Foreign ministers of the European Community today approved limited economic sanctions against Iran starting May 22, but they excluded from the planned trade embargo all contracts for goods and services signed before the takeover of the American Embassy in Tehran last Nov. 4.
The decision significantly watered down an April 22 pledge by the common Market to adopt full economic sanctions if no decisive progress had been made by this weekend toward the release of the 53 American hostages held by Iran. That pledge had been based on a January U.N. Security Council resolution on sanctions that was vetoed by the Soviet Union.
The more limited sanctions decided upon today allow billions of dollars in projects to stand. For example, they allow Italy to complete $3 billion worth of industrial contracts in Iran, in which 1,700 Iranians are employed, and permit Britain to continue to supply Iran with Talbot (formerly Chrysler U.K.) auto kits for assembly.
Italian diplomatic sources here insisted, however, that the sanctions adopted here, which follow the "diplomatic" curbs on embassy staff levels and tightened visa requirements adopted April 22, would have a significant impact.
President Carter, returning to the White House from a weekend at Camp David, gave terse approval to the Common Market decision. Asked if he was "pleased by the action of the Allies," he replied, "yes."
[In Washington, the State Department issued a statement saying: "We welcome the firm decision by the European Community to impose meaningful economic sanctions on Iran. We would have preferred that the pre-Nov. 4 contracts had also been covered, but understand the impediments to doing so in the absence of a U.N. resolution."]
In recent months, Britain, France, Italy, the Netherlands and West Germany have reportedly increased their sales to Iran over the 1979 monthly levels. At present British trade with Iran amounts to $70 million a month; Dutch sales averaged $32 million in January and February, up from a monthly average last year of $20 million. And West German exports also rose to $134 million in the first quarter of this year.
Although the sanctions that go into effect Thursday will cut into all exports not covered by pre-Nov. 4 contracts, the damage to Europe's economies will nevertheless be minimal if compared to the estimated $10 billion that would have been lost in total embargo.
The Europeans repeatedly have expressed skepticism about the effectiveness of sanctions, but this weekend's decision appeared to reflect recent appeals by top Iranian officials for support that would permit them to tackle the hostage problem. But by setting a firm date for the start of sanctions -- the four-day gap is designed to give those countries that still need it time to prepare enabling legislation -- the Europeans sought to satisfy their American ally.
The sanctions agreed to today affect all trade contracts signed after Nov. 4 except for food and medicine.
The left intact an April 22 gentleman's agreement ruling out purchases of Iranian oil sold at prices above the level prevailing in the Organization of Petroleum Exporting Countries.
The decision of the EC foreign ministers fell far short of original American hopes for a total trade embargo on Iran, and it left the door open to removal of the sanctions if a new U.N. effort to resolve the hostage crisis "progresses in such a way as to make it possible to rapidly suspend the measures . . ." Despite the fact that U.S. officials recently expressed concern that exemption of old contracts would gut the European commitment, diplomatic sources here said they expected the measures adopted here to satisfy the American government. Italian Foreign Minister Emilio Colombo informed U.S. Secretary of State Edmund Muskie of the decision last night and said today he expected American support.
By contrast, other diplomatic sources said they anticipated American disappointment with a growing European consensus favoring a joint European position on the Middle East.
The sources said that although no final decisions had been made, the Europeans were disillusioned with the Camp David process and would probably make proposals next month designed to restore momentum to the Egyptian-Israeli negotiations on the question of Palestinian autonomy.
After the two-day meeting here, the foreign ministers of Italy, France, Britain, West Germany, Ireland, the Netherlands, Belgium and Luxembourg agreed that there had been "no decisive movement" toward the release of the hostages since their April meeting in Luxembourg. "For this reason," said a communique issued at the close of today's meeting, "they have decided to apply without delay" the sanctions.
The communique itself did not mention a date for the application of the sanctions, but Foreign Minister Colombo, speaking for the nine, said they would go into effect Thursday. Colombo denied that this weekend's decision consitituted a step backward from the April pledge to adopt the sanctions spelled out in the January Security Council resolution. Excluding contracts signed before the hostages were taken, however, allows major European deals with Iran to stand that the U.N. resolution would have invalidated.
According to a British official, the United States has Europe's full support on the "unacceptable" seizure of the hostages. But the decision "also takes cognizance of the realities of the Iranian situation and is of a kind on which diplomacy can build."