Are India and China acting in self-interest or are they just selfish?
One of the guiding principles of free-market economics is the self-interest of the individual. We will all behave in a way that benefits us as individuals, particularly if we have the right to the fruit of our labor, free transfer of goods, and equal protection under the law. Self-interest is not a bad thing. We would all agree that an individual should not be forced to buy a large ten passenger SUV when all she needs is a smaller, less expensive vehicle. We should go to a restaurant that suits our individual tastes, etc. Nations have an obligation to behave in a similar manner -- "What is in the best interest of the citizenry?"
However, individuals and nations also have an obligation to the collective good. Usually we call it "society." The globe also has a society of civilized nations that live by the rule of law.
India and then China announced that they will be buying oil from Iran and that they will be using gold as currency in the transaction. China is set to begin this trade on June 28. Both nations are doing this to sidestep the EU embargo on Iranian oil that is set to begin in July. It is important to understand that Iranian oil is important to both nations. Chinese imports from Iran have been falling, but as of March they were still importing 254,000 barrels per day. India imported 409,100 per day in March.
Here is the question. Should they import oil from Iran and thereby sponsor a terrorist regime or should they source oil from other markets? I would argue that a good global citizen would not sponsor terrorism through massive gold transfers but should instead buy oil on the open market from other Middle Eastern countries, Nigeria, Mexico, Canada, or the U.S.A. Their self-interest has turned to selfishness in that they are risking the health and welfare of other nations in order to satisfy an oil thirst that could be satisfied through normal market operations.
Maybe you are wondering how much money is involved. March imports by India and China and March prices would equate to a gold transfer of $24.2 billion from India and $11.2 billion a year from China. That amount of gold can be expected to undo the purpose of the embargo, which is to deprive Iran of hard currency. Way to go India and China, you have reduced the efficacy of your global trading partners/allies.
What are the downsides for the U.S.? One is that it increases the risk that a rogue nation will kill innocent people in the U.S. and in our allied countries. Second, it reduces the strength of the EU sacrifice and effort aimed at a regime change in Iran. Lastly, it has the potential to weaken the U.S. Dollar, but we are not expecting a major impact in this area. Mostly this tags these two nations as more interested in themselves in the short term than they are in the global good.