Diplomatic diligence OK on Iran pipeline

Though the Indo-Iran pipeline is still on the negotiating table, New Delhi has put together a due diligence report on the legal implication ...

Though the Indo-Iran pipeline is still on the negotiating table, New Delhi has put together a due diligence report on the legal implication of the proposed $4.3-billion deal in the context of Washington’s concerns over the trilateral initiative.

While Washington is playing the Iran card close to its chest, a note from South Block indicates the possibility of India attracting US sanctions under the Iran and Libya Sanctions Act, 1996 (also called the Kennedy D’Amato Act).

According to South Block, any activity that leads to annual investments of more than $40 million that directly and significantly contributes to Iran’s ability to develop its oil and gas resources will trigger the sanctions.

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However, New Delhi knows that Turkey, Britain, The Netherlands and Japan, who invested into Iran’s hydrocarbon sector after the Act came into force, did not attract any US sanctions.

It also cites the example of European Union that successfully complained to the panel established under the dispute resolution mechanism of WTO in 1997 to escape US sanctions targetting Cuba. The note says the US legislation on Iran has been challenged by EU and Canada and even Tehran as an ‘‘inadmissible intervention in its internal and external affairs.’’

The fact of the matter is that the US President has the discretion to impose sanctions on his determination that a company or a person has ‘‘knowingly violated the Act after its enactment.’’Under the law, the President can impose the following sanctions :

• Denial of Export-Import Bank assistance for exports

• Denial of US export licencesz

• Prohibitions on US financial institutions providing major loans or credit to sanctioned person or company

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• Denial of access to US government procurement contracts, which is not consistent with WTO obligations

• For companies, restrictions of their exports to US companies

While Indo-US focus is on civilian nuclear energy cooperation, this is no way linked to any assurances on the India-Iran pipeline. New Delhi’s argument against the Kennedy-D’Amato Act is that it is not developing Iran’s oil and gas reserves but only tapping its resources via Pakistan.

For Washington, the Indo-Iran pipeline is also a double-edged weapon. While its national interest is not to allow Iran to develop nuclear weapons, it also does not want to be seen coming in way of the Indo-Pak rapproachment through the economic benefits of the pipeline.

The government note finds the US Act against the principles of sovereign equality, non-intervention and freedom of trade. It points out that the United Nations General Assembly has adopted resolutions calling for immediate repeal of extra-territorial laws that impose sanctions on corporations or nationals of other states.

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The note makes it clear that the European Union and Canada have enacted blocking statutes to address the Kennedy-D’Amato Act.

Though External Affairs Natwar Singh has gone on record says India has traditionally good relations with Iran, Washington has made it clear that it will flag off its concerns only after the project takes off.

Aiyar finalises dates

NEW DELHI: Oil minister Mani Shankar Aiyar plans to visit Pakistan and Iran in June to discuss the planned, $4-billion Indo-Iran project to import natural gas to India. Indian officials are likely to sign a formal Sale Purchase Agreement with Iran to import 5 million tonnes a year of liquefied natural gas (LNG) during Aiyar’s visit, he said. Aiyar plans to visit Karachi and Islamabad on June 3-7 and Azerbaijan for two days from June 8, where he will address an oil and gas conference before flying to Teheran, a senior official said. —ENS