Sets deadline for escrow account use

Negotiations between Indian and U.S. negotiators continued until mid-April, but the Trump administration made it clear that it would make no concessions on its demand that India “zero out” oil imports from Iran, to which India acceded, sources privy to the talks confirmed.

On Tuesday, U.S. Principal Deputy Assistant Secretary for South and Central Asia Alice Wells flew down to discuss regional issues with Indian officials, including the impact of the U.S. decision, as well as prepare for the visit by U.S. Special envoy on Afghanistan Zalmay Khalilzad.

In addition, the U.S. has also stipulated that India’s “escrow account” used for Rupee-Rial trade cannot be operated after its May 2 deadline. However, there is no change in the exemption given for India’s investments in Chabahar port as a trade route to Afghanistan.

The ‘secondary sanctions’ that will go into place next week will see the U.S. placing strict financial curbs on any entities or companies violating the oil sanctions, including a ban on the use of the SWIFT banking international transaction system by the companies, seizure of any U.S. assets of those companies, and curtailing any other dollar transactions. Indian officials said that eventually, the cost of importing Iranian oil would be much higher than other sources of oil that it would be unviable.

“It was a purely commercial decision, taken by the oil importers, including the PSU,” an official said, of the virtually foregone conclusion that India will “zero out” its oil intake from Iran.

The U.S. also drew a direct link between the cooperation it is providing India in investigating the Pulwama terror attacks, shutting down terror havens in Pakistan, and designating Masood Azhar as a terrorist, at the U.N. Security council, and the cooperation it expects in dealing with Iran.

As reported by The Hindu last week, U.S. Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker, who visited Delhi in early April, had discussed steps on blacklisting Pakistan at the Financial Action Task Force at its plenary session in June, while also raising the need for India to cooperate on passing strictures against Iran, which the U.S. calls the world’s biggest terror sponsor. On April 8, the U.S. also designated Iran's Islamic Revolutionary Guard Corps as a foreign terrorist organisation for its alleged role in funding the Hezbollah and Yemeni Houthi groups, further restricting any engagement with the Iranian government.