US praises Indian steps to tighten sanctions on Iran

Washington, Dec 29 (PTI) The United States has praised
India's recent steps to tighten sanctions on Iran by barring
its companies from a range of deals which are transacted
though a key trade-finance clearing house.
"This is a significant action" by India, the Treasury
Department's point man on Iran sanctions, Stuart Levey, was
quoted as saying by The Wall Street Journal.
Levey's statement comes days after the Reserve Bank of
India instructed its Banks to stop processing current- account
transactions using the Asian Clearing Union (ACU).
Headquartered in Tehran, ACU was set up by the UN in
1974 to help facilitate trade in the region.
India is Iran's biggest trading partner in business
done through ACU. Besides RBI, it includes central banks of
Bangladesh, the Maldives, Burma, Iran, Pakistan, Bhutan, Nepal
and Sri Lanka.
On Friday, RBI said Indian firms can't use the ACU
mechanism when making payments for the import of oil or gas.
"In view of the difficulties being experienced by
importers/exporters in payments to/receipts from Iran... it
has been decided that all eligible current account
transactions including trade transactions with Iran should be
settled in any permitted currency outside the ACU mechanism
until further notice," RBI said in another statement Monday.
While that order didn't explicitly mention Iran, the
Islamic republic is the only major crude exporter in the ACU,
the daily said.
Levey said the latest RBI move will make clear to
Indian companies that working through the ACU doesn't
necessarily mean an Iranian counterpart has an international
seal of approval.
RBI had asked importers to settle their accounts in
currencies other than dollar and euro.
The Journal said in January 2009, Iran's government
advised local and Indian companies to use the ACU as a way of
avoiding international sanctions and the US banking system.
"Iranian exporters to India and Indian exporters to
Iran no longer need to fret over the US embargo on dollar
transactions," read a January 2009 English-language report on
Iran's state-owned Fars News Agency.
"By resorting to the Asian Clearing Union mechanism
for import-export transactions, exporters from the two
countries can not only realize their receivables but also
sidestep the US banking system altogether," it said according
to the daily.
India's move could also disrupt its trade with other
countries.
In November, India used the ACU to conduct significant
transactions with Sri Lanka and Bangladesh, the paper said.