By: Irananiasforum.com,  7.4.2001

Iran will continue to export its crude to India despite an overdue of nearly $9 billion and the difficulty to find a mechanism to pay the future exports.

The dilemma begun in December, when India responded positively to US demand to tighten financial sanctions against Iran

and therefore, the Indian central bank placed restrictions on transactions with Iran through a financial clearing house.

Iran is the second-largest crude supplier to India after Saudi Arabia and accounts for about 14% of the country’s oil import bill. Iran exports 400.000 barbell a day to India reaching $12 billion annually. Indian oil companies importing crude from Iran include Indian Oil Corp., Hindustan Petroleum Corp. Ltd., Bharat Petroleum Corp. Ltd., Mangalore Refinery & Petrochemicals Ltd. and Essar Oil Ltd. Until 2009-10, Reliance Industries Ltd. used to import crude from Iran, but it has since discontinued its purchases.

In March 2011, a solution seemed to appear to resolve the issue when India tried to make payments in Euros through the Hamburg-based European-Iranian Trade Bank AG. But the US intervened and included the small Iranian bank in the black list. Consequently, Germany halted the financial transactions.

On July 3, the Iranians warned India to find a solution to the issue but India has offered to pay in its own currency Rupee, an offer that Iran has so far refused to accept. According to financial reports, ” Korea and China use their own currency to pay for Iranian imports. Iran buys cars and several other commodities including heavy equipment from the two nations from the payments it earns from oil sales, leaving almost nothing by way of actual currency transfer.”

Iran’s dilemma to exports its main source of income is combined with its difficulty to maintain its production. Since the start of international sanctions against Iran in 2007 when its nuclear dossier was sent to the UN Security Council, almost all multinational have left Iran and the country is left without foreign investment and necessary technology to maintain its declining oil production. According to both Iranian and Western sources, if the trend continues, Iranian oil production will only satisfy its domestic demands and the country’s income will come to an end.

This is part of the price the Iranian regime is actually paying to acquire the nuclear weapon and obtain a hegemonic position in the region.