New Delhi: India hopes to resolve an oil payments dispute with Iran before February, the foreign secretary said yesterday, as the South Asian giant strives to satisfy energy needs without upsetting the United States.
Indian Finance Ministry officials were discussing possible solutions with bankers and oil executives ahead of a ministerial visit to Tehran. But one participant warned of a ‘long haul' as Indian bankers stopped issuing letters of credit for the trade. The Reserve Bank of India (RBI) said last month that payments to Iran could no longer be settled using a long-standing clearinghouse system run by regional central banks.
Misuse of funds
The decision came weeks after a visit to New Delhi by US President Barack Obama. Washington praised the move, saying it would reduce what it sees as misuse of funds by Iran to support nuclear activity. Iran initially refused to sell oil outside the old setup but later agreed to ensure oil shipments for January. Talks last week between central bankers of the countries failed to find a way out that would enable India to continue imports of oil from its second largest supplier while boosting the transparency of deals as sought by the US.
The negotiations underscore the balance India has to strike between meeting rising energy demand and satisfying key allies such the US and Arab nations wary of Iran's nuclear ambitions. "We want a solution as soon as possible, the soonest possible," Foreign Secretary Nirupamam Rao said.
