A few days ago we posted this piece on trade negotiations between India and Iran. India imports 80% of its oil, and buys about 16% of its imported oil from Iran. This is a very important matter for India. The United States is pressuring India to participate in economic sanctions against Iran and that has caused some difficulty in the India/Iran oil trade. The short version is, Iran wants some certainty that it will be paid for the oil; it wants the trades cleared through a non-western bank, or to be guaranteed by the Bank of India.

India’s Economic Times is now reporting:

    NEW DELHI: India is determined to ensure steady crude oil supplies from Iran and is even considering settling payments with gold in the short term before the two countries agree on a mutually accepted currency and a bank to clear the transactions.
    “We have written a letter to NIOC ( National Iranian Oil Company )) asking it to suggest a bank where US sanctions are not applicable,” a government official involved in the matter said requesting anonymity.

India has already found a use for the 200 tons of gold it bought from the IMF in November 2009. I wonder if India actually took delivery, or if they’re relying on a bookkeeping entry at the IMF…

I have to wonder; dare I ask (Dare! Dare!), if the Fed weren’t so determined to destroy the buying power of the dollar, would so many other nations be so willing to abandon dollar-denominated trading? If the dollar completely loses its reserve-currency status, either through QE Infinity or through deficit spending, how will American foreign policy be affected? What happens when the dollar doesn’t matter at all anymore?

The word “war” seems to be getting thrown around a lot lately:

    Brazil has warned that the world is on course for a full-blown “trade war” as it stepped up its rhetoric against exchange rate manipulation.
    Guido Mantega, finance minister, told the Financial Times that Brazil was preparing new measures to prevent further appreciation of its currency, the real, and would raise the issue of exchange-rate manipulation at the World Trade Organization and other global bodies. He said the U.S. and China were among the worst offenders.

One more question: why do I always have to find these things in the foreign press?