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.
The vast sums involved in these transactions are expected, furthermore, to boost the price of gold and depress the value of the dollar on world markets.
Iran's second largest customer after China, India purchases around $12 billion a year's worth of Iranian crude, or about 12 percent of its consumption. Delhi is to execute its transactions, according to our sources, through two state-owned banks: the Calcutta-based UCO Bank, whose board of directors is made up of Indian government and Reserve Bank of India representatives; and Halk Bankasi (Peoples Bank), Turkey's seventh largest bank which is owned by the government.
An Indian delegation visited Tehran last week to discuss payment options in view of the new sanctions. The two sides were reported to have agreed that payment for the oil purchased would be partly in yen and partly in rupees. The switch to gold was kept dark.
India thus joins China in opting out of the US-led European sanctions against Iran's international oil and financial business. Turkey announced publicly last week that it would not adhere to any sanctions against Iran's nuclear program unless they were imposed by the United Nations Security Council.
The EU decision of Monday banned the signing of new oil contracts with Iran at once, while phasing out existing transactions by July 1, 2012, when the European embargo, like the measure enforced by the United States, becomes total. The European foreign ministers also approved a freeze on the assets of the Central Bank of Iran which handles all the country's oil transactions.
However, the damage those sanctions cause the Iranian economy will be substantially cushioned by the oil deals to be channeled through Turkish and Indian state banks. China for its part has declared its opposition to sanctions against Iran.
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.
The oil-for-nuclear aid deal is a side-product of the US Iran oil embargo.
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Israel can't afford to wait for sanctions and is bound to move fast.
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Drill cancellation camouflaged preparations to strike its nuclear sites.
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Three weeks after Tehran threatened action against any US aircraft carrier entering the Strait of Hormuz, Washington made two moves: US Defense Secretary Leon Panetta disclosed Sunday, Jan. 22, that the USS Enterprise Carrier Strike Group would steam through the strategic strait in March; a few hours later, the US Navy sent the USS Abraham Lincoln carrier through the strategic strait without incident, accompanied by British and French warships.
DEBKAfile: Defusing the Hormuz crisis set the scene for resumed nuclear negotiations leading up to which several messages were exchanged through back channels between the Obama administration and Tehran in recent weeks - amid Israeli preparations to strike Iran's nuclear facilities.
These developments deepened the breach between the US and Israel. Two days earlier, on Friday, Jan. 20, Gen. Martin Dempsey, Chairman of the Joint US Chiefs of Staff, visited Israel and with Israeli leaders emphasized the cooperation between Washington and Jerusalem on the Iranian threat. The Netanyahu government complained that action against Iran had been postponed for years on one pretext on another, and the same thing was happening to effective sanctions against Iran's oil exports and central bank. Israel was therefore compelled to exercise its military option against the mortal peril of a nuclear Iran, said the Israeli prime minister, before it was too late.
Then Sunday, Jan. 22, Defense Secretary Panetta stood in a hangar of the Enterprise clad in the uniform of a ship's crewman and told an audience of 1,700 personnel that the carrier would be sent to Hormuz in March. His statement was a red herring. A few hours later, the Abraham Lincoln was already through.
But what he said on the Enterprise was this: "That's what this carrier is all about. That's the reason we maintain a presence in the Middle East… We want them to know that we are fully prepared to deal with any contingency and it's better for them to try to deal with us through diplomacy."
DEBKAfile's Washington sources note that Panetta was the first high-ranking administration official to give Tehran an ultimatum: Accept the American offer to negotiate terms for halting your nuclear weapon program, or face up to America's mighty fleet of American aircraft carriers. "Our view is that the carriers, because of their presence, because of the power they represent, are a very important part of our ability to maintain power projection both in the Pacific and in the Middle East," said the defense secretary.
However, behind this show of strength, Washington was actively preparing to sit down and talk.
Saturday, Jan. 21, the Washington Post disclosed that Obama had sent a special emissary to Tehran with an oral message proposing that Iran join the United States for resumed nuclear negotiations.
The emissary was not named – although there was some speculation that Turkish Foreign Minister was chosen for the mission - nor was Iran's reply revealed.
According to the WP, its content was as follows: The United States and the international community have a strong interest in the free flow of commerce and freedom of navigation in all international waterways… Since taking office, the president has made it clear that he is willing to engage constructively and seriously with Iran about its nuclear program.
Also on Saturday, Iran's Revolutionary Guards stated it considered the likely return of US warships to the Gulf part of its routine activity. They were not climbing down from their original threat. The statement came only after Tehran saw the USS Stennis, the object of threat, exiting the Gulf Friday, Jan. 20, and decided it was the Americans who had backed down.
Panetta's comments Sunday aimed at correcting that impression and making it very clear to Tehran that although the Stennis was gone, the Abraham Lincoln was there and the Enterprise was coming "fully prepared to deal with any contingency."
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