The United States has taken steps to pressure its allies outside Europe to move away from imports of Iranian oil. US State Department spokesperson Victoria Nuland specifically mentioned India and China when saying on February 21 that her government was "having talks with countries around the world about the implications of the [sanctions/embargo] legislation with regard to our expectation that countries will increasingly wean themselves of dependence on Iranian oil."
Asked about an opinion piece from former Under Secretary of State Nicholas Burns, who wrote that India's decision to continue trade with Iran "isn't just a slap in the face for the US - it raises questions about its ability to lead", Nuland brushed Burns off as "a private citizen".
The commercial pressure on India has begun to show. The Indian Export Credit Guarantee Corporation, which underwrites the risk of Indian exporters, said that it would not halt insurance cover for exports to Iran but that it is become "very cautious" and "will try to keep our exposure at the minimum level."
With the Turkiye Halk Bankasi unable to provide third-party financial intermediation and with Dubai-based middlemen unable to easily deal with Iranian firms, about US$3 billion in Iranian arrears against Indian traders have built up since December 2010. These commercial headaches have soured India-Iran business relations. Read More