Turkey and India Have Leverage in Trump’s Iran Sanction War

Both India and Turkey have said they will defy President Trump’s call for them to stop buying Iranian oil once the U.S. reapplies sanctions in November.  That isn’t really news.

Both of them defied the Obama administration in 2012, albeit in different way. Turkey changed its banking rules to monetize gold and used its gold reserves as a means to launder Iranian oil payments for third parties through its banking system.

India bypassed cutting off Iran from the U.S. dollar by beginning a goods-for-oil swap program.

Today, however, the geopolitical background is far different.  Today, Iran can and does list its oil for sale in Shanghai’s futures market payable in Chinese Yuan.  Turkey can recycle its Yuan it receives from its large trade deficit with China to up its purchases of Iranian oil if need be.

But, more importantly, both India and Turkey have geopolitical freedoms they didn’t have in 2012.  I have covered the Turkey angle on this at length.  India, on the other hand, I haven’t.

Iran has become Turkey’s biggest oil importer.

Turkey, a NATO ally, is dependent on imports for almost all of its energy needs. In the first four months of this year, Turkey bought 3.077 million tons of crude oil from Iran, almost 55 percent of its total crude supplies, according to data from Turkey’s Energy Market Regulatory Agency (EPDK).

President Recep Tayyip Erdoğan last year said Turkey was looking to raise the volume of its annual trade with Iran to $30 billion from $10 billion.

And it doesn’t look like this will change with Trump’s sanctions.

With President Erdogan winning re-election he now goes into the NATO Summit with Trump on July 11-12th with a lot of leverage.  Erdogan has openly courted Russia on energy supplies.

It just began construction on its first nuclear power plant being built by Russia which is due to begin generating power by 2023.  But, in the near term, Turkey is in bed with Gazprom on the Turkish Stream pipeline, which is ready to begin the land-based portion.

The permits have not been issued however.  Turkey has been dragging its feet on this.  And with good reason, Erdogan knows Turkish Stream is a bargaining chip for him with Trump at the NATO summit.

Turkey’s NATO status is becoming problematic and it’s why I don’t really expect Trump to take the U.S. out of the treaty organization just yet.  He wants to lessen our involvement and may very well announce a major funding cut at the Summit, but if his regime change strategy for Iran (and Germany) is to succeed he can’t completely alienate Erdogan just yet.

India’s Silk Road Goes Through Iran

The biggest tell that the U.S. is having to resort to begging to keep its geostrategic allies in line came from the most unlikely source though, U.N. Ambassador and neoconservative Buffoon herself, Nikki Haley.

While urging India to curb its Iranian oil purchases, Haley said the United States supported India’s project to help Iran build a major port complex in Chabahar, which is being developed as part of a new transportation corridor for landlocked Afghanistan.

Calling the port project “vital,” Haley said, “We know the port has to happen and the U.S. is going to work with India to do that.”

Haley acknowledged that the port project will also benefit Iran even as Washington tries to cut Tehran off from international markets.

“We realize we’re threading a needle when we do that,” she said.

This is blatant pandering on Haley’s part to keep India from jumping ship towards the Russia/China/Iran alliance.  The port development project at Chabahar has been delayed for months because of Trump’s threatening to scuttle the JCPOA and make it difficult for Indian companies to do business with Iran.

It’s a major infrastructure project meant to position India, technically, outside of China’s One Belt, One Road (OBOR) project which has poured more than $50 billion into India’s biggest rival, Pakistan under the rubric of CPEC — The China Pakistan Economic Corridor.

So, this admission by Haley that the port and railroad upgrades in Iran have to go forward to appease India is telling as to who really has the leverage here.

Ultimately, India will be allowed to bypass the dollar for its oil trade with Iran, if the U.S. wants to remain a serious influencer of policy.  It is already a member of the Shanghai Cooperation Organization (SCO) and Iran now has a free-trade pact with the Eurasian Economic Union, which India is exploring becoming affiliated with.

As much as India may not like the OBOR project from the perspective of national price, its leadership recognizes it will ultimately benefit India tremendously.

So will Turkey.  Trump will talk a big game about sanctioning China but doing so would crash the global economy.  So, it’s all noise.

China National Petroleum Company (CNPC) is taking over for France’s Total on the important South Pars B gas field.  While India and Iran continue to haggle over the South Azadegan oilfield development plan.

A lot of these deals between India and Iran have the stink of U.S. meddling in them, trying to keep them in limbo while furious haggling goes on behind the scenes.  There’s a reason why Haley went to India.

And then there’s another reason why a major “2+2” meeting between the U.S. and India between Secretaries of Defense and State, James Mattis and Mike Pompeo and their Indian counterparts was just unilaterally postponed by the U.S.

The upcoming summit with Putin in Helsinki.  This will not sit well with India as this is the latest in a series of delays because of uncertainty at the State Department under Trump.

In the end, expect India and Turkey to mostly get their way in the coming months on energy and defense policy.  They both understand that Trump is simply trying to manage the retreat of the U.S. empire from Eurasia as best as he can and both are more than willing to play it against the Russia/China/Iran axis to get the best deals they can for themselves.


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20 thoughts on “Turkey and India Have Leverage in Trump’s Iran Sanction War

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