EU puts Iran in hot seat with "unprecedented" oil embargo

By Alexandra Mayer-Hohdahl Jan 23, 2012, 18:11 GMT

Brussels - European Union foreign ministers approved an embargo on Iranian oil Monday, as part of 'unprecedented' sanctions meant to up the pressure on the Middle Eastern country over its disputed nuclear programme - a move that Tehran swiftly warned would backfire.

'The more they move towards the direction of sanctions, the more hurdles will be created for the settlement of the nuclear dispute,' Iran's deputy foreign minister, Abbas Araqchi, told the official news agency IRNA.

'Methods like threats, pressure and sanctions ... have always failed and will have no effect on our persistence to pursue our (nuclear) rights,' Foreign Ministry spokesman Ramin Mehmanparast said on state television.

The sanctions were welcomed by the United States and by Israel, but Russia was critical of the move.

'These unilateral steps are not helpful,' said Russian Foreign Minister Sergei Lavrov, according to Interfax news agency. 'We will restrain ourselves from hasty actions, we will work for a renewal of talks.'

Tehran insists that its nuclear programme has peaceful aims, but Austrian Foreign Minister Michael Spindelegger said the EU could not simply stand by and 'watch as Iran tinkers with atomic bombs.'

'Iran continues to defy UN Security Council resolutions and enriches uranium to 20 per cent, for which there is no possible civilian explanation,' British Foreign Secretary William Hague added.

British Prime Minister David Cameron joined German Chancellor Angela Merkel and French President Nicolas Sarkozy in calling late Monday for Iran to 'immediately' suspend its nuclear programme, saying they would 'not accept Iran acquiring a nuclear weapon.'

The oil embargo paves the way for an immediate ban on new import contracts, while existing deals are to be terminated by July 1.

The EU countries most dependent on Iranian oil are Italy, Spain and Greece. France, Germany, Britain and the Netherlands also have deals with Tehran for the import of crude.

Although a political consensus on the embargo had been quickly agreed, negotiations over its implementation proved more difficult, with EU importers looking to limit the damage to their economies.

Cash-strapped Greece ended up posing the biggest challenge, since it can acquire oil from Tehran without financial guarantees - a condition other suppliers such as Saudi Arabia are unlikely to replicate, given Athens' fragile economy.

'We are going to give Greece a little bit of time to adapt and we are going to help it find replacement supplies,' French Foreign Minister Alain Juppe said. 'A certain number of producing countries have said they are ready to increase their production.'

Italian Foreign Minister Giulio Terzi di Sant'Agata said he expected the impact on his country to be 'absolutely negligible or even non-existent,' pointing also to an exception Italy has secured for oil, to repay a debt Iran has with gas company ENI.

Spanish Foreign Minister Jose Garcia-Margallo y Marfil, however, conceded his country was making 'an important sacrifice.'

'We understand that the security of the region is an important priority. We are ready to make this sacrifice to reach unanimity in Europe,' he added.

To sweeten the deal, ministers agreed on a review clause, for the impact of the sanctions on the EU economy and global oil prices to be examined periodically. A first review is scheduled for May.

The EU hopes other countries will follow its lead in banning Iranian oil. China imports the lion's share of Tehran's crude. The other importers are India, Japan, South Africa, South Korea, Sri Lanka, Taiwan and Turkey.

''Oil-embargo' is a word easily said,' German Foreign Minister Guido Westerwelle told reporters after the meeting in Brussels. 'But if the message to the Iranian leadership is to be clear, then it needs more than just a Western voice. It needs an international voice.'

To further increase pressure, EU ministers also approved sanctions on Iran's central bank - with an exception for 'legitimate trade ... under strict conditions' - and a ban on the trade in petrochemical products, gold, precious metals, diamonds, banknotes and coins.

At the same time, several ministers insisted that the EU remained open to nuclear negotiations with the country, if they are undertaken transparently and in good faith.

The sanctions are meant to 'make sure that Iran takes seriously our request to come to the table and meet,' said the bloc's foreign policy chief, Catherine Ashton.

'These unprecedented sanctions ... are going to paralyze little by little the economic activity of Iran and deprive the country of a large part of its resources,' Juppe noted. 'I know that one can be very skeptical of sanctions ... But it's better than going to war.'

In addition to the EU measures, the US slapped sanctions on Iran-based Bank Tejarat on Monday.

The Islamic republic's third-largest bank provides financial services to several other Iranian banks that were sanctioned for involvement with Iran's nuclear programme, the US Treasury Department said.

Bank Tejarat became the 23rd Iran-based bank sanctioned by the US for involvement with Iran's nuclear programme, the Treasury Department said.

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