India, China may be less inclined to cooperate on US- Iran sanctions: FP Magazine


WASHINGTON, May 16 (APP):The US renewed sanctions on Iran may have unintended economic consequences as India and China, Iran’s biggest oil buyers, would be less inclined to cooperate, and may even boost their purchases from Tehran, a report by the Foreign Policy magazine said.
Sanctions were re-imposed after President Trump pulled out of the Iran nuclear deal, accusing the country of violating the accord which prevented it from pursuing its alleged nuclear program. All major powers, party to the deal, said Iran was in full compliance of the accord signed in 2015.
Trump’s administration is betting that all foreign firms will abide by the sanctions, but the report said that these sanctions will not deliver p”unishing economic pressure”to make Iran submit to Washington’s policy not everyone were likely to follow the US policy.
Among the major sanctions are the ones on Iran’s central bank and on its oil trade, which is the engine of its economy and the major source of foreign earnings.
The report observed that not every foreign company, bank or oil traders will abide by the sanctions, especially so when their own governments are frustrated over the US’ unilateral withdrawal from the treaty.
The US’ major European allies are not happy with the decision and some have even indicated to continue working with Iran on the nuclear deal.
According to the report, unlike during the 2012 to 2015, there was no multilateral interest in putting financial pressure on Iran or isolate it diplomatically.
With regard to oil, the report said that while some European refiners and countries like Japan and South Korea may stop buying oil from Iran, major purchasers India and China will be less inclined to cooperate.
“They (India and China) might even find opportunities to purchase additional barrels of oil from Iran, which has been pushing out more supplies in recent months. This could meaningfully diminish the effect of the sanctions,”the report said.
Similarly, the report stated that there will likely be a mix response when it comes to foreign banks and traders severing financial relationship and trade in goods with Iran. Those foreign banks which are out of US jurisdiction may even adapt facilities to continue doing trade with Iran, even if they were hit with sanctions, said the reporting adding that there was a precedent for this in China.
“More generally, these broad new Iran sanctions will encourage some countries to explore an array of alternative financial conduits to Iran, from barter to blockchain, to shield their banks and companies from U.S. jurisdiction,” the report said.