Swiss snub of EU Iran sanctions prompts criticism

BERLIN – Just over a week after the EU’s embargo on Iranian crude oil imports went into effect, and Swiss refusal to bar energy and financial transaction trade with Tehran has unleashed trans- Atlantic criticism.

Josh Block, a senior fellow at the Washington- based Progressive Policy Institute and a former spokesman for the American Israel Public Affairs Committee, said Tuesday that “the Swiss decision to break with the international consensus on Iran and help Tehran evade oil sanctions is deeply disturbing.”

In an email to The Jerusalem Post, Block wrote that “given their record of continuing to trade with Nazi Germany during World War II as millions of Jews were slaughtered just across their borders, you would hope that the Swiss government had changed its ways and joined the side of Western nations in opposing threats to security and global peace. Now, as then, there is no excuse for their shameful behavior.”

Responding to Block’s criticism, George Farago, a spokesman for the Swiss Foreign Ministry, told the Post that “we will not comment on an imagined analogy with the situation in the Second World War.”

Farago said the Bundesrat (the Swiss Federal Council) had adopted a large section of the EU sanctions against Iran.

However, he added that “business with Iranian oil and petrochemical products is not banned within the EU.”

Not an EU member and traditionally neutral, Switzerland has no legal obligation to follow EU sanctions, although in recent years it has tended to harmonize its laws with those of its main trading partners. Critics say the Swiss government is the most pro-Iran regime country among European governments.

President Eveline Widmer-Schlumpf has defended the country’s independent stance, adding that this was helping US interests by allowing communication between Tehran and Washington.

Switzerland has represented US interests in Iran since the latter’s Islamic revolution in 1979.

However, Daniel Schwammenthal, the director of the AJC Transatlantic Institute in Brussels, called the Swiss refusal to follow the EU sanctions “a setback for global security.”

“Given Switzerland’s role as an oiltrading hub, it risks undermining international efforts to stop Tehran’s race toward nuclear arms,” he told the Post.

He noted that Widmer-Schlumpf “defended Bern’s position by invoking Swiss neutrality. But is Switzerland really not taking any sides when it breaks ranks with the EU and instead allows Iranian oil to be traded in Geneva? Whatever Bern would like to call its failure to do its part in stopping a nucleararmed Iran, it’s neither neutral nor responsible.”

The Swiss government’s defense of its neutrality has come in the face of US pressure. Last month, US Ambassador Donald Beyer said in advance of the Swiss decision, “We expressed our disappointment.

We would like them to do it [follow the EU on Iran sanctions].”

The US Embassy did not immediately respond to Post emails on Tuesday.

US and Israeli diplomats have sparred publicly with the Swiss defiance of international sanctions. The Swiss stateowned EGL’s 18 billion-22b.-euro gas contract with the National Iranian Gas Export Company (NIGEC) – which has not been canceled – prompted Israel to summon the Swiss ambassador for a diplomatic rebuke in 2008.

The Bundesrat move offers top Swissbased oil traders such as Glencore and Trafigura a legal loophole for dealing in Iranian crude, although the prospect of falling afoul of US and EU restrictions will almost certainly deter them. Both firms say they have halted all Iranian oil trade.

Switzerland is one of the top centers for physical oil trading and also hosts a branch of the National Iranian Oil Company (NICO), although the country does not import oil from Iran.

Bern exempted Iran’s central bank from its asset freeze in April. The bank faces stringent sanctions from the US, as well as restrictions from the EU, and is the main economic hub for Iran’s nuclear proliferation work.

Despite the Swiss refusal to embrace full EU sanctions targeting Iran’s energy sector, a spokeswoman for Israel’s Embassy in Berlin told the Post Tuesday that the embassy’s position had not changed since a few weeks ago: “We appreciate everything Switzerland is doing to enhance the sanctions, and it is good to see that Switzerland’s position is more and more converging with the American and European position.”

Farago said his government had “sharpened the sanctions toward Iran.”

New Swiss sanctions will affect supplies for the petrochemical industry and telecommunications equipment, as well as the purchase and sale of precious metals and diamonds, the Federal Department of Economic Affairs (FDEA) said.

“The public relations penalty that the larger traders will pay if caught trading with Iran is colossal,” said Matthew Parish, partner at Geneva-based law firm Holman Fenwick Willan.

“The space preserved by the decision is really for smaller traders, who operate only in Switzerland and other countries operating outside of international sanctions,” he said.

The FDEA said that all oil transactions with Iran had to be reported to the Swiss Economics Ministry, and the government might take further measures later based on these reports.

It is unclear how much of Iran’s oil exports are currently traded or financed via Switzerland.

The director of a Swiss federal department said in an interview that Swissbased oil firms were not exploiting government indecision on whether to follow the EU’s ban on Iranian oil.

Reuters contributed to this report.