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Saturday October 23rd, 2021
Political News

Sri Lanka seeks stronger economic ties with Iran amid US sanctions

ECONOMYNEXT – Sri Lanka’s Foreign Minister GL Pieris has sought enhanced bilateral trade, investment and co-operation in tourism and energy amid a US sanction imposed in 2012 is in place at meeting with Tehran’s envoy in Colombo.

Minister Pieris made the request when Hashem Ashjazadeh, Iran’s Ambassador called on him, Sri Lanka’s Foreign Ministry said.

“In recent years, the bilateral relations have been reinvigorated by the exchange of high level visits that have contributed to closer cooperation and coordination, both at the bilateral level as well as in the international arena,” the ministry said in a statement.

Peiris also conveyed Sri Lanka’s appreciation for the steadfast support extended by Iran during the Human Rights Council sessions held in Geneva and at other multilateral fora.

Iran has sided with Sri Lanka’s rulers against many Western nations, who had wanted to probe alleged war crimes and past human rights violations against citizens to ensure reconciliation and lasting peace.

Sri Lanka was forced to stop importing Iranian light crude officially after sanctions were imposed in 2012.

The island nation still owes 250 million dollars to Iran which it is unable to settle through the dollar banking system, though attempts have been made to settle it against tea shipments.

It was not immediately clear how Sri Lanka could benefit from greater economic co-operation, enhanced bilateral trade, investment and possibilities of cooperation in tourism and energy with Iran under the US sanctions.

A Sri Lanka minister said in 2014 that Iranian light was being imported from ‘third parties’ but later said no such imports had been made when the US sought clarification.

Sri Lanka’s banks could face blacklisting if they use US currency for transactions with Iran.

Sri Lanka’s 50,000 barrels per day state-run oil refinery which could not properly process heavy oils was in trouble after the sanctions but it later started using Murban oil.

Sri Lanka is now trading tea as food-stuffs are allowed under sanctions.

Iran Ambassador Ashjazadeh had told media that Iran had proposed to open an account with Sri Lanka Central Bank and Sri Lanka can open an account with Iranian Central Bank and the exports between both countries could go to these accounts directly and they can balance the accounts in rupees and riyal respectively without the involvement of a foreign bank.

Iran officials have said in the past that the discussions on a possible barter system have made progress and Iran is ready to export petro chemicals and equipment as well.

Sri Lanka’s Energy Minister Udaya Gammanpila last month had also sounded out Ambassador Ashjazadeh on buying oil on credit, reports said.

Whenever Sri Lanka’s central bank prints money and runs out of foreign exchange, the state fuel distributor is made to borrower abroad, running unhedged forex losses. The borrowings from Iran were made when the rupee was a little over 110 to the US dollar. (Colombo/Sept09/2021)

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