Europe bans Iranian oil imports in push to curtail nuclear program

BRUSSELS — Europe banned the import of Iranian oil Monday and froze Europe-based assets of the Central Bank of Iran, intensifying an international campaign to choke Iran’s economy and force the radical Islamic government to dispel fears that it is working to develop nuclear weapons.

The ban, decided by foreign ministers of the 27-nation European Union, is a dramatic escalation of sanctions against Iran, joining with the United States to squeeze the oil earnings and financial transactions that the Tehran government depends on to sustain its citizens and finance its military. The British foreign secretary, William Hague, called the E.U. effort “unprecedented” and said it shows the resolve of European governments to prevent Iran from becoming a nuclear power.

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Sanctions may have Iran feeling the pinch from Western nations, but in one spot along the Strait of Hormuz, trading goes on much as it always has. Merchants in speedboats move an array of goods between a spot in Oman and Iran. (Jan. 22)

Sanctions may have Iran feeling the pinch from Western nations, but in one spot along the Strait of Hormuz, trading goes on much as it always has. Merchants in speedboats move an array of goods between a spot in Oman and Iran. (Jan. 22)

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But the decision also includes broad loopholes — including a six-month delay before it goes into effect — that soften its immediate practical impact. Existing contracts for Iranian oil can be respected until July 1, an announcement said, and the ban will come under review before May 1 to see if more flexibility is needed.

Countries such as Greece and Italy, suffering under crippling debt burdens, are likely to get more time before they have to break their financial ties to Iran, European diplomats said on condition of anonymity. Greece has been buying oil from Iran on credit and earns desperately needed money by refining crude for Balkan neighbors, they said. Italy has arranged for Iranian oil in payment for loans granted by Rome in the past.

Iran has the benefit of its contracts with Asian nations — in particular, about 60 percent of Iran’s 2.2 million barrels a day of exports have been locked into contracts with China, Japan and South Korea. Turkey accounts for an additional 7 percent. Traditionally, European customers have accounted for less than 20 percent of Iranian exports.

Nevertheless, powerful figures in Iran immediately threatened retaliation, according to news agency reports from Tehran. Their defiance, including calls to close the Strait of Hormuz, underlined the high stakes in the West’s confrontation with the Islamic government.

Ali Fallahian, a member of the country’s influential Assembly of Experts and a former intelligence minister, told the semiofficial Fars News Agency that Iran should cut off sales to European nations immediately and, if the crisis grows, constrain maritime traffic through the strait. The Strait of Hormuz is a narrow exit from the Persian Gulf through which one-fifth of the world’s oil exports pass.

Similarly, Mohammed Kossari, deputy chief of the parliament’s foreign affairs and national security committee, said: “If any disruption occurs regarding sale of Iranian oil, the Strait of Hormuz will definitely be closed.”

Iran had threatened earlier to close the strait, and the Obama administration has said that the United States would see the action as a red line that it would not allow Iran to cross. Underlining the point, a U.S. aircraft carrier group led by the USS Abraham Lincoln sailed through the strait Sunday into the Persian Gulf, accompanied by two European frigates, the British Navy’s Argyll and the French Navy’s La Motte-Picquet.

European ministers emphasized that their goal in imposing the sanctions was not to provoke more confrontation with Iran, but rather to push the nation to resume talks on Iran’s nuclear program and to increase openness for inspectors from the United Nations’ nuclear watchdog, the Vienna-based International Atomic Energy Agency.

“I want the pressure of these sanctions to result in negotiations,” Catherine Ashton, the E.U.’s foreign policy representative, told reporters in Brussels.

Iran has consistently maintained that its nuclear development program is designed to further research and supply electricity. But it has refused full access to its facilities, which include a new underground uranium-enrichment plant.

U.S. and other officials suspect that Iran is seeking to acquire the means and technology to make nuclear warheads while at the same time improving the missiles that would carry them.

“The recent start of operations of enrichment of uranium to a level of up to 20 percent in the deeply buried underground facility in [Fordow] near Qom further aggravates concerns about the possible military dimensions to Iran’s nuclear program,” the E.U. ministers said in a communique.

The Obama administration praised the EU decision and also announced new sanctions targeting yet another Iranian bank, this one with ties to eastern Europe. The new sanctions were aimed at the Bank Terajat and its Belarus-based subsidiary, Trade Capital Bank of Minsk, which were described as one of a handful of institutions still used by Iran to access the international financial system.

“We have now imposed sanctions on all of Iran’s significant state banks,” a senior Treasury told reporters, insisting on anonymity in order to discuss details of the new measures.With a total of 23 Iranian banks now under sanctions, Iran has “largely been cut off from the global financial system” and faces significant obstacles in acquiring hard currency and financial services, the official said

Such sanctions, and the threat of new ones to come, have been a factor behind the plummeting value of the Iran’s currency, the rial, which has shed 70 percent of its value against the dollar since September, the official said.

Israel, the only Middle East nation that possesses nuclear weapons, has said that a nuclear-armed Iran would threaten its existence, and several Israeli officials have suggested that the Jewish state might at some point seek to destroy or impede the program through a bombing campaign.

On Monday, Israeli leaders, who have urged crippling sanctions on Iran, cautiously welcomed the E.U. move.

Israeli Prime Minister Benjamin Netanyahu said the E.U.’s embargo was “a step in the right direction,” but he added that the sanctions would have to be “evaluated on the basis of their results” and stressed that “very strong and quick pressure on Iran is necessary.”

Defense Minister Ehud Barak called the European step “very important.” He said the new measures should be “imposed quickly and put into action in order to put the Iranian leadership to the test as soon as possible.”

Staff writer Joby Warrick in Washington and correspondent Joel Greenberg in Jerusalem contributed to this report.

 
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