New US sanctions, authorized on December 31, penalize any financial institution dealing with Iran’s central bank. This could make it difficult for India to pay for Iranian oil in hard currency. But there are ways to get around the problem. There is the time tested barter trade. There is also the old Soviet model of Rouble -Rupee trade under which India paid for its Russian buys in Rupees and in turn Moscow used the Rupee account to lift whatever appeared attractive in the Indian market and supplied to less privileged Communist countries.  In the sixties and seventies when the Rupee trade was introduced, Indian market was not as sophisticated and broad based as it is now. It means India and Iran will have no difficulty in avoiding the conventional banking channels that have got links with the western financial world.

It is time that the US rephrased what John F Kennedy had told his countrymen at the time of his inauguration as the first Catholic President of America in the sixties. He had said that Americans should ask themselves what they could do for the country rather than asking what the country could do for them. Today, the time has come for Washington to think what it can do to the world rather than making demands on the world, particularly the developing countries.

As Pranab Mukherjee said, the positive outlook on inflation in India could be affected if the US Federal Reserve decides to ease monetary policy further.  Fed Chairman Ben Bernanke last week opened the door to a third round of quantitative easing, suggesting that a continued decline in inflation and ongoing economic weakness could justify new bond buying.  The Fed’s last round of bond-buying drew loud criticism from emerging economies who said it sparked inflation and hurt their exports.

The Indian Finance Minister repeated that criticism on Sunday, saying US quantitative easing creates "inflationary impacts" in emerging economies and boosts uncertainty. His concern is justified because India hopes to return to  high growth trajectory, despite an expected slowdown, to a 7 percent pace this year from 8.5 percent last year.  And the Reserve Bank of India ( RBI) only last week held its policy rate steady  after several weeks, and signalled its next move could be a rate cut, after signs that outsized price pressures may be ebbing.  Inflation, as measured by wholesale prices, rose 7.47 percent in December, its slowest pace in two years, and as Mukherjee says, if this trend continues, India can hope to see inflation drop to around 6.5 percent by end of the year.

Thanks to the WTO today no country with currency convertibility is immune to what happens in the Big Apple. India is safe to an extent because its rupee is not fully convertible yet. But that is no consolation.  India is known to go against the tide often as it did in respect of Myanmar. When the entire western world was opposed to Yangon regime and targeted it economically, and diplomatically, Delhi maintained friendly relations with the Junta subscribing to the view that there is no uniform yardstick on democracy and that Myanmar should be allowed to usher in changes at its own pace. Turn of events in Myanmar and the way the US is wooing the quasi-junta regime show that India was right in its approach.

The long and short point is the developed world should not force their ‘agenda diplomacy’ on every country, more so since they have failed by design or default in preventing Pakistan from acquiring its Islamic Bomb.