Iran faces fresh sanctions from EU; US senate votes unanimously to sanction Iran’s central bank

Updated On: Dec 02, 2011

The European Union (EU) slaps new sanctions on Iranian individuals, companies and organisations in response to a report alleging that Tehran had pressed ahead with ambitions to build a nuclear weapon.

Meeting in Brussels, EU foreign ministers approved the addition of 180 Iranian entities to the list of those whose assets in Europe have been frozen and who have been banned from travel in any of the EU's 27 member states. The 180 blacklisted people and companies were those associated with the Iranian Revolutionary Guard. A spokesman for EU foreign policy chief, Ms Catherine Ashton said that the new sanctions would target 39 people and 141 companies and would include the freezing of assets and travel bans.

The move followed a sharply critical report last month by the United Nations’s (UN) nuclear watchdog agency citing evidence that Tehran had pushed ahead with tests aimed at developing an atomic bomb. The 27-member EU agreed to widen the blacklist after the UN report concluded there was 'credible' evidence that President Mahmoud Ahmadinejad was still developing an atomic bomb.

EU ministers said in a statement: "The council agreed to broaden existing sanctions by examining, in close co-ordination with international partners, additional measures including measures aimed at severely affecting the Iranian financial system, in the transport sector, in the energy sector."

But the ministers stopped short of imposing an embargo on Iranian oil, a more drastic step that some European countries have urged. French Foreign Minister Alain Juppe was quoted as saying that Greece, which relies heavily on Iranian oil imports, objected to the idea.

"We have to take that into account," Mr Juppe said. “We have to see with our partners that the cuts can be compensated by the increase of production in other countries." He added that such an arrangement remained "very possible."

Joining the foreign ministers’ talks, British Foreign Secretary William Hague earlier said he hoped the new EU sanctions would strike at Teheran’s financial heart. “I hope we will agree on additional measures that will be an intensification of the economic pressure on Iran, peaceful legitimate economic pressure particularly to increase the isolation of the Iranian financial sector,” Mr Hague said.

The EU has already frozen the assets of hundreds of Iranian firms and in July last year adopted measures aimed at preventing new investment, technical assistance and technology transfers, particularly those pertaining to producing and refining gas.

China’s Reactions

In Beijing, China expressed concern over the situation in Iran after an attack by protesters led Britain to close its Teheran embassy and several European countries recalled ambassadors for consultations.

“China has noted the tough reactions made by the relevant countries over this event and is concerned over the development of the situation,” Chinese foreign ministry spokesman Hong Lei said.  “We hope relevant countries will keep calm and exercise restraint and avoid taking emotional actions that may rachet up the confrontation.”  He added.

China and Russia — key allies of Iran — have often sought to take a softer stance on the Islamic republic than their fellow members of the UN Security Council. China and Iran have become major economic partners in recent years, thanks partly to the withdrawal of western companies in line with sanctions against Teheran.

US senate votes unanimously to sanction Iran’s central bank

The US, on the other hand, is taking a hard-line stance against Iran as the Senate on Thursday voted on a provision to penalize any foreign bank that does business with Iran’s Central Bank, the conduit for Iran’s receipts from oil sales. This will make it harder for Iran to access the world financial system, aiming to choke off the country's ability to process oil revenue amid concerns it aims to develop a nuclear weapon. The provision, an amendment to a defense authorisation bill, is designed to dissuade foreign customers of Iran’s oil for fear of losing access to the United States market.

The 100-0 vote came in spite of warnings from the Obama administration that the sanctions would alienate allies and drive up oil prices. The administration has been trying to use diplomatic avenues to persuade allies to avoid Iranian oil, which provides half of the government's revenues. But Congress, frustrated that President Barack Obama has so far declined to apply sanctions to Iran's central bank, decided to press him to take steps in that direction.

The Obama administration views sanctions against the Iranian central bank as a blunt instrument, because foreign financial institutions would have to cut off dealings with Iran's central bank or essentially be shut out of the US financial system. Any foreign central banks that completed petroleum transactions via Iran's central bank could face similar bans.

In theory, that could affect China—the biggest purchaser of Iranian oil and a big buyer of US debt—though the measure would allow the president to waive sanctions for national-security reasons or due to a spike in oil prices.

It remains to be seen if the provision becomes part of the final bill as it depends on whether it survives a House-Senate conference that will be needed to reconcile their different versions of the overall defense bill.

Report: European Union Tightens Sanctions Against Iran [The New York Times, 1 Dec 2011]

Report: EU to slap new sanctions on Iran's officials and firms [BBC, 1 Dec 2011]

Report: US Senate OK's sanctions on Iran central bank [Reuters, 2 Dec 2011]

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