EU to issue stronger Iran sanctions

U.S. President George W. Bush, left, is seen at a press conference with British Prime Minister Gordon Brown, right, at the Foreign and Commonwealth Office in London, Monday, June 16, 2008. Bush and British Prime Minister Gordon Brown used a joint news conference to show solidarity on an array of vexing foreign policy matters chiefly Iran, Iraq and Afghanistan. Bush dismissed reports he had differences with Brown on Iraq, where Britain has cut its troops. (AP Photo/Carl De Souza, Pool) (Carl De Souza - AP)

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By ROBERT WIELAARD

The Associated Press
Monday, June 16, 2008; 10:56 PM

LUXEMBOURG -- The European Union agreed Monday on the need to sharpen sanctions on Iran _ possibly targeting the oil and gas sectors in what would mark Europe's strongest punishments yet to discourage Tehran's nuclear ambitions.

In line with such a move, British Prime Minister Gordon Brown said the EU will join Britain in freezing the assets of Iran's largest bank.

"We will take any necessary action so that Iran is aware of the choice it needs to make," said Brown at a London news conference with President Bush.

The EU's tougher stance follows Iran's latest refusal to accept an economic incentives in exchange for halting uranium enrichment, which Tehran insists is for energy-producing reactors but Western nations and others fear could be used to develop nuclear weapons.

Washington's European allies have been far more cautious on punishing Iran because of deep business and energy ties. But the oil and gas move _ which is not yet final _ would strike directly at Iran's economic base and its plans to expand petroleum exports to Europe at a time of record-high prices.

Brown warned that European nations will start the process of oil and gas sanctions if Iran continues to refuse to halt enriching uranium.

"Action will start today in a new phase of sanctions on oil and gas," he said.

Brown also said Britain will freeze the assets of Iran's Bank Melli _ a separate and largely symbolic clampdown on the mideast nation. He said that the European Union would join in the freeze.

But aiming at Iran's vast oil and gas industries would be a much more significant blow than the banking sanctions.

Iran's stumbling economy _ burdened by chronic inflation and unemployment _ desperately needs the foreign currency from its fuel exports, which are still weighted toward Western markets despite efforts to cater to growing Asian demand.

At the same time, Iran relies on foreign investment and technology in its oil and gas fields. More than 80 percent of Iran's revenues come from oil exports, and the country has the world's No. 2 gas reserves.

"The sanctions are going to extract a lot of pressure and cost in Iran, but I'm not sure at this point that they will give up uranium enrichment," said Mehrzad Bouroujerdi, an Iranian affairs expert at Syracuse University.