Claire Rosemberg, AFP
Last updated: 23 January, 2012

EU set to slap oil embargo on Iran

The European Union readied to slap an embargo on Iran’s oil exports Monday as the West ramped up pressure over the country’s suspect nuclear drive and urged Tehran to return to the negotiating table.

In the toughest measures yet to reduce Iran’s ability to fund a nuclear weapons programme, EU foreign ministers meeting Monday are to strengthen existing sanctions by banning imports of Iranian crude as well as targeting finance, petrochemicals and gold.

The measures come amid heightened concerns of confrontation following reports by the UN atomic agency, the IAEA, that Tehran is inching ever closer to building nuclear weapons.

The EU ministerial meeting comes hard on the heels of a Pentagon announcement that the US aircraft carrier USS Abraham Lincoln on Sunday passed through the Strait of Hormuz and is now in the Gulf, after Tehran threatened to close the strategic shipping route. Related article: British, French ships join US carrier in Strait of Hormuz

As the West’s reaction to Iran’s nuclear programme strengthens, Britain’s Ministry of Defence said a British Royal Navy frigate and a French vessel had joined the carrier group to sail through the waterway.

“Those who do not want to reinforce sanctions against a regime which is leading its country into disaster by seeking a nuclear weapon will bear responsibility for the risk of a military breakdown,” French President Nicolas Sarkozy warned Friday.

Tehran’s foreign ministry dismissed the nuclear claims, with spokesman Ramin Mehmanparast dubbing them “baseless and far from reality.”

The 27 EU foreign ministers nonetheless look set to agree new measures against Tehran after having already frozen the assets of 433 firms and 113 individuals, as well as restricting trade and investment in the oil and gas industries.

Also expected are bans on the sale of gold, diamonds and other precious metals to Iran and any delivery of newly minted coins and notes.

The ministers are also expected to expand sanctions against Syria in response to the continued repression against dissent there.

The EU imported some 600,000 barrels of Iranian oil per day in the first 10 months last year, making it a key market alongside India and China, which has refused to bow to pressure from Washington to dry up Iran’s oil revenues.

Greece’s dependency on Iranian oil, however, has been holding up a deal on the timing and conditions of the oil embargo.

The financially-strapped nation, which relies on Iranian oil for more than a third of its oil imports, had concluded “good financial arrangements” with Iran including 60-day payment and no financial guarantees, EU sources said.

The bloc therefore has been seeking new suppliers able to match the easy conditions offered by Tehran to Greece. Contacts are underway with Saudi Arabia and hopes are high that Libya can soon increase its production.

“Greece has agreed on a political level to stop its imports from Iran, the question is, who can compensate,” said a diplomat speaking on condition of anonymity. “It will be more difficult to find alternative suppliers because of the present financial situation of Greece.”

Iranian oil accounted for 34.2 percent of Greece’s total oil imports, 14.9 percent of Spain’s and 12.4 percent of Italy’s in the first nine months of last year, according to the latest EU statistics.

With the three nations all suffering financial difficulties, weeks of talks on an oil embargo stumbled on a deadline for importers to phase out existing contracts.

Britain, France and Germany called for a three-month deadline, whereas Greece requested up to a year. A compromise under discussion would see the embargo take full force in five months, on July 1.

Also under discussion has been a request from Italy to allow Iranian companies to continue repaying debts with crude instead of cash, a move which some argue would mean Tehran having less crude to sell on the market.

Already agreed is a deal to sanction Iran’s central bank, and possibly one or two others.

The freeze would be partial “enabling legitimate trade to go ahead”, and ensuring there were no obstacles to continued payment of outstanding Iranian debts to Europe, an EU diplomat said.

Germany notably expressed concern over the reimbursement of loans to Iran worth 2.6 billion euros should financial channels be closed.

Meanwhile, global powers involved in negotiations on Iran’s nuclear programme are still waiting for a reply to a letter sent to Tehran months ago by EU foreign policy chief Catherine Ashton, her office said Friday.

US Secretary of State Hillary Clinton said Friday that Iran must show a “seriousness and sincerity of purpose” if it is to resume the talks.