By Mark Dubowitz
The Reserve Bank of India has opened up a major new front in the global effort to tighten the economic screws on Tehran. Under pressure from the United States, the Indian central bank last week blocked domestic buyers of Iranian oil from making payments through the Asian Clearing Union. But further measures, and time for them to work, will still be needed to convince Iran to abandon its nuclear weapons program.
While oil sales to India can still clear through commercial banks, they will be more transparent, subjecting them to scrutiny under financial sanctions laws enacted by the U.S., the European Union and a range of Asian countries. And many international banks will not get involved at all, given the potential penalties. Every bank CEO is aware of the almost $2 billion in fines levied by the U.S. government against some prominent European banks for violations of U.S. laws against business with Iran.
This has Tehran worried: Crude oil sales are the lifeblood of the regime's power, constituting 80 percent of Iran's export earnings and 24 percent of its GDP. Tehran has reacted angrily, with the National Iranian Oil Company refusing to settle Indian oil trades outside the ACU.
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