Trump to India: No Waiver on Iran Business

The last time, India had worked out a rupee-rial exchange system for India to pay for Iranian oil. Trump says not again.

Impractical or not, India Times reports No waiver on Iran business.

NEW DELHI: If India believed that just like the first round of Iran sanctions, it could negotiate a softer deal with the US, those hopes were dashed.

After US administration officials said Indian companies would be subject to the same sanctions as everyone else if they dealt with Iran, particularly in the energy sector, India will now bring this to the discussion table during the 2+2 dialogue, referring to the combination of foreign minister Sushma Swaraj and defence minister Nirmala Sitharaman and their US counterparts Mike Pompeo and James Mattis.

Indian government sources say the US’ demands are “impractical” since there is a big difference between “significant reductions” and “zero” trade. During the pre-2015 round of sanctions, countries had to demonstrate they were consciously reducing energy imports from Iran. That helped India reduce its imports but maintain a relationship with Iran nevertheless. This time, that may not be the case, as US officials went on record to say they would not give out waivers to allies. “We view this as one of our top national security priorities. I would be hesitant to say zero waivers ever. I think the predisposition would be No, we’re not granting waivers,” they said.

The last time round, India had worked out a rupee-rial exchange system for India to pay for Iranian oil. In addition, Iranian government took on the reinsurance burdens. It's not clear whether these will be utilised in the same way this year.

Rupee Exchange System

Unlike what most think, oil trade does not have to be in US dollars, nor does anyone or any country have to have dollars to buy oil.

Oil Priced in Dollars Nonsense

One only needs dollars if one goes through the futures system to schedule oil delivery.

Otherwise, trade is in any currency that individuals, corporations, or countries agree on.

I would be surprised if oil is "not" trading in euros and yen, right now. Recall that at one point Venezuela demanded euros, not dollars for oil.

According to the pundits, that can't happen. According to pundits, oil for rupees cannot happen.

No Requirement to Hold Dollars

All the talk about the US going to war with Iraq because it was going to price oil in euros was then and remains sheer stupidity.

There is no requirement to hold dollars to buy oil. Those who believe so have a poor understanding about global trade.

No Waivers

With that out of the way, let's return to the situation at hand.

Key Question

Here is the question: Will India or China be willing to stand up to Trump?

If India, China, and the EU all got together and told Trump to go to hell, this sanction madness would end tomorrow.

Skirting the Sanctions

Two days ago I proposed Iran Can Use Bitcoin to Avoid US Sanctions.

That idea depended on an agreement between India and Iran to trade oil for Rupees, then converted into Bitcoin, then into dollars or euros.

It seems Trump will not allow that.

Oil Shock

Unless Iran can find a way around the sanctions, expect global trouble.

Another oil shock is on the way.

For discussion, please see Donald of Arabia, Oil Sanction Idiocy: Another Oil Shock Coming.

Mike "Mish" Shedlock

Comments (11)
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SweetKenny
SweetKenny

Poor Canada can only sell to US - they’re going to miss the fun

thimk
thimk

well someone needs to get on the phone and tell Merkel that another wave of refugees are arriving . great,timely reporting Mish on an issue of paramount importance

Stuki
Stuki

More like being played by the Kremlin. And/or possibly being bribed by the Saudis.

All Russia has to do to keep oil prices agreeable to it's exporters, is stir up some trouble in the Middle East. Mess around with Syria, hand weapons to some rowdy sect somewhere, leak one of a quadrillion plausible seeming but ultimate dead end roads to a quick nuke to the ever-hopeful never-exactly-nuclear-scientist Mullahs.

And then sit back and laugh, as the Washington clownshow, and their well cultivated and indoctrinated dittohead army, persists in serially shooting themselves, and innocent bystanders, in the foot; by paying to have oil lifted out of the arctic tundra, instead of letting it flow freely and cheaply out of the ground in more naturally favorable spots.

sachvik
sachvik

Mish - Don't see anyone who will stand up to Trump over Iran... Most of the world's trading system today depends on exports to the large US market - why would any country jeapordize that? China and India still need to continue their export-driven models to create jobs for hundreds of millions of people in these countries. Russia is a beneficiary of oil price hikes anyway... Europe has enough problems of its own... Unless a viable alternative emerges (which takes time) or another "maverick" like Trump emerges, no one will disturb the established order! Everyone will just wait for Trump to go away and deal with the next person...

Sidharth
Sidharth

Trump is asking India to choose between Iran and US. In effect, it's a choice between oil or no oil. This is going to be interesting.

Sechel
Sechel

There are many goods and services to which the U.S. is dependent on imports. It's a global economy. We're shooting ourselves in the foot.