Rouhani visit signals balance in ties

Rouhani visit signals balance in ties

Context:

• Iranian President Hassan Rouhani will visit India from February 15 to 17.
• His visit just came after Israel Prime Minister Benjamin Netanyahu, Iran’s biggest rival, made a historic visit.

Purpose of visit:

• His visit will send out a message that India aims for balance in its ties in the neighbourhood.
• Mr. Rouhani and Prime Minister Narendra Modi will seek to iron out issues on trade, connectivity, banking and energy.
• Both the sides would review the progress achieved in bilateral relations and also exchange views on regional and international issues of mutual interest.
• India’s oil imports from Iran, which had plummeted to new lows last year, will go up this year, because of “better terms from Iran”, which is anticipating possible new sanctions being imposed by the Trump administration.

Importance of Iran for India:

•  Iran is not only important for India’s energy needs but also its only route for access to Central Asia.

Expected projects:

Port project

• Among the subjects expected to be discussed are the progress of the $500-million Beheshti port project in Chabahar, where India is expected to complete development of berths later this year.
• India is already routing a consignment of 1.1 million tonnes of wheat to Afghanistan through the existing facilities at Chabahar.

Banking trade:

• On bilateral trade, the biggest stumbling block is banking channels.
• The two sides are now discussing the possibility of a “rupee-rial mechanism”, in addition to the current channel through UCO Bank for rupee payments.
• However, European banks have refused to support the trade, given the uncertainty over fresh sanctions from the U.S.

Other issues:

•  Another issue is the pending negotiations over the Farzad-B gas and oil fields that India has expressed its interest in.

FATF meeting:

• Iran is likely to seek India’s support at the upcoming meeting of the UN’s Financial Action Task Force, where Tehran is hoping to exit a blacklist on money laundering and terror finance.
• India hopes to see Pakistan put on a “grey-list” at the meeting.