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NEWS & COMMENT: EU embargoes oil from Iran

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Depending on your source, the embargo on Iranian oil imports imposed Monday by the E.U., which will take full effect in July, are a "hope of reducing the risk of a military strike against Iran, probably by Israel,"[1], "part of efforts to ratchet up pressure on the Persian Gulf nation’s nuclear program,"[2], or an "embargo" that is "an act of economic war that heightens the danger of a slide into military hostilities in the Persian Gulf."[3]  --  But since an Iranian state-owned company holds a 10% stake in a natural-gas project in the Caspian Sea, BP is slated to get an exemption from U.S. sanctions because the sanctions aren't supposed to affect efforts "to bring gas from Azerbaijan to Europe and Turkey" or to affect Europe's "energy security and independence from Russia" — are you following this?  —  the Wall Street Journal said.[4]  --  COMMENT:  It's beginning to look to us (though what do we know?) like some people somewhere have decided that now (i.e. the near future) is the time to do in the allied régimes in Syria and Iran.  --  Everyone knows that that's been a goal of the U.S. national security state for a very long time, and we get the feeling that some people somewhere have decided that the stars are not going to align themselves any better than they already have to permit this to come about.  --  So little by little the pieces and the people appear to be moving into place to make this happen.  --  Didn't we read just the other day that "The U.S. is considering closing its embassy in Damascus amid concerns about the security of the staff there"? ...


1.

EUROPE AND U.S. TIGHTEN VISE OF SANCTIONS ON IRAN

By Stephen Castle and Alan Cowell

New York Times

January 24, 2012 (posted Jan. 23)

http://www.nytimes.com/2012/01/24/world/middleeast/iran-urged-to-negotiate-as-west-readies-new-sanctions.html


BRUSSELS -- The European Union agreed Monday to impose a phased ban on oil purchases from Iran that officials said was needed to help force a shift in policy and avert the risk of military strikes against Tehran, as the United States expanded its sanctions to include the country’s third-largest bank.

European Union countries will not sign new oil contracts with Iran and will end existing ones by July 1, foreign ministers meeting in Brussels said in a statement.  The ban will cover imports of crude oil, petroleum products and petrochemical products.  It will also cover the export of major equipment and technology for the sector.  The European market accounts for about a fifth of Iran’s oil exports.

“To avoid any military solution, which could have irreparable consequences, we have decided to go further down the path of sanctions,” Alain Juppé, France’s foreign minister, told reporters.  “It is a good decision that sends a strong message and which I hope will persuade Iran that it must change its position, change its line, and accept the dialogue that we propose.”

The decision, while significant for the numbers of countries it encompasses, will do nothing to stop the flow of oil to Asia, a much larger market for Iran.  According to the United States Energy Information Administration, Iran’s top export destinations in 2010 included China, with 20 percent of exports; Japan, with 17 percent; India, with 16 percent; and South Korea, with 9 percent. Europe’s biggest importer was Italy, with 10 percent.

The American move targeted Bank Tejarat, the 23rd financial institution in Iran now subject to American sanctions, even as the Obama administration considered including the country’s central bank in its restrictions.

“At a time when banks around the world are cutting off Iran and its currency is depreciating rapidly, today’s action against Bank Tejarat strikes at one of Iran’s few remaining access points to the international financial system,” the Treasury under secretary for terrorism, David S. Cohen, said in a statement.  “Today’s sanction against Bank Tejarat will deepen Iran’s financial isolation, make its access to hard currency even more tenuous, and further impair Iran’s ability to finance its illicit nuclear program.”

The European ministers said the assets of the Iranian central bank within the European Union would be frozen, with limited exemptions to permit the continuation of legitimate trade, the ministers’ statement said.  “Trade in gold, precious metals, and diamonds with Iranian public bodies and the central bank will no more be permitted, nor will the delivery of Iranian-denominated bank notes and coinage to the Iranian central bank,” the statement said.

The European measures include a plan to review the economic impact of the oil ban on certain ailing European Union members, notably Greece and Italy.  But officials said such a review would do no more than possibly delay sanctions in certain areas.

Western politicians believe Iran is building a nuclear weapons capability, but the government in Tehran insists that its nuclear program is for civilian uses only.  Amid the heightened tensions over the standoff, Iran has threatened to block the Strait of Hormuz, a strategic corridor for Western energy supplies.  Two Iranian lawmakers repeated that threat on Monday.

European diplomats said tougher sanctions were their best hope of reducing the risk of a military strike against Iran, probably by Israel.  Israel has publicly agreed that sufficiently tough sanctions could force an economically shaky Iran to comply with international demands to curtail its nuclear program.

The Israeli prime minister, Benjamin Netanyahu, called the new sanctions a “step in the right direction.”

“True, it is still impossible to know what the result of these sanctions will be,” Mr. Netanyahu said.  “Very strong and quick pressure on Iran is necessary.  Sanctions will have to be evaluated on the basis of results.”

In a statement, Britain’s prime minister, David Cameron; the German chancellor, Angela Merkel; and the French president, Nicolas Sarkozy, described the measures as “an unprecedented package of sanctions on Iran.”

“Iran has so far had no regard for its international obligations and is already exporting and threatening violence around its region,” the statement said.  “Until Iran comes to the table,” the three leaders added, “we will be united behind strong measures to undermine the regime’s ability to fund its nuclear program.”

American officials welcomed the decision in Brussels.

“The measures agreed to today by the E.U. Foreign Affairs Council are another strong step in the international effort to dramatically increase the pressure on Iran,” said a statement released by Treasury Secretary Timothy F. Geithner and Secretary of State Hillary Rodham Clinton. “This new, concerted pressure will sharpen the choice for Iran’s leaders and increase their cost of defiance of basic international obligations,” they added.

But the reaction from Moscow was critical.  “In essence this is an attempt to strangle an entire sector of the Iranian economy,” the Russian Foreign Ministry said in a statement.  “It is clear that this is pressure, diktat, an attempt to punish Iran for intractable behavior.  As we have told our European partners before, this is a mistaken policy.  Under this kind of pressure, Iran will not agree to any kind of concessions or change in its policies.”

In a separate statement, Russia’s foreign minister, Sergey V. Lavrov, said that “we have continued hope that negotiations will be resumed soon.”

--Stephen Castle reported from Brussels, and Alan Cowell from London. Reporting was contributed by Michael Schwirtz from Moscow, Isabel Kershner from Jerusalem, and Steven Lee Myers and Brian Knowlton from Washington.

2.

E.U. HITS IRAN WITH OIL BAN, ASSET FREEZE

By Ewa Krukowska and Gregory Viscusi

Bloomberg
January 23, 2012

http://www.bloomberg.com/news/2012-01-23/eu-hits-iran-with-oil-ban-bank-asset-freeze-in-bid-to-halt-nuclear-plan.html


BRUSSELS and PARIS -- European Union foreign ministers agreed to ban oil imports from Iran starting July 1 as part of efforts to ratchet up pressure on the Persian Gulf nation’s nuclear program, the 27-nation bloc said in a statement.

The E.U. will freeze assets in Europe of the Iranian central bank as well as of eight other entities and ban trade in gold, precious metals, diamonds, and petrochemical products from Iran.  The Iranian Foreign Ministry in a statement called the decision “aggressive” and said it will have “negative consequences” in Europe, including higher oil prices.

Among the entities are Bank Tejarat, the last major Iranian bank financing large-volume trade in Europe.  Also sanctioned is port company Tidewater, owned by the Islamic Revolutionary Guard Corps, which operates about 90 percent of Iran’s container ports, according to U.K Embassy spokesman James Barbour in Washington.

“These E.U. sanctions will hurt Iran very deeply,” Shada Islam, Middle East, and Asia analyst at the Friends of Europe policy group in Brussels, said in an interview.  “To be really effective, however, the E.U. and the U.S. must also try and get key Asian countries, including China, on board.”

An Iranian foreign ministry official said the pressure won’t force Iran to change its actions.  Sanctions have “proved ineffective in the past and will prove futile in the future,” said Abbas Aragchi, a deputy foreign minister, according to the official state-run Islamic Republic News Agency.

The EU said yesterday in Brussels that its actions “target the sources of the finance for the nuclear program, complementing already existing sanctions.”

ASSET FREEZE


The asset freeze also applies to Sad Export Import Co., a front company involved in arms transfers to Syria, the E.U. said today in its Official Journal.  Other entities subject to restrictions include Darya Delalan Sefid Khazar Shipping Co., which is owned or controlled by Islamic Republic of Iran Shipping Lines, and Behnam Sahriyari Trading Co., which sent containers of firearms to Syria in May 2007.

Japanese Foreign Minister Koichiro Gemba today called the E.U. ban “quite drastic” and differs from Japan’s plan to gradually cut purchases of Iranian crude.

New contracts on oil imports from Iran and extensions of existing deals will be banned, the E.U. said.  Shipments under agreements already in place can continue until July 1.  The E.U. measures against Iran also include a ban on the export of equipment and technology for the Iranian petrochemical industry.

OIL PRICES


Crude for March delivery was little changed at $99.66 a barrel at 1:37 p.m. Tokyo time, in electronic trading on the New York Mercantile Exchange.  The contract earlier increased as much as 0.4 percent to $99.98.

The Iranian Navy didn’t harass the USS Abraham Lincoln, an aircraft carrier, as it went through the Strait of Hormuz into the Persian Gulf on Jan. 22, Pentagon spokesman Navy Captain John Kirby told reporters yesterday.  The Lincoln replaced the USS John Stennis, which left the area on Dec. 27.

“HMS Argyll and a French vessel joined a U.S. carrier group transiting through the Strait of Hormuz, to underline the unwavering international commitment to maintaining rights of passage under international law,” the U.K. Ministry of Defense said in an e-mailed statement from London.

The acting commander of the Islamic Revolutionary Guards Corps, Brigadier-General Hossein Salami, said Jan. 21 the U.S. Navy has deployed warships in the region “for a long time” and the current situation “is not new,” according to IRNA.

LESS CONFRONTATIONAL


His remarks were less confrontational than those of Mohammad Kowsari, deputy head of the Parliament’s National Security and Foreign Policy commission, who was cited by the state-run Fars news agency as saying Iran will “certainly close the Strait of Hormuz” if sanctions “interrupt” its oil exports.  About 20 percent of globally traded oil transits the Persian Gulf passageway.

“We can keep the Strait of Hormuz open and we will do what is necessary to achieve that,” Ivo Daalder, the U.S. ambassador to NATO, said in a BBC Radio 4 interview yesterday.

The U.S. and E.U. say Iran’s nuclear-development plans are aimed at gaining atomic weapons capability.  The Islamic Republic, the second-largest oil producer in the Organization of Petroleum Exporting Countries after Saudi Arabia, is already under four rounds of U.N. sanctions and says its nuclear program is for civilian energy and medical purposes.

The International Atomic Energy Agency said yesterday it will send inspectors to Iran Jan. 29 to Jan. 31 in an effort to resolve questions raised by its nuclear activities.

'FAILED'


“The Iranian leadership has failed to restore international confidence in the exclusively peaceful nature of its nuclear program,” said U.K. Prime Minister David Cameron, French President Nicolas Sarkozy, and German Chancellor Angela Merkel in a joint statement.  “We will not accept Iran acquiring a nuclear weapon.”

In Washington, President Barack Obama welcomed the E.U. move as demonstrating “once more the unity of the international community in addressing the serious threat presented by Iran’s nuclear program.”

The U.S. “will continue to increase the pressure unless Iran acts to change course and comply with its international obligations,” he said in a written statement.

While the E.U. decision yesterday will be binding on member states, a separate regulation is needed for it to become binding on companies.  The European Commission, the E.U.’s regulatory arm, is expected to offer a draft rule on that matter within days, according to an E.U. diplomat.

MEDITERRANEAN STANCE


Mediterranean countries that import much of their crude from Iran, such as Greece, Spain, and Italy, had argued for sanctions to be phased in over as much as a year.  Both Spain and Italy get 13 percent of their crude imports from Iran, according to the U.S.’s Energy Information Administration.

The U.K. and Germany, which have also sought swifter sanctions, get only 1 percent of their oil imports from the Islamic Republic, while France gets 4 percent.

Spanish Foreign Minister Jose Manuel Garcia-Margallo told reporters in Brussels yesterday that Saudi Arabian officials told him they will make up for supply shortfalls.

In addition to the four sets of U.N. sanctions, Iran is under other U.S. and E.U. restrictions.

Oil sales earned Iran $73 billion in 2010 and supplied more than 50 percent of the national budget and 80 percent of exports, according to the U.S. Energy Department and the International Monetary Fund.  Iran produced 3.58 million barrels of crude a day in December, according to data compiled by Bloomberg.  That’s about 4 percent of global oil consumption.

The E.U. imported 14.5 billion euros ($18.9 billion) of goods from Iran, 90 percent of which was oil and related products, in 2010 and exported goods to the country worth 11.3 billion euros, the E.U. said in a Jan. 20 statement.

--To contact the reporters on this story: Ewa Krukowska in Brussels at This e-mail address is being protected from spambots. You need JavaScript enabled to view it ; Gregory Viscusi in Paris at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

--To contact the editors responsible for this story: James Hertling at This e-mail address is being protected from spambots. You need JavaScript enabled to view it ; John Walcott at This e-mail address is being protected from spambots. You need JavaScript enabled to view it


3.

EUROPEAN UNION IMPOSES OIL EMBARGO ON IRAN

By Peter Symonds

WSWS
January 24, 2012

http://www.wsws.org/articles/2012/jan2012/iran-j24.shtml


European Union (E.U.) foreign ministers meeting in Brussels yesterday imposed far-reaching economic sanctions on Iran, including an embargo on Iranian oil imports that will come into full force in July.  The embargo is an act of economic war that heightens the danger of a slide into military hostilities in the Persian Gulf.

The E.U. sanctions are comprehensive, hitting every aspect of Iran’s oil industry.  The 27 member countries will halt the signing of any new oil contracts with Iran immediately, and end existing ones by July 1.  The ban will cover imports of crude oil, petroleum products, and petrochemical products, and will extend to the export of equipment and technology to, and new investment in, Iran’s energy sector.

The E.U. has also targetted Iran’s central bank, freezing the bulk of its assets in Europe.  There are limited exceptions to allow for what is still regarded as legitimate trade.  The European measures complement legislation signed into law by President Barack Obama on December 31 providing for penalties against any company, including foreign corporations, having business dealings with Iran’s central bank.  The U.S. measures seek to block all Iranian oil sales internationally, crippling the country’s economy.

Last year, the European Union purchased nearly a quarter of Iran’s exported oil.  Several southern European countries -- Greece in particular -- have been heavily dependent on oil imports from Iran and resistant to the imposition of a full embargo.  They have been pulled into line with the vague promise of a review by May 1 of any adverse economic impact from the sanctions.

If implemented, the embargo will have a severe impact on the Iranian economy, which relies substantially on oil exports.  Iran’s currency has dropped 14 percent in value against the U.S. dollar since Friday, adding to high levels of inflation inside the country.

French Foreign Minister Alain Juppé declared:  “To avoid any military solution, which could have irreparable consequences, we have decided to go further down the path of sanctions.”  He appealed to Tehran to “accept the dialogue we propose.”  The cynicism of these remarks is underlined by the comments of French President Nicolas Sarkozy who warned last Friday that “time is running out” to avoid a military confrontation.

Both U.S. and Israel have repeatedly made clear their preparedness to unilaterally attack Iran on the basis of unsubstantiated claims that it is acquiring nuclear weapons.  The Iranian regime has insisted that it has no plans to build an atomic bomb.  Iranian foreign ministry spokesman Ramin Mehmanparast branded the E.U. sanctions as “unfair” and “doomed to failure.”

The E.U. has offered talks, but they have the character of an ultimatum.  E.U. foreign policy chief Catherine Ashton declared that Iran had to “pick up all the ideas that we left on the table” after previous talks, or “come forward with its own ideas.”  In other words, Iran has to make substantial concessions before negotiations can even begin.

Moreover, the Iranian regime has witnessed the U.S. and European duplicity in Libya -- a strong deterrent to making any compromise.  Washington reached a rapprochement with Libyan leader Muammar Gaddafi in 2003, only to launch a NATO-led war in 2011 to oust the regime.  Any guarantees that the U.S. and its European allies offer Tehran in talks are worthless.

As part of its efforts to demonize Iran, the U.S. media has highlighted the comments of parliamentarian Mohammad Kossari who warned that Iran would close the Strait of Hormuz “if any disruption happens regarding the sale of Iranian oil.”  The U.S. has declared that any attempt to block the strategic waterway, through which a fifth of the world’s traded oil passes, would be a “red line” producing military conflict.

The Pentagon has doubled the presence of its aircraft carrier battle groups near the Persian Gulf.  On Sunday, the day before the E.U. meeting, the aircraft carrier, the USS Abraham Lincoln, escorted by British and French warships, passed through the Strait of Hormuz into the Persian Gulf.  Despite claims that it was a “routine transit,” the maneuver was obviously timed to menace Iran.

The U.S. is intensifying the pressure on Tehran on all fronts.  On Monday, the Obama administration announced new sanctions against Iran’s third-largest bank, Bank Tejarat, closing off one of the country’s few remaining links to the international finance system.

Senior U.S. officials have been engaged in a global campaign aimed at pressuring governments, banks, and corporations to wind back oil purchases and economic ties with Iran.  Earlier this month, U.S. Treasury Secretary Tim Geithner travelled to Japan and China to warn both countries that they faced penalties if oil purchases were not cut back.  To emphasize the point, the White House imposed penalties on a Chinese oil trading company, Zhuhai Zhenrong, for doing business with Iran.

China and Russia have both opposed the unilateral sanctions imposed by the U.S. and E.U. and insisted on their right to keep doing business with Iran.  Beijing declared that the U.S. penalty on Zhuhai Zhenrong was “unreasonable” and not in line with U.N. Security Council resolutions on Iran’s nuclear program.  The Russian foreign ministry issued a statement yesterday expressing “regret and alarm” over the E.U. sanctions, describing them as “an attempt to strangle an entire sector of the Iranian economy.”

Using Iran’s nuclear programs as a pretext, the U.S. is escalating its confrontation with Iran.  As in the case of the American occupations of Iraq and Afghanistan, Washington is seeking to reinforce its dominance in the energy-rich regions of the Middle East and Central Asia at the expense of its European and Asian rivals.  The danger is that the Obama administration’s reckless actions against Iran will trigger a war that threatens to engulf the region and spread internationally.

4.

Blog

CONGRESS COULD EXEMPT KEY BP PROJECT FROM NEW IRAN SANCTIONS

By C.M. Matthews

Wall Street Journal

January 23, 2012

http://blogs.wsj.com/corruption-currents/2012/01/23/congress-could-exempt-key-bp-project-from-new-iran-sanctions/


Some U.S. lawmakers are warming to U.K. and European Union requests to exempt a BP PLC-led natural-gas project from any new sanctions against Iran, the Wall Street Journal reported Monday.

U.K. and European Union officials have convinced some U.S. lawmakers to ensure that new sanctions don’t block the $20 billion project in the Caspian Sea off Azerbaijan because Iranian state-owned oil company Naftiran Intertrade Co. holds a 10% stake.

The project, known as Shah Deniz II, is being operated by BP and is seen as key to alleviating Europe’s dependence on Russia as its largest supplier of natural gas.  Officials from the U.K. Foreign Office, the E.U. and BP say they asked Capitol Hill lawmakers in December to exempt the project, according to the Journal.

The Shah Deniz II project could have been hit by a bill by Rep. Ileana Ros-Lehtinen (R., Fla.) that would ban any company doing business with Iran’s oil and gas sector from operating in the U.S.  But the current version of the legislation includes language that says it won’t affect efforts “to bring gas from Azerbaijan to Europe and Turkey,” or to achieve “energy security and independence from Russia.”

The lobbying underscores a dilemma at the heart of the Western push to sanction Iran over its nuclear program:  how to pressure with maximum efficiency without putting Europe’s economy at risk.

“There is broad-based consensus in the House and Senate that our sanctions policy should impose maximum economic pain on the Iranians without allowing Russia to hold Eastern Europe hostage for energy supplies,” a congressional aide familiar with the European lobbying effort told the Journal.

 

Last Updated on Tuesday, 24 January 2012 22:13  

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