Shape of sanctions: on U.S. waiver on Chabahar port
Mains Paper 3: International Relations
Prelims level: Chabahar port
Mains level: Bilateral, regional and global groupings and agreements involving
India and/or affecting India's interests Effect of policies and politics of
developed and developing countries on India's interests.
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.
The Trump administration has agreed to waive sanctions on
the purchase of oil from Iran for about six months, which would help the Modi
government tide over until the general elections, without any major oil price
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.
The waivers are welcome also as they indicate that despite
all the harsh rhetoric on “choking Iran”.
Impact of this wavier
The U.S. may have had a rethink on its sanctions, and
the costs incurred in pushing around allies and partners such as India,
Japan and South Korea to “zero out” oil purchases.
This conclusion stems from the fact that both India and
Iran’s two biggest oil importers, have been extended
This flexibility could be a sign that the U.S. is leaving
space for leeway in resuming talks with Iran in the long term.
The fact that the waivers are temporary, and contingent on
further reductions in oil trade with Iran, means that for now India will need to
continue to find alternatives to its offtake from Iran.
The alternative rupee-rial mechanism, which was
operationalised in 2012 during the last round of sanctions, depends on
increasing Iranian demand for Indian goods to balance India’s annual purchases
of about $10 billion, which hasn’t fructified yet.
The European Union, Russia and China have also been
working on a “special payment mechanism” to circumvent sanctions.
But they have yet to launch it, limiting India’s options.
The waivers from the U.S., 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.
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.
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.
This could, in turn, impact Delhi-Tehran ties in the long
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.
Securing the waiver the government has not exactly dodged
the figurative bullet, but merely outpaced it.
It will need to keep outrunning that bullet for the
Q.1) The strategically important Zaranj-Delaram Highway often seen in news is
Q.1) Why the U.S. waiver on Chabahar and on oil purchases from Iran is so
important for India?