India has considerably cut down its import of crude oil from Iran. This is following US pressure of financial sanctions on countries dealing with the Islamic republic. US is accusing Iran of using funds from trade to sponsor nuclear programs, while Iran claims these programs are only for peaceful purposes.
The US has already shut down the use of its financial system by Iran which forced Iran to accept Indian rupees in payment for the crude. The rupees would then be exchanged for goods. But Iran does not sufficient requirements for Indian goods. With these new sanctions, countries that deal with Iran have to use banks within their own boundaries effectively forcing Teheran to barter oil for goods. Moreover the goods (like precious metals) that Iran can buy are also restricted by the US.
The largest importers of Iranian oil are China and India. India has refused to completely sever ties with Iran due to its geo-political interests in the region. India and Iran, both do not accept of Pakistan’s influence in war torn Afghanistan’s policy making. And this becomes crucial once western forces pulls out its troops from there next year. India has meanwhile strengthened its ties with the US through a civil nuclear pact and increased co-operation in regional security.
According to Iran-based Fars New Agency, Iran’s foreign trade exceeded $78bln during the first ten months of the current Iranian year (March 20, 2012-January 20, 2013) despite the sanctions and restrictions imposed by the West on Iran’s economy. “God willing, non-oil exports will equal (Iran’s) imports by the end of 1391 (march 19, 2013),” President Mahmoud Ahmedinejad said, adding, “That would be a great revolution in the country’s economy.”
While on the ground, the situation looks bleak and contrasting. Iran has a huge black market for currency trading which the government has been unable to curb. The Rial (Iranian currency) has lost its value many times over since the west imposed sanctions. A dollar which used to be approx. 8,300 Rials in 2004, is now worth approx. 12,300 Rials. The average family with a steady income is forced to ration its daily used products because of the decreasing value of money. While the rich finds the price of imported products fluctuate almost 30% in a day.
Sanctions have profound effect on human vital resources. “More than anything else, we have a lack of medicines for patients suffering from cancer and multiple sclerosis,” former Iranian president Akbar Hashemi Rafsanjani told the conservative website “Tabnak”. “Those with thalassaemia or in need of dialysis are facing difficulties too – all because of sanctions against banks or problems with transferring foreign currency.”
“The sanctions imposed on the Islamic Republic of Iran have had significant effects on the general population, including an escalation in inflation, a rise in commodities and energy costs, an increase in the rate of unemployment and a shortage of necessary items, including medicine,” United Nations secretary-general Ban Ki-Moon said. “The sanctions also appear to be affecting humanitarian operations in the country,” he wrote. “Even companies that have obtained the requisite license to import food and medicine are facing difficulties in finding third-country banks to process the transactions.”