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India pays oil bill, Iran ducks sanctions
by Staff Writers
Dubai, United Arab Emirates (UPI) Aug 19, 2011

Amid a welter of international intrigue and big-stick diplomacy, Iran has been dodging international sanctions again.

Energy-hungry India, which gets 18 percent of its oil from Iran, has resumed oil payments to Tehran through a state-owned Turkish bank after remittances were cut off in December due to sanctions imposed by the United Nations in June 2010 over Iran's nuclear program.

New Delhi owes Tehran some $5 billion, although it's not clear how long the arrangement with Turkey's Halkbank will survive.

"There is speculation that the United States will pressure Turkey to close the Halkbank window to Iran, as it pressed the Reserve Bank of India before," observed Asian analyst Robert M. Cutler of Canada's Carlton University.

"However, there's good reason to suppose that Turkish Prime Minister Recep Tayyip Erdogan is pleased at the opportunity that this presents to install another instrument of potential control over Tehran."

The sanctions have blocked similar payments from South Korea, a key U.S. ally in Asia and one of the top buyers of Iranian crude that total around $3.82 billion and could hit $4.76 billion by the end of the year.

In the meantime, Iran, seeking ways to beat the sanctions, is talking to China, a permanent member of the U.N. Security Council, about using barter to sidestep the sanctions.

The Financial Times reports that because of difficulties in conducting dollar-denominated business with Iran these days, China could owe the Islamic Republic as much as $30 billion.

It said bilateral Iran-China trade totaled $29.3 billion in 2010, nearly 40 percent up on the previous year. But Iran is feeling the financial pinch and needs hard cash, rather than cheap trade goods, so that proposal may not get off the ground.

But at the same time, China, like India, needs Iran's oil, the country's lifeblood.

"China and India together buy about one-third of Iran's oil," the Financial Times reported. "China's oil imports from Iran have risen 49 percent this year."

India's payment problems began in December 2010. The Reserve Bank of India had been funneling oil payments through Germany's Bundesbank to a controversial Iranian bank in Hamburg.

That's the European-Iranian Trade Bank, known as EIHB which has somehow avoided being blacklisted by the European Union. But the involvement of Germany's central bank in the arrangement came to light and the payments to Tehran were blocked.

The German newsmagazine Der Spiegel reported in April that Germany only agreed to that arrangement as part of a deal with Tehran to release two reporters of the weekly newspaper Bild Am Sontag who were seized in Tehran in October 2010. They were released in February.

India's central bank scrapped that long-standing mechanism in December. Tehran threatened to cut off oil supplies in August if the outstanding bills weren't paid and India found the Turkish route.

Meantime, Tehran is trying to purchase foreign banks and money exchange bureaus around the world in a bid to circumvent the sanctions, a recent U.N. report claims.

It concluded that the Iranians often use foreign money-changers, whom it transfers funds that are converted into dollars or euros. These are then transferred to an intermediary bank -- invariably in Dubai and Turkey -- and then on to a bank in the country where the manufacturers Tehran is buying from are located.

"The end-user's name does not appear on the transaction, so the ultimate recipient of the funds is not aware they are coming from a sanctioned entity," the report explained.

It warned that the Tehran regime was seeking to establish covert financial infrastructures to facilitate the deals it requires to maintain its nuclear and ballistic missile programs -- the ones the sanctions are intended to neutralize.

One ploy the Iranians have used to dodge detection of their clandestine dealings to acquire a wide range of components and machinery for these programs is to disguise its fleet of cargo vessels.

There are largely controlled by the state-owned Islamic Republic of Iran Shipping Lines, the national maritime carrier that haul clandestine, sanctions-busting cargoes to Iran.

The U.S. Treasury has imposed sanctions on much of IRISL's 123-ship fleet and a score of its dummy front companies around the globe. But IRISL just changed the ships' names.

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