Iran Sanctions Benefit India

4 Jan

Iran’s top nuclear negotiator has started a three day visit to India. According to Trend News, the visit takes place at the invitation of India’s National Security Advisor, Shivshankar Menon. 

India is one of the few countries that has received sanctions waivers from the US, thus allowing it to continue purchasing oil from Iran.

Iran has tried hard to bring the Indian government to its side. At the recent Non Aligned Movement (NAM) conference in Tehran, India had one of the largest delegations. This was seen as a positive sign by the Iranian government. Most likely, Iran will try to convince India to lobby western countries to remove sanctions against it. It’s also very possible that Iran will try to bring India to its side in  the nuclear dispute with the West.

However Iran is unlikely to succeed for a number of reasons.

First and foremost India’s relations with the West, especially the U.S are more important economically and strategically than its relations with the Iranian regime.

Secondly, sanctions against Iran have created a lucrative business opportunity for India. Because of the sanctions, India can’t pay Iran in dollars for its oil. As a result, the two countries have arranged a barter deal upon which instead of dollars, India pays Iran with Indian rice, medicine and steel.

Such a barter deal is lucrative for India as it gets to sell products to Iran which Iran could have bought from India’s competitors elsewhere, but now has no choice but to buy from India. Iran has to buy such products from India, even if in some cases the quality is bad. As its bargaining position has been weakened due to the sanctions, it won’t have much power to negotiate a better deal. The same has happened to China. Due to the sanctions and Iran’s isolation, Chinese companies have sold many low quality products to Iran knowing full well that Iran has little choice but to buy them.

Therefore its very unlikely that Iran will find India doing much to remove the sanctions against Iran. The same applies to China. Both are doing very well from the current sanctions against the regime.

One Response to “Iran Sanctions Benefit India”

  1. Edgar Njiru January 6, 2013 at 6:34 am #

    wow!! This is set for a decade of big time cashing in for the BRICS most notably India and China.

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