India opts to befriend rather than sanction Iran

INDIA SAYS it is determined to continue importing oil from Iran despite EU and US sanctions aimed at stopping trade until Tehran stops what the West insists is a military nuclear programme.

Reacting to US secretary of state Hillary Clinton’s comments that the US was engaging in “very intense and very blunt” conversations with India and others such as China and Turkey to stop oil imports from Iran, New Delhi officials indicated yesterday that they would not be coerced.

India’s finance minister Pranab Mukherjee recently rejected pressure from the Obama administration to join the US-EU led sanctions against Tehran.

India imports about 12 per cent of its oil and gas requirements from Iran for an estimated $12 billion (€9 billion), and maintains it will abide only by UN sanctions and not implement those imposed by individual nations or groupings such as the US and the EU.

India recently used Chabahar port in southeastern Iran for the first time to transport 100,000 metric tonnes of wheat to Afghanistan as part of its humanitarian aid to the war-torn country.

India helped build Chabahar a decade ago to provide access to Afghanistan and central Asia – prohibited over land by neighbouring nuclear rival Pakistan – and is involved in building a 900km rail link from the Zabul iron ore mines in southern Afghanistan to the Iranian port. With Iran and Afghanistan, it has agreed that Indian goods headed for Central Asia and Afghanistan will benefit from tariff discounts at Chabahar.

In addition to its oil needs, India wants to cement ties with a besieged Tehran so as to retain access to Kabul in the run-up to the US withdrawal from Afghanistan and to the Asian republics, where there are vast hydrocarbon reserves that could fuel India’s economic development.

Over the past few weeks a defiant India has been examining ways to step up trade with Iran amid trouble in settling its oil bills as sanctions closed down banking routes.

Much to Washington’s ire, New Delhi is sending a large trade delegation to Iran later this month to explore business opportunities created by western sanctions.

The Associated Chambers of Commerce and Industry in Delhi said the Islamic republic offered massive potential for Indian exports: more than $10 billion (€7.5 billion) a year.

“The potential of trade and economic relations between India and Iran can touch $30 billion by 2015 from the current level of $13.7 billion,” association secretary general DS Rawat said.

An Iranian central bank delegation is currently in Delhi to examine options for India to pay for crude imports. It is negotiating to offset a proportion of this bill in exchange for oil-refining machinery, heavy engineering goods and pharmaceuticals, all badly needed in Iran.

Until recently Indian firms were routing payments through Turkey’s Türkiye Halk Bankasi AS, after EU pressure last year forced German-based Europäisch-Iranische Handelsbank AG to stop handling the payments. It remains uncertain how long this arrangement will continue.

Elaf Bank forms joint venture with Ohad Trust in Malaysia

Elaf Bank B.S.C. ‘Elaf’, licensed by the Central Bank of Bahrain ‘CBB’ to operate as a wholesale Islamic bank, and Ohad Trust B.S.C. ‘Ohad’ — a Fund administration, Custodian and Trust services provider also licensed by the CBB — have formed a joint venture in Labuan, Malaysia.

As a result of this joint venture, the Labuan Financial Services Authorities (LFSA) has granted a ‘trust’ license under the name Ohad Trust (Labuan) Bhd ‘Ohad Labuan’, during a private ceremony held in Malaysia and attended by representatives from all parties to commemorate this event.

The LFSA granted trustee license will allow Ohad Labuan to work on trust, foundations, fund administration, registrar and custody assignments in Malaysia.

Dr. Jamil El Jaroudi, CEO of Elaf Bank, commented on the significance of this joint venture with regards to the Bank’s strategy to generate business opportunities in both markets. “Ever since its inception, Elaf Bank has been actively sourcing and developing business in the two strong and well regulated Islamic Finance hubs, Bahrain and Malaysia.

When we sought a branch office license in Malaysia, it was because we believed that having presence in South East Asia in addition to our headquarters in Bahrain will create more business opportunities, and our belief was right.

Having a branch office in Malaysia has definitely opened more doors not only for our Bank, but also for other Bahrain-based entities, and has allowed us to fulfill our promise to better serve our wide range of Islamic finance client needs in both the GCC and SEA regions.”

Mr. Stefan Cnoops, CEO of Ohad Trust, commenting on the importance of this step, stated: “As the first ever licensed trustee in the Middle East, Ohad Trust has been present in Bahrain since 2005. We are proud to expand our presence and business prospects into South East Asia by obtaining a license in Malaysia.

There can be no doubt that Elaf Bank and Ohad Trust share common objectives and we are very happy to have joined forces through this strategic partnership in such an important market. We are confident Ohad Labuan, which is backed by a comprehensive regulatory framework and legal environment in Malaysia, will be able to capture significant trust related work, particularly in relation to Sukuk.

We are equally confident that Ohad Labuan will become a leader, as it already is in Bahrain, in the administration and custody work of the increasingly important Labuan Islamic Investment Funds market.”