Oman to the rescue, asks India to route Iran oil payments through Muscat
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In a confidential agreement that hopes to get around some of the crippling effects of sanctions, Iran has authorised Oman to collect crude oil payments due to it from buyers, including India, and keep in safe custody.
The pact, called the Memorandum of Understanding on Financial Cooperation and signed in July, also allows Oman to use the funds to finance Iran's import of food, agricultural commodities, medicines and medical devices.
Under the MoU, Iran's oil revenue frozen in foreign banks will be channeled by Oman and transferred to designated accounts agreed upon by the two.
Oman has agreed to guarantee "safe transfer" of the funds to designated accounts in "highly qualified banks" and ensure they are "not affected or prejudiced by acts of sanctions, boycott and blockade or confiscation arising from any judicial, executive or any other action of third parties".
The contours of this arrangement came to light when Oman approached New Delhi last month for a revised mechanism to facilitate transfer of oil payments by India to Iran through Oman. It suggested that India could start with a $100-million transfer to check how the proposed system would work.
Although the MoU was signed on July 20 between then Iranian Foreign Affairs Minister Ali Akbar Salehi and the chief of the Omani Centre for Investment Promotion & Export Development, Salem bin Nasser Al-Ismaily, the latter's communication with India on September 24 indicates it has the approval of the new regime in Tehran which was visited by the Sultan of Oman in August.
Ismaily, sources said, assured New Delhi that Oman guaranteed that the transactions would not in any way violate US sanctions. As testimony, he submitted a July 25 letter from the US Treasury Department confirming that Iranian oil revenues held in foreign banks may be used to finance exports of food and medicine to Iran.