China, one of the largest investors in Iran’s energy sector and one of its largest importers of crude oil. So if there’s going to be any dent to Iran’s energy sector, it’s going to have to involve countries like India and China and others that invest heavily in it.

RT: What will it mean for India if the US does, in fact, hit New Delhi with sanctions?

NP: I’m not sure if New Delhi itself would be directly hit, though its energy companies could certainly be sanctioned. But the challenge for India is that it wouldn’t be all that easy to switch from Iranian crude to other sources, in part because the refineries in India are particularly geared to refine Iranian crude and it would take a difficult and extensive retrofitting process to be able to do that. But at the same time it’s not just a matter of energy dependence. Because Pakistan has not allowed India to access Afghanistan through its borders, and across its territory, India has been forced to look a little further abroad. So it developed a very strategic link between the Chabahar Port in eastern Iran on the Gulf of Oman and western Afghanistan. And this road not only takes away Pakistan’s monopoly on Afghanistan’s maritime trade, but it also gives India some very strategic important access to Afghanistan and to central Asia in general. So sanctions would be a little more complicated than just withdrawing from the energy sector.

RT: What is India’s stance on Tehran now?

NP: India has been facing a dilemma because it depends on Iran not only for energy and other trade, but also for strategic access to Central Asia and for other strategic ties. So on one hand it can’t entirely drop Iran, also for fear that if it does so, China would pick up the pieces, especially on preferential financial terms. But at the same time, it can’t entirely reject the United States’ position because India is, of course, America’s burgeoning strategic ally. They have tremendous amounts of trade, they share strategic interests elsewhere in the world. So for the last five years and continuing, India has been trying to balance and juggle its relations between Iran and the United States—even trying to convince the US to ease its confrontational approach with Iran.

RT: What is India’s alternative if it does stop buying oil from Iran?

NP: India is currently waiting for an exemption from US penalties on financial transactions with Iran. But, as it’s been doing over the last few years, India’s also been looking for creative means to engage with Iran economically. That involves creating new corporate entities that are outside of the realm of Western financial sanctions and even buying Iranian crude through rupees or with gold, so that Tehran will be forced to buy other Indian goods in return. So it’s sort of reverted to a barter system. So that’s one method of continuing to engage with Iran economically.

RT: India buys almost 80 per cent of Iranian crude, but has vowed to curtail its import of Iranian oil by 20 per cent, officials reported. For India, Iranian oil imports currently make up approximately 10 per cent of total oil imports, but that number is set to fall to seven per cent next year.

This entry was posted in India, Iran, Media Appearance, Strategy, Uncategorized, United States. Bookmark the permalink.

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