Penny MacRae, AFP
Last updated: 10 February, 2012

EU to pressure India over Iran

The European Union looked to push India at a summit on Friday to use its commercial and diplomatic influence to try to bring Iran back to the negotiating table over its disputed nuclear programme.

The move came a day after New Delhi announced it would send a large business delegation to Iran to exploit an opportunity to boost bilateral trade at a time when Europe and the United States are trying to isolate the Islamic republic.

India, which was the biggest buyer of Iranian oil worldwide last month according to Dow Jones Newswires, has emerged as a potential problem for Western nations as they look to ratchet up pressure on Tehran.

Speaking ahead of the EU-India summit in New Delhi, European Council president Herman Van Rompuy suggested New Delhi’s refusal to join the sanctions programme could be used constructively.

“I plan to ask Indian leaders to apply their considerable leverage to Iran and help in convincing the Iranian leadership to give up their sensitive nuclear programme and return to the negotiating table,” Van Rompuy told The Times of India said.

Indian foreign policy experts have previously suggested New Delhi could act as an interlocutor with Iran to help the world community engage with the country over its nuclear goals, which Tehran maintains are peaceful.

India’s decision to send a business delegation to Iran comes amid reports the two sides are exploring ways to increase trade while sidestepping the EU and US sanctions that target the Iranian central bank and the oil industry.

Iran has reportedly agreed to accept Indian rupees for up to 45 percent of oil exports, while India sees opportunities to sell tea, wheat and rice, as well as iron and steel among others.

India’s Economic Times reported on Thursday that New Delhi had proposed paying for crude imports with wheat exports to the Islamic Republic.

“If Europe and the US want to stop exports to Iran, why should I (India) follow suit? Why shouldn’t we tap that opportunity?” an unnamed government official was quoted as saying by the Press Trust of India on Thursday.

India argues it is bound only by UN sanctions on Iran, not embargoes imposed by other countries.

“We can’t determine what Indian companies do,” acknowledged EU ambassador to India Joao Cravinho this week.

During the summit — attended by Van Rompuy, EU Commission President Jose Manuel Barroso and Indian Prime Minister Manmohan Singh — the two sides will also focus on bridging differences holding up a long-delayed free trade pact.

“We hope to bring a package together that will get the political blessing from the EU president and Prime Minister Singh,” Cravinho told AFP.

Such a package would allow negotiators to move into the final lap of talks for an accord that could be wrapped up in the second half of 2012, embracing 1.8 billion people or nearly a quarter of the global population, Cravinho said.

Intense negotiations have been under way for weeks with both sides “working on the nature of trade-offs needed to reach a political agreement”, he added.

Indian Commerce Minister Anand Sharma said talks were in the “final stage” but a “few gaps” remained to be closed, while a senior Indian government official, who could not be named, said New Delhi hoped for a “significant announcement.”

Deadlines for concluding the deal, under discussion since 2007, have been repeatedly missed with the EU pressing India to cut duties on cars, wines and spirits.

In turn India is seeking greater EU market access for its farm products, textiles and IT services.

The EU is also keen on making new inroads into India’s banking and retail sectors, while India wants the EU to allow freer movement of its professionals in the 27-nation bloc.

“The EU-India free trade agreement is one of the biggest and most ambitious free trade agreements ever negotiated,” said Cravinho.

India has already struck free trade deals with Japan, Malaysia and South Korea, while the EU is in trade liberalisation talks with Canada and Japan, among other countries.