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Shape of sanctions: on U.S. waiver on Chabahar port

Mains- GS-2-International Relations, Prelims-Miscellaneous

1. The U.S. administration’s decision to grant India and seven other countries waivers on the sanctions it re-imposed on Iran provides some temporary relief to India.

2. The waivers announced cover Indian investment in Iran’s Chabahar port and the plan to build a railway line from Chabahar to Afghanistan to facilitate trade.

3. The waivers are temporary and contingent on further reductions in oil trade with Iran.

4. India will need to continue to find alternatives to its offtake from Iran.

5. The alternative rupee-rial mechanism:

a. It was operationalized in 2012 during the last round of sanctions,

b. It depends on increasing Iranian demand for Indian goods to balance India’s annual purchases of about $10 billion. It is not functionalised yet.

6. The European Union, Russia, and China have also been working on a “special payment mechanism” to circumvent sanctions.

7. But they have yet to launch it, limiting India’s options.

8. India will still face the impact of the U.S. sanctions, both on oil and on its investment in Chabahar, as very few international companies may be willing to undertake contracts.

9. It will also impact Delhi-Tehran ties in the long run.

a. Unlike China, it chose to reduce its oil intake from Iran and entered into negotiations for alternative fuel supplies from Iran’s rivals in the Gulf.

b. Above all, by seeking the waivers, instead of sticking to its earlier line that it accepted only UN and not “unilateral” sanctions, India has lost its moral leverage.

10. India will have to keep engaging the U.S. in order to secure further waivers, both in this case and for CAATSA-related U.S. sanctions on Iran, Russia, and North Korea.

11. As a result, by securing the waiver the government has not exactly overcome the hurdle but merely outpaced it.

Source: The Hindu.