(Persia Digest) – An expert of the Indian Subcontinent in Tehran believes: “Iran has no option but to suffer the damages of barter trade for the sale of its oil to India against commodities or rupees. This is a temporary solution to cross the hurdle of new sanctions which will incur heavy losses on the country.”
The Central Bank and Ministry of Finance of India are investigating ways of establishing a rupee payment system or barter trade with crude oil producing countries such as Iran, Russia, and Venezuela. India is Iran’s second largest oil customer. As such, what are Iran's interests in its crude oil deals with India on a rupee or barter trade basis?
University Professor and former Iranian MP, Dr Nozar Shafiei told Persia Digest: “Under the sanctions, Iran has no choice but to conduct trade with other countries based on barter or their national currency. This is a decision taken in unusual situations which will definitely cost Iran dearly.”
He added: “Iran is likely to sell its oil to India with subsidies and receive rupees in exchange, which is not a currency used in trade, or else import Indian goods. Despite a losing situation, this is the only way forward for the Iranian authorities.”
This expert on Subcontinent affairs reiterated: “Iran has three options at the moment. It can either start talks with the US, design a system whereby it can use the national currency of other parties in its global trading, or continue to cope with the current economic and financial crisis.”
Shafiei points out that India is not the only country using its national currency to trade with Iran, adding: “If we only traded with India with this system, it would have had serious consequences for us. But we also use the lira and ruble with Turkey and Russia to a certain extent. What is problematic, however, is the need to trade in dollars with other countries. Nevertheless, given Iran's situation, this way of doing business is more cost-effective than the other two approaches I have mentioned.”
The former MP continued: “Another point here is that this form of commercial relations can continue Iran's bilateral ties with other countries until we put this behind us and circumvent the sanctions until the situation changes, for instance, with the outcome of midterm elections in the US Congress.”
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