European Union Pressures Iran with More Economic, Trade Sanctions

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European Union Pressures Iran with More Economic, Trade Sanctions

Currently Israel is the only Middle Eastern country with nuclear capability. It has been running military practice drills in response to Iran's uranium enrichment program. Iran skirts many trade sanctions by doing business in Dubai. There are 350,000 Iranians and 8,200 Iranian companies in Dubai now.

CARROTS & STICKS: The EU increased its pressure on Iran to stop its uranium enrichment program by approving new economic, trade and travel sanctions. Iran responded by calling the sanctions illegal.

by Laura Major
Informify Staff Writer
June 25, 2008

Just last week EU foreign policy chief Javier Solana visited Iran to deliver an incentives package, which Iran refused. The EU's new sanctions include freezing Iranian assets held in Bank Melli branches in Paris, London and Hamburg, Germany. The EU also restricted travel for 15 additional Iranians and restricted trade with 20 additional Iranian companies. The United Kingdom issued similar sanctions during U.S President George Bush's visit there earlier this month.

Iran Still Refusing to Stop Uranium Enrichment Program

The new sanctions come on top of four additional sanctions that the UN Security Council authorized during the last two years.

EU issued preconditions: The EU won't lift the sanctions or grant incentives—or even talk about them—until Iran ceases its uranium enrichment program and cooperates with international inspectors from the International Atomic Energy Agency.

Iran refused compliance. Iran insists that, as a signer of the Nuclear Nonproliferation Treaty, it has a right to develop nuclear energy, which it says is all it is doing. Iranian President Mahmoud Ahmadinejad said, "A court should be formed to try and punish all world criminals who invade the rights of the Iranian nation." (Associated Press, 6/24/08)

Iranian Foreign Ministry spokesman Mohammed Ali Hosseini said, "Suspension of enrichment has no logic and therefore, Tehran's stand on the issue has not changed." (The Washington Post, 6/24/08)

Are Economic & Trade Sanctions Hurting Iran?

The EU's current sanctions against Iran focus mainly on...

Iran's banks
Iran's oil and gas industry

If the above doesn't get Iran's attention, the EU has threatened economic sanctions focused on...

companies that invest in Iran's oil and gas industry
companies that sell oil and gas technology and equipment to Iran

To compensate financially for the current sanctions, Iran...

withdrew almost $75 billion before the EU froze its assets in European branches of Bank Melli
established credit with Pakistani and Chinese banks

Iran gets around most of the other sanctions by working through Dubai in the United Arab Emirates:

Iranian businesses that trade abroad have offices in Dubai—there are 8,200 Iranian companies in Dubai today.
More than 350,000 Iranian citizens live in Dubai, making them the third largest community there and the one with the most money.

There are 200 flights a week between Dubai and Iran.
The port of Dubai ships all kinds of items to Iran for an annual trade figure of $7.2 billion—banned U.S. trade goods make up $250 million of that figure.

(Source: Iran's Ability to Avoid Sanctions, 6/23/08)

What Changes Will the New U.S. President Bring to the Table?

Here's how the two probable nominees said they'd handle the Iranian nuclear enrichment issue.

Republican John McCain plans to...

stay the course
continue backing the EU and UN attempts to pressure Iran
insist that a precondition of any negotiations must be that Iran cease enriching uranium
call for increased sanctions

McCain said the EU "deserves praise for its great efforts to present a positive endgame: an Iran with far-reaching economic incentives, external support for a civilian nuclear energy program and integration into the international community." (The Washington Post, 6/22/08)

Democrat Barack Obama plans to...

dismiss the precondition for negotiation, which he doesn't think is useful
send an American official to accompany EU foreign policy chief Solana on his next visit to Iran
reach a quick resolution with Iran; otherwise Iran will keep making progress on its alleged nuclear weapons program

Obama called the Bush administration's solution "limited, piecemeal talks while we outsource the sustained work to our European allies." But, Obama said, "There will be careful preparation. We will open up lines of communication, build an agenda, coordinate closely with our allies and evaluate the potential for progress." (The Washington Post, 6/22/08)

Question for Readers:

Do you think the EU's current sanctions will have any effect on Iran's nuclear program?

The United States has prohibited most trade with Iran since 1979 when Iran took the American Embassy in Tehran hostage. Over the last two decades, the U.S. government took the following measures:

1995	President Clinton prohibits American companies from trading with Iran or from investing in its oil and gas. Congress passes the Iran Libya Sanctions Act (ILSA) imposing penalties on U.S. companies investing more than $20 million in Iran's energy sector. (Later, Libya was dropped from the act.)
2006	Congress extends the ILSA for five years.
2007	Congress... puts sanctions on Iranian Bank Melli, Bank Mellat and Bank Saderat names the Iranian Revolutionary Guard Corps (also called Revolutionary Guards) proliferators of weapons of mass destruction places sanctions on companies that do business with the Revolutionary Guards and the Qods Force (a special unit of the Guards that connects underground militant Islamic groups around the world)
2008	Congress puts sanctions on Qods Force Brig. Gen. Ahmed Foruzandeh for promoting violence in Iraq.