Germany has agreed to help India make payments for Iranian oil to a Hamburg-based bank, allowing funds to pass through the Bundesbank, a newspaper reported on Monday.
Citing government and financial sources, Handelsblatt business daily said Germany’s foreign and economy ministries had given the green light for the deal, which would facilitate payment of some 9 billion euros ($12.65 billion) annually for Iranian oil.
The decision will come as a relief for India, whose payments for January cargoes from Iran were coming due in April, but were hindered by a decision of its own central bank to restrict payments to Iran.
In a move to placate Washington’s tough stance against Tehran, the bank in December said it would not allow the settlement of payments to Iran via a clearing system run by regional central banks, putting at risk import of some 400,000 barrels per day.
Seeking a solution, India’s Finance Minister Pranab Mukherjee said last month that India was working out a mechanism via the German central bank to expedite payments to Iran for oil shipments.
Ironically, Berlin will now allow the transactions to pass through its system, potentially raising its own problems with Washington, and also Israel, both of whom have pushed for tougher restrictions on the Hamburg-based EIH bank involved.
The U.S. Treasury Department in September sanctioned EIH Bank for facilitating billions of dollars of transactions with Iranian banks that the United States and European Union have blacklisted for aiding Iran’s nuclear or missile programs.
