India is trying to avoid a showdown with the US over demands from Washington that it sharply drop its imports of oil from Iran.
The US Secretary of State, Hillary Clinton, is in India on a three-day visit and has pushed India to instead increase oil purchases from other suppliers, such as Saudi Arabia, in an attempt to pressure Iran over its nuclear programme.
"If there weren't an adequate supply we would understand, but we believe that there is adequate supply," Ms Clinton said yesterday in Kolkata. "We commend the steps [the Indian government has] taken and we hope they will do even more."
The US and the EU are seeking to pressure Iran amid allegations from political leaders that Tehran is planning to transform its nuclear energy infrastructure into a weapons programme. Iran has denied these claims and an assessment from America's intelligence agencies concluded earlier this year that Iran was not trying to develop weapons.
Nevertheless, the US is threatening to impose sanctions from 28 June on 12 nations including China and India that do not make a sharp reduction in oil imports from Iran. Japan and EU countries have been granted a waiver from these sanctions, which could include exclusion from the US banking system, after satisfying the US that these countries have already reduced Iranian imports.
It is likely India will seek to have it both ways and avoid a confrontation with the US and threaten a relationship that both countries say is increasingly important. At the same time, given its energy demands and its long relationship with Iran, it is unlikely to do more than make a modest reduction in its imports. India imports about nine per cent of its oil from Iran.
Last month, Indian Finance Minister, Pranab Mukherjee, said those imports had already been reduced and reports yesterday said the authorities had requested two oil importers to reduce imports by about 15 per cent. At the same time, India does not want to be seen giving in to Washington. Asked yesterday whether India was being bullied by the US, an Indian official who spoke on the condition that he not be named, said: "India is too big to be bullied."
He said the relationship between Iran and India was "civilisational and cultural" and said it was of growing economic value. He added: "We have had a relationship for thousands of years and we will continue to have a relationship for thousands of years."
Earlier this year, India announced it was seeking ways to avoid using US dollars to pay for Iranian oil and had agreed 45 per cent should be paid for in Indian rupees. Iran will then use this to buy goods from India.
In a further indication of the way that India will try to juggle its interests, it emerged yesterday that at the same time it is hosting Ms Clinton it is also welcoming a 50-strong business delegation from Iran.
Iran and the so-called six powers – America, France, Britain, China, Russia and Germany – last month resumed discussions over Iran's nuclear programme after a break of more than a year. The talks are scheduled to continue in Baghdad on 23 May.
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