The United States has taken steps to pressure its allies outside Europe to move away from imports of Iranian oil. US State Department spokesperson Victoria Nuland specifically mentioned India and China when saying on February 21 that her government was „having talks with countries around the world about the implications of the [sanctions/embargo] legislation with regard to our expectation that countries will increasingly wean themselves of dependence on Iranian oil.”
Asked about an opinion piece from former Under Secretary of State Nicholas Burns, who wrote that India’s decision to continue trade with Iran „isn’t just a slap in the face for the US – it raises questions about its ability to lead”, Nuland brushed Burns off as „a private citizen”.
The commercial pressure on India has begun to show. The Indian Export Credit Guarantee Corporation, which underwrites the risk of Indian exporters, said that it would not halt insurance cover for exports to Iran but that it is become „very cautious” and „will try to keep our exposure at the minimum level.”
With the Turkiye Halk Bankasi unable to provide third-party financial intermediation and with Dubai-based middlemen unable to easily deal with Iranian firms, about US$3 billion in Iranian arrears against Indian traders have built up since December 2010. These commercial headaches have soured India-Iran business relations.
On February 24, SWIFT, the main financial messaging service for international money transfers, threatened to cut Iran out of its network. The Society for Worldwide Interbank Financial Telecommunications (as SWIFT is less commonly known) deals with about 10,000 member banks and transmits 17 million financial messages per day. In 2010, 19 banks and 25 financial institutions in Iran transmitted 2 million messages through the SWIFT network.
Based in Brussels, SWIFT is vulnerable to the upcoming European embargo of Iran. Its corporate leaders, Yawar Shah (Citigroup) and Stephan Zimmermann (UBS), are ingrained in the Atlantic financial architecture and unwilling to stand up to the political pressure from their capitals. Avi Jorisch, a former US Treasury official told Bloomberg, „This is a financial equivalent of warfare.” SWIFT has never before expelled a country in this fashion.
Commercial fears among Indian traders and political pressure from Washington has moved the Indian government to seek refuge in Saudi Arabia. Saudi Assistant Minister for Petroleum Affairs Abdul Aziz Bin Salman bin Abdulaziz came to India and met India’s Minister of State for Petroleum and Natural Gas, R P N Singh, on February 23. Abdulaziz noted that Saudi would be glad to increase sales of oil to India, and that if India were to approach Saudi Aramco, its needs would be covered.
India has already begun to „wean” itself off Iran’s oil – it imported 22 million tonnes in 2009-10 and 16 million tonnes in 2010-11. India’s imports from Iran spiked in January because crude to China had to be redirected over a market price dispute. In the short term, India will continue to buy from Iran because its refineries are adjusted to Iranian crude. It will require a financial and technological investment to alter the refining designs. There has been as yet no public discussion about this problem.
IAEA’s „serious concerns”
Pressure on India ramped up after the International Atomic Energy Agency (IAEA) team returned from Tehran and delivered its report on February 24. The report does not offer any smoking gun. Iran continues to enrich uranium, which it is technically allowed to do by the nuclear Non-Proliferation Treaty (NPT), „under Agency safeguards”. The problem lies in „Iraq Territory”: „Since 2002, the Agency has become increasingly concerned about the possible existence in Iran of undisclosed nuclear related activities involving military related organizations, including activities related to the development of a nuclear payload for a missile, about which the Agency has regularly received new information.”
The IAEA finger points to one location: Parchin, only 20 kilometers southeast of Tehran (not an ideal place to have a nuclear weapons testing site). The IAEA caviled, „Iran did not provide access to Parchin, as requested by the Agency during its two recent visits to Tehran.”
The IAEA director general’s report is disingenuous in its silence on the previous visits of inspectors to Parchin, as Gareth Porter has noted. (See The cadence behind Iran’s atomic block, Asia Times, February 25). The November 2011 report pointed out that an undisclosed source said that the Iranians have conducted tests at Parchin since 2000. In January and in November 2005, IAEA teams visited Parchin, took environmental samples and left satisfied that the complex did not have any relationship to nuclear weapons. After the second visit, the IAEA noted that there was „no relevant dual-use equipment or materials in the location visited”. Yet, the bugbear of Parchin remains.
Until 1992, the IAEA was a modest investigatory and verification body in the UN system that made sure that nuclear materials in NPT states did not slip from energy production to the making of nuclear weapons. Article IV of the IAEA Treaty guarantees that a member state might „develop research, production and use of nuclear energy for peaceful purposes without discrimination.”
At a Security Council Summit in January 1992, the Atlantic powers dragooned the IAEA into becoming its „nuclear watchdog”. Non-proliferation of nuclear weapons became its main goal, and not twinned with nuclear disarmament. In other words, the IAEA operated within the confines of „nuclear apartheid”, no longer challenging the nuclear weapons states to roll back their nuclear arsenals.
In addition, the IAEA investigations began to question the right of certain countries to enrich uranium for energy purposes. The US-EU position is to deny Iran its own enrichment and reprocessing infrastructure, even if it fulfills the IAEA safeguard requirements for verification. Iran’s deliberations with the IAEA are part of an attempt to keep some room for it to negotiate around the maximalist demands of the Atlantic powers.
Fearmongering about military strikes might be theater for the intensification of the sanctions regime into a full-blown embargo. White House spokesperson Jay Carney’s interpretation of the IAEA report is that Iran has refused „to abide by international obligations”. Actually, it has refused to accept the maximum demands of the Atlantic powers.
The White House does not seem keen on military action on Iran, with the director of national intelligence telling a Congressional committee on January 31 that Iran has no designs to weaponize its nuclear program. The Obama administration has, however, used dangerous rhetoric („all options on the table”) to hornswoggle countries like India into the embargo that it wishes to set up by the summer of 2012.
Burns’ statement that India does not show its „ability to lead” is a threat that the US might not endorse India’s bid for a permanent seat on the UN Security Council. This is a political game, with „Iran” used as a weapon to subordinate countries like India to the economic and political domain of the US. The US is playing with fire, pushing the „Iraq option” in Iran not for regime change necessarily, but in a Cold War against the emergent states (Brazil, Turkey, India, China).