Foreign and Defense Policy

India Takes a Shameful Step Backwards on Iran

The informative India Real Time blog over at the Wall Street Journal reports today that India and Iran have found a loophole for India to transfer oil payments to Iran after the Reserve Bank of India (RBI) barred Indian companies from using the Asian Clearing Union to carry out transactions last December.

After negotiating with the RBI, the countries have decided that India will pay for Iranian crude oil through the Hamburg-based European-Iranian Trade Bank AG (EIH). Turns out that the U.S. Treasury Department blacklisted EIH last year for facilitating Iran’s nuclear and weapons proliferation activities. According to Treasury:

—In 2009, EIH and Bank Mellat facilitated nearly $350,000 of business between a weapons exporter and a subsidiary of WMD proliferator Iran Electronics Industries (IEI).

—In 2007, EIH and Bank Mellat facilitated a transaction of more than $250,000 directly between IEI and the same arms exporter.

—In a six-month period beginning in late 2007, EIH and the Export Development Bank of Iran enabled Iran’s missile programs to purchase more than $3 million of material.

—Also in 2007, almost $1 million in business involving an Iranian WMD proliferator was facilitated by EIH and Bank Mellat.

When the RBI barred Indian companies from using the Asian Clearing Union to do business with Iran in December, it appeared that U.S. diplomatic efforts to reduce Indian links with Iran had started to bear fruit. Today, we see that this is clearly not the case. Not only does India show no desire to cut its economic links with Iran, it is finding loopholes that are in brazen defiance of expressed American concerns. India cannot simply plead ignorance on this case.

Shame on India. A country that aspires to so much on the international stage cannot succumb to the temptations of a nation like Iran, regardless of its energy needs.

It is true that the United States needs to do more to cultivate the bilateral partnership with India, and that an occasional state visit isn’t enough for achieving long-term mutual interests. But if India cannot take a security issue like Iran seriously, then it provides less incentive for us to take India seriously.

Image by Dainis Matisons.

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