America imposed sanctions on four Indian companies.

Why in the NEWS?

• As part of its "maximum pressure" campaign against Iran, the US has imposed sanctions on four Indian companies.

Key points:

• The US has imposed new sanctions on Iran as part of its "Maximum Pressure" campaign.
• The campaign aims to restrict Iran's economy and stop its oil sales revenue so that it cannot continue its alleged destabilizing activities.
• On February 24, the US Treasury Department announced sanctions on several other international companies, including four Indian companies.
• According to the US government, these companies were involved in the sale and transportation of Iranian oil and petroleum products.

What will you read next in this topic?

1. Which Indian companies were sanctioned?
2. What are the allegations against these companies?
3. Why did the US impose these new sanctions?
4. What does 'Shadow Fleet' mean?
5. Effect of sanctions imposed by the US
6. Global Sanctions Policy:
7. Sanctions imposed by US and their effects

Which Indian companies were sanctioned?

• Indian companies sanctioned by the US Department of State and the Office of Foreign Assets Control (OFAC):
  • Flux Maritime LLP - Navi Mumbai
  • BSM Marine LLP - National Capital Region (NCR)
  • Austinship Management Pvt. Ltd. - National Capital Region (NCR)
  • Cosmos Lines Inc. - Thanjavur, Tamil Nadu

What are the allegations against these companies?

• Three of these companies (Flux Maritime, BSM Marine, and Austinship Management) were commercial or technical managers of ships allegedly involved in transporting Iranian oil and petroleum products.
• Cosmos Lines was sanctioned for its involvement in transporting Iranian petroleum.
• The US alleges that these companies were part of a "shadow fleet" that helps smuggle oil out of Iran.
• These banned companies were working closely with Iran's National Oil Company (NIOC) and its affiliate firms, thereby circumventing sanctions imposed on Iran by the US and Western countries.

Why did the US impose these new sanctions?

• The US government says that a large part of Iran's economy comes from oil exports, which it uses for military operations and destabilizing activities in the Middle East.
• The US has claimed that the money from the sale of Iranian oil is used to support its military and proxy groups, increasing regional instability.
• According to US Treasury Secretary Scott Bessant,

"Iran relies on a shadowy network of ships, shippers and brokers to facilitate the sale of its oil and finance its destabilizing activities."

• The US wants companies and countries around the world to stay away from Iran's oil trade, so it is constantly imposing new sanctions.

What does 'Shadow Fleet' mean?

• Despite sanctions on Iran by the US and other Western countries, Iran continues to trade oil clandestinely.
• This trade is carried out through a strategy called the "shadow fleet", which typically involves false information, fake documents and manipulated tracking systems on the ships involved.
• The US Treasury Department alleges that Iranian tankers transfer oil at sea to hide the true origin of the oil in order to sell it to foreign customers.
• The US said that the proceeds from such trade help Iran's military objectives and its proxy groups.

Effect of sanctions imposed by the US

• The sanctioned companies will no longer be able to use the US financial system.
• Companies and banks doing business with the US will be prevented from making any financial transactions with these companies.
• The assets of these companies can be frozen.
• Indian companies may face increased difficulties in international trade and shipping industry, as other countries and financial institutions may distance themselves from them.
• These sanctions could be diplomatically and commercially challenging for India.
• India has historically imported oil from Iran, although India stopped importing Iranian oil from 2019 due to US sanctions.
• If Indian companies are affected by the sanctions, it could impact India-US trade and political relations.
• India will now have to balance between Iran, the US and its own energy needs.

Global Sanctions Policy:

• There are many types of sanctions, which can be imposed on a country, organization or individual.
• These sanctions are usually imposed to achieve economic, diplomatic and military objectives.

Economic Sanctions

• Import/Export Restrictions:
  • Preventing the supply of essential goods, technology, or military equipment to a country.
  • Example: Sanctions imposed by the US on Iran, under which Iran's oil sales were banned.
• Ban on Business Activities:
  • Preventing companies from doing business in a particular country.
  • Example: The US imposed trade sanctions on Chinese companies (Huawei, ZTE).
• Banking and Currency Restrictions:
  • Preventing international financial transactions, causing a setback to the country's economy.
  • Example: Removing Russia from SWIFT (Global Banking System). Freezing of Assets:
  • Freezing of assets held abroad and deposits in banks.
  • Example: US seizing assets of Russian oligarchs.

Diplomatic Sanctions

• Expelling diplomats of a country.
• Ceasing or stopping membership in international organisations.
• Suspending negotiations and peace agreements.

Military Sanctions

• Stopping the supply of arms to a country.
• Cancelling defence contracts.
• Suspending international military cooperation.

Sanctions imposed by US and their effects

• Sanctions on Iran: US pressured global companies to limit oil sales to Iran.
• Sanctions on Russia: More than 10,000 sanctions were imposed on Russia after it invaded Ukraine.
• Sanctions on China: Many Chinese tech companies were blacklisted.
• Sanctions on North Korea: Strict sanctions to stop its nuclear programme.