EU rules let Iran import, export oil, creating possible split from US policy
Thomas Erdbrink, Glenn Kessler, WaPo, Oct 28 2010
The US and Europe have worked cooperatively on Iran policy since President Obama took office, but a small crack might have begun to open over sanctions that are beginning to pinch ordinary Iranians. The EU issued regulations this week that went well beyond a UNSC resolution passed in June, outlining tough restrictions on the sale of equipment and technology to the Iranian oil and gas industry, as well as on investment in those sectors. But the regulations, unlike legislation passed by the US Congress, allow for the import and export of oil and gas to the Islamic republic. A European official who specializes in sanction policies said:
If you want to send a tanker filled with refined petrol to Iran, and you have proved that you are not carrying any other goods that we deem illegal, Europe has no problem. We don’t want any negative effect on the Iranian population or to deprive them of energy, so we do not follow US measures that go beyond UN sanctions.
The EU will also permit financial transactions needed to import of oil and gas to Iran. The US, by contrast, penalizes companies if they sell gasoline to Iran, and has increased pressure on international oil companies and refineries to cancel their contracts with the country. The practical effect of the European action might be minimal because European oil giants might still refuse to supply Iran with fuel for fear of appearing to thwart US sanctions. US officials said Wednesday that they were broadly pleased with the European regulations, which they said could devastate Iran’s oil and gas industry. A senior administration official who handles the Iran portfolio said:
We are going at the supply, while they are going at the back end. We have had the kind of cooperation and coordination with the Europeans that has been unprecedented. I have never heard any concerns raised by my European interlocutors about the effect of the sanctions on ordinary Iranians. The regulations turned out to be pretty solid. At each stage, when they have faced a choice between going soft or going heavy, they have gone heavy.
US officials have in the past said that if the increased pressure is hurting ordinary Iranians, they should blame their leaders for the Islamic republic’s increasing isolation. But EU officials said Wednesday that they specifically allowed fuel sales to ease the burden on average Iranians. According to June statistics, Iran needs to import 4.7 million gallons of refined petroleum each day because of the country’s low refining capacity. After US sanctions were implemented in July, Iranian leaders announced that they had started an emergency plan to increase local production by mixing oil with high-octane products. At several European airports, planes belonging to Iran’s national carrier, Iran Air, are being refused refueling services by representatives of major oil companies. According to the European Union, there is no legal basis for denying the airline services. Iran Air has been able to refuel at only three European airports since a Sep 30 agreement between the State Dept and European oil firms Total of France, Statoil of Norway, Eni of Italy and Royal Dutch Shell of Britain and the Netherlands. They pledged to end their investments in Iran and avoid new activity in the country’s energy sector. In turn, US officials said, the companies would be protected from possible US penalties for doing business with Iran. The European official said:
We have complained to the US about the extraterritorial effects of their measures on European companies. If those companies submit to US wishes, it is their decision, but we are against these policies. This is a major issue for us.
There have been complaints in the European parliament over US pressure on EU companies regarding Iran. Marietje Schaake, an influential parliament member who represents a liberal party, said:
If Europe accepts US interference through pressure on its businesses, it is giving up independence. The influence of US interference beyond our own sanctions harms the EU’s credibility as a global player.
