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Iran

IRAN OIL – US SANCTION – INDIA’s IMPACT

What’s in news?

India will stop importing crude oil from Iran after US ends sanction waive

Key data’s:

India will stop importing crude oil from Iran following the US move to end sanction waivers, and will use alternate supply sources such as Saudi Arabia to make up for the lost volumes.

Background:

  • USA announced Iran as a hostile state, since the tension starts when Nuclear Program starts.
  • As per USA, Iran’s nuclear weapon program is a threat to USA, as they sponsoring to terror outfits like Hamaz, Hezbulla.
  • In 2008-09, Iran started its Nuclear weapon program. But the USA, starts to sanction on Iran, to cripple its economy.
  • When USA, imposed sanctions, it will directly impact many countries which are importing oil from Iran. Such a countries are, India, Japan, China, Turkey, Italy, etc.,
  • Joint Comprehensive Plan of Action
  • The Joint Comprehensive Plan of Action (JCPOA) known commonly as the Iran deal or Iran nuclear deal, is an international agreement on the nuclear program of Iran reached in Vienna on 14 July 2015 between Iran, the P5+1 (the five permanent members of the United Nations Security Council—China, France, Russia, United Kingdom, United States—plus Germany), and the European Union.
  • Formal negotiations toward the Joint Comprehensive Plan of Action on Iran’s nuclear program began with the adoption of the Joint Plan of Action, an interim agreement signed between Iran and the P5+1 countries in November 2013. For the next twenty months, Iran and the P5+1 countries engaged in negotiations, and in April 2015 agreed on an Iran nuclear deal framework for the final agreement and in July 2015, Iran and the P5+1 agreed on the plan.
  • Under the agreement, Iran agreed to eliminate its stockpile of medium-enriched uranium, cut its stockpile of low-enriched uranium by 98%, and reduce by about two-thirds the number of its gas centrifuges for 13 years.
  • For the next 15 years, Iran will only enrich uranium up to 3.67%. Iran also agreed not to build any new heavy-water facilities for the same period of time. Uranium-enrichment activities will be limited to a single facility using first-generation centrifuges for 10 years. Other facilities will be converted to avoid proliferation risks.
  • To monitor and verify Iran’s compliance with the agreement, the International Atomic Energy Agency (IAEA) will have regular access to all Iranian nuclear facilities.
  • The agreement provides that in return for verifiably abiding by its commitments, Iran will receive relief from U.S., European Union, and United Nations Security Council nuclear-related economic sanctions.
  • The JCPOA is not a bilateral deal between Iran and the U.S.; other parties are China, France, Germany, Russia, the U.K., and the EU. Further, the JCPOA was unanimously supported by the United Nations Security Council (Resolution 2231) enabling Security Council sanctions to be lifted

INDIA’S MOVE DURING 2008-09:

  • During 2008-09, USA for the first imposed economic sanctions on Iran.
  • India, took few steps to tackle the situation and also to avoid USA’S sanction. They are;
    • India reduced its oil imports from Iran, in marginal rates.
    • India preferred Alternative Payment System.
    • Some innovative arrangements have been made.

TRUMP’S MOVE:

  • Recently, USA President Donald Trump came out of the nuclear deal and asked other countries to cut down the oil imports from Iran. Because, oil exports are the main source of revenue to Iran.
  • According to Donald Trump, the revenue earned is used to finance the terrorist organisation and also the Iran is not following the provisions of the Nuclear Deal.
  • After imposed economic sanction of 6 months on countries, it gave exemptions to 8 countries like India, Japan, China, South Korea, Turkey, Italy, Greece and Taiwan. And USA announced this exemption is only for one time, and it cannot be extended.
  • Turkey, Greece, Taiwan accepts the warning of Iran to cut down the oil imports from Iran.

INDIA’S CURRENT MOVE:

  • India decided to zero-down the imports of oil from Iran as USA threatens, India cannot use the dollar in International Trade and the assets of oil importing companies in the USA will be frozen.
  • India was the second biggest buyer of Iranian crude oil after China.
  • The shortfall will be made from alternate supply sources available in Saudi Arabia, Kuwait, UAE and Mexico.

RESULT:

  • India’s energy security depends on 85%of imports. Among this number, India importing 10% of oil from Iran. If it cut down the imports, India have to imports additionally from the remaining countries. This may affect the energy security of the country.
  • India would breach its “Foreign Policy Doctrine”. As per this doctrine, there are two principles must be followed.
  1. Principle of stratrergic autonomy:
  • The choice taken by India regards with other country must be independent. It should not be influenced by any other country.
  • India, for smooth and mutual relation with foreign countries, it should not interfere in any country’s internal affairs.
  1. India should not support any unilateral sanctions. Rather than it can support UN’s sanction on other countries.
  • India’s relation with Iran would be affected as we are doing with Chabahar port, to watch the Taliban’s return in Afganistan, monitoring Pakistan.

Way forward:

Rather than zero-down imports, it may reduce its rate of imports from Iran.

https://www.iasipstnpsc.in/us-exempts-india-china-from-sanctions-on-iranian-oil/

https://www.livemint.com/industry/energy/india-will-stop-importing-crude-oil-from-iran-after-us-ends-sanction-waiver-1556008925244.html

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