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EU tightens screw on Iran with extra sanctions

Brussels, July 26, 2010

The European Union adopted tighter sanctions on Iran over its disputed nuclear programme on Monday, with steps to block oil and gas investment and curtail Tehran's refining and natural gas capability.

The measures go well beyond sanctions imposed by the United Nations last month and mirror steps taken by the United States in recent weeks to apply extra pressure on Tehran to return to negotiations over its uranium enrichment programme.

As well as adopting harsher sanctions, including targeting Iranian banks and insurance companies, EU foreign ministers called on Iran to resume talks over its enrichment work, which Western powers see as a veiled quest to develop nuclear weapons and which Tehran says is for more energy.

'This is increased pressure on Iran to enter into negotiations about their whole nuclear programme,' British Foreign Secretary William Hague told reporters as he arrived for the meeting in Brussels and before the measures were adopted.

'I hope Iran takes from this message that European nations are open to negotiations about the nuclear programme, but if they don't respond, we will intensify the pressure.'

The extra sanctions, which also limit dealings with Iran's state shipping company and air cargo firms, will not legally come into force until they are published in the European Union's official journal on Tuesday, diplomats said.

'The annexe is extremely detailed and sets out precisely which Iranian entities -- banks, insurance companies, shipping and cargo lines -- are blocked,' one diplomat said. 'Once it's published, there is a legal obligation to comply.'

Perhaps the hardest-hitting element of the sanctions is the move to prohibit new investment in and technical assistance to Iran's refining, liquefaction and liquefied natural gas sectors which are a mainstay of Iran's energy-based economy.

Iran denies it is enriching uranium to fuel atomic bombs, saying the programme is for energy and medical purposes only.

Pressure and diplomacy

The broadened sanctions are intended to apply financial heat on Iran, which is the world's fifth largest crude oil exporter but has little refining capability and has to import around 40 per cent of its gasoline needs for domestic consumption.

Traders said this month Iran was depending more on friendly countries for fuel supplies to sidestep sanctions intended to hinder its fuel imports, and was buying about half of its July gasoline imports from Turkey and the rest from Chinese sellers.

Only three cargoes of gasoline have so far reached Iran this month, however, according to shipping documents seen by Reuters, a sign that sanctions are biting. Because Iran subsidises fuel for consumers, pump prices will not be affected.

While China, Turkey, Malaysia and others may now step in to furnish Iran with goods it will not be able to get from the European Union, analysts said the EU sanctions were well-enough designed to ensure they were effective.

'Most of the sectors that have been targeted in the EU sanctions are ones over which Europeans have a substantial leverage,' Mark Fitzpatrick, an Iran specialist at the International Institute for Strategic Studies, told Reuters.

'Not so many other countries can provide the kind of financial services that will be cut off. Few other countries supply technology for liquefied natural gas, nobody else does re-insurance ... The European Union has very wisely found areas over which it has real leverage and cannot be supplanted.'

Diplomats acknowledged, however, that the impact of the sanctions will depend on steps to ensure compliance.

As part of its 'dual-track' approach twinning sanctions and diplomacy, the EU is also hoping that Iran will agree to resume long-moribund negotiations in the coming weeks.

The EU foreign affairs chief, Catherine Ashton, and Iran's chief nuclear negotiator, Saeed Jalili, have exchanged letters in the last few weeks and it looks possible that they will meet for talks as early as September, diplomats say.

Iran experts caution that any resumption of talks - the first negotiations with the West since October 2009 - are unlikely to produce quick results, instead beginning a lengthy process of Iran manoeuvring to get sanctions lifted and the West seeking a moratorium on its uranium enrichment.-Reuters




Tags: EU | Iran sanctions |

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