Germany stops helping India pay Iran for oil

Under pressure from the West, Germany has stopped accepting money from India for onward transfer to an Iranian-owned, Hamburg-based bank, towards payments for the import of crude oil.

Last month, Germany's central Bundesbank returned Euro 500 million to the RBI four days after it had debited its account, saying that the money had been re-credited following "documentation problems".

A check by the Indian ambassador in Germany — who acted on the instructions of Foreign Secretary Nirupama Rao — with Berlin revealed that the transfer was reversed on the orders of the German foreign office.

India has been looking for a way to transfer the money by getting around the global economic sanctions against Tehran. The German newsmagazine Der Spiegel reported recently that Germany had "facilitated" the clearance of India's outstanding oil bill in February 2011 in return for the release of two German journalists in Iran's custody.

"The message from Berlin was that the money was rewired to RBI because of US pressure," said Indian officials dealing with the matter. The payment for oil already delivered was to be, however, transferred by the Bundesbank to the Hamburg-based Europäisch-Iranische Handelsbank (EIH), they said.

Sources said Germany's refusal to accept payments has raised India's oil payment outstanding against Iran to $2.8 billion by the end of March — a critical situation that has warranted the roping in of Rao and India's National Security Adviser to persuade Tehran to continue oil supplies to India despite the payment dilemma.

Petroleum Secretary S Sundareshan wrote to both Rao and the NSA today, seeking their intervention in the matter, the sources said. Sundareshan has requested that the Iranian ambassador be spoken to in order to ensure the flow of crude, they added.

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