India is the first buyer of Iranian oil to agree to pay for its purchases in gold instead of the US dollar, debkafile's intelligence and Iranian sources report exclusively. Those sources expect China to follow suit. India and China take about one million barrels per day, or 40 percent of Iran's total exports of 2.5 million bpd. Both are superpowers in terms of gold assets.
By trading in gold, New Delhi and Beijing enable Tehran to bypass the upcoming freeze on its central bank's assets and the oil embargo which the European Union's foreign ministers agreed to impose Monday, Jan. 23. The EU currently buys around 20 percent of Iran's oil exports.
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debkafile's intelligence sources disclose that Tehran has set up alternative financial mechanisms with China and Russia for getting paid for its oil in currencies other than US dollars. Both Beijing and Moscow are keeping the workings of those mechanisms top secret.
M K Bhadrakumar is a former Indian career diplomat who has served in Islamabad, Kabul, Tashkent and Moscow
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Over and above, China is tiptoeing into the dazzling world of petrodollar recycling and it is difficult to conjecture that Beijing is unaware what it could be doing via this swap deal with the UAE - for an ancient country that knows only too well that any long journey must begin with a small step.
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The swap deal with the UAE has introduced a tantalizing thought to the GCC states - possibility of renminbi invoicing - that will worry the west. Currently, there may be no need to lose, sleep since Beijing severely restricts the flows of its currency across its borders but China is doubtless putting the infrastructure in place for an era that is not too far off when it may begin to do away with today's strict limits on currency flows, and Beijing may well seek the use of renminbi in international trade. By 2025, China may be importing three times more oil from the GCC than Uncle Sam would need to buy.
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Iran has replaced the dollar in its oil trade with India, China and Japan, Fars reported.
The European Union, the U.S. and the United Nations are applying sanctions against Iran over its nuclear program. Iran says its nuclear efforts are for civilian purposes and to generate electricity, while the U.S. and several major allies say the program represents a weapons threat.
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