Are EU sanctions influencing Iran's behavior?

Analysis: Many European states 'Switzerland, Italy and Austria have succumbed to Iran¹s game of fooling the West.

By BENJAMIN WEINTHAL
Bushehr Reactor 311 (photo credit: Associated Press)
Bushehr Reactor 311
(photo credit: Associated Press)
Europe's submissive attitude toward Iran and its nuclear weapons program must change, political analyst Diana Gregor, a leading expert in Central European policies vis-a-vis Iran told Benjamin Weinthal, The Jerusalem Post's correspondent in Berlin.
What is your assessment of the EU’s approach toward Iran’s drive to go nuclear?
I find it important to emphasize that Europe is willingly swallowing Iran’s non-compliance, despite harsher sanctions and European businesses pulling out of Iran.
Having said that, the EU is currently considering putting an end to direct talks with Iran – which only emphasizes the degree of disbelief and disenchantment vis-a-vis Iran’s nuclear weapons development program. The EU is at a point where it wants to see Iran “walk the walk” and not only “talk the talk.”
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The EU is also currently thinking of entering talks with Iran only on the condition of Iran’s compliance with the international community’s demands from now on. If this regulation comes into effect, it would have immediate impact on the next round of talks in Istanbul – if talks take place at all.
Many officials within the EU, however, are convinced that Iran is only playing for time while it keeps fooling the international community – a notion I agree with.
Are the EU sanctions putting enough pressure on the Iranians?
Past and current developments do not point toward a change of heart where the Iranians are concerned. And the West seems to be willing to submit to yet another round of Iran’s special brand of diplomacy, which consists of indicating openness to renew negotiations (i.e., the upcoming talks in Istanbul) and pseudo-transparency (i.e., the recently issued invitation by Iran to inspect its nuclear sites) – while at the same time emphasizing that there is nothing to talk about, and that Iran will not put an end to its uranium enrichment program. Iran’s negotiations are merely ways to buy more time.
For the future stability of Europe – a future in which Europe is not subjected to blackmail or nuclear threats – Iran must abolish its nuclear weapons development program; or be stopped. Inaction will not stop the Iranian regime.
Iran sanctions so far have hit the country’s economy quite hard, but have not had an effect on the mullahs’ regime. The latest P5+1 talks in Geneva showed once again that Iran has no intention to halt its uranium enrichment program and change its nuclear ambitions.
Sanctions are supposed to isolate Iran economically. However, sanctions can only be effective if they are accurately and rigorously implemented. Only then can sanctions convince companies not to do business with Iran. The idea behind sanctions – to paraphrase Stuart E. Eizenstat – is to maximize the costs that Iran incurs due to its nuclear weapons development program by simultaneously minimizing the benefits. This is the reason why the financial sources Iran needs to keep its nuclear program running need to be eliminated.
Iran is wedded to the idea of having a nuclear capability; the Iranians do not intend to give that up.
Targeted sanctions therefore seem to offer a suitable solution, as chances for a diplomatic breakthrough remain extremely slim.
What is the status of US-EU coordination regarding sanctions?
Since President Obama took office, the US and the EU have worked cooperatively on an Iran policy.
In October 2010, the EU issued new regulations, after the fourth round of sanctions [imposed this summer], calling for restrictions on equipment and technology sales to the Iranian oil and gas industry, as well as on respective investments. However, these regulations do allow the import and export of oil and gas to Iran. The EU also allows financial transactions needed to import oil and gas to Iran.
The US, on the contrary, penalizes companies selling gasoline to Iran and has increased pressure on international companies and refineries to cancel their contracts with Iran.
There has been an agreement between the US State Department and European oil firms Total (France), Statoil (Norway), Eni (Italy) and Royal Dutch Shell (Netherlands + Britain) to refuse to refuel planes that belong to Iran Air – they have pledged to stop investing in Iran and to not engage in any new activities with the Islamic Republic. In return, the companies are granted protection from possible US penalties for their pre-existing business ventures with Iran.
The US and EU are considering imposing new, joint sanctions before the next round of P5+1 talks scheduled for later this month in Istanbul. They agree that cooperative, joint action with regard to Iran is necessary. They believe in the effectiveness and efficiency of EU-US sanctions, rather than UN-sanctions, as UN-sanctions are often time-consuming and not always successful. None of the previously issued UN sanctions so far have been able to stop the Iranian nuclear weapons development program.
Is there a unified Iran policy among European countries?
Within the EU there are different blocks: Some are pushing for Iran sanctions and their proper implementation, and others are advocating against restrictions. Some of the driving forces behind a “slack” position toward EU sanctions against Iran are the following: 
Sweden has distinguished itself as one of the EU nations most opposed to sanctions against Iran and has constantly worked to weaken the sanctions put into effect by the international community. After the new round of sanctions was agreed upon in June 2010, Sweden called for decreasing the severity of EU sanctions. Swedish firms are involved in Iran’s energy sector with private companies selling equipment and spare parts to Iran’s oil industry. Sweden’s ambassador was among the few Western diplomats who attended [Iranian President Mahmoud] Ahmadinejad’s inauguration in June 2009.
Austria: Austrian companies are earning good money in Iran, but rarely talk publicly about it. As a result of the global financial crisis, Austria’s total worldwide exports shrank by 20 percent last year. Meanwhile, the country’s exports to Iran grew! Austria has repeatedly contributed to keeping the Iranian regime from international isolation, and has not helped with steps toward destroying the economic basis of the dictatorship of the ayatollahs and the Revolutionary Guards.
Despite the UN and EU sanctions against Iran, the volume of trade between Teheran and Vienna reached 635.95 million euros in 2008. Austrian exports to the Islamic Republic, including sophisticated machinery and electronic goods, rose by almost 6% in 2009, reaching 350 million euros, while Austrian exports to the rest of the world fell by 20% due to the financial crisis. Since 2002 trade between Austria and Iran has doubled, with military deals accounting for 11%.
Spain is a major purchaser of Iranian crude oil. According to the Spanish Ministry of Industry, Tourism and Commerce, Spain is the biggest oil importer in the European Union; in fact, within the first quarter of 2010, Spain purchased 134,607 barrels a day, with an approximate value of $11.6 billion. Spain is one of Iran’s biggest European Union Trade partners. In 2008, trade between the two nations nearly doubled, reaching over 3b. euros, according to the Iranian Chamber of Commerce. Spain is one of seven countries chosen to participate in the development of the Teheran-Mashhad railroad project, which is estimated to cost between $650.7 and $867.6 million.
There are 1,500 Spanish enterprises in Iran, mostly concerned with developing infrastructure, generation of electricity, water administration and renewable energy. Spain is the secondbiggest importer of oil from Iran [within the EU], just behind Italy. From January 2010 to July 2010 Spanish exports to Iran increased 52%.
Switzerland remains one of Europe’s least compliant nations. After the EU voted to strengthen the UN sanctions, the Swiss energy giant EGL was cited as a possible sanctions violator at a US congressional hearing. The hearing cited firms active in Iran’s gas and oil sectors despite sanctions. According to the Swiss Foreign Ministry, Iran is one of Switzerland’s most important Middle Eastern trading partners.
Italy: Despite the diplomatic rhetoric, Rome traditionally has good business relations with Teheran, and Italy remains one of Iran’s largest and most important trading partners in Europe, with bilateral trade totaling well over $7.5b. a year. Italian refiners are maintaining crude oil trade with Iran at a time when other oil majors and big refiners are halting orders.
Malta, Greece and Cyprus have also opposed additional Iran sanctions.
The EU is Iran’s second largest trading partner worldwide, after China.
The difficulty of properly implementing Iran sanctions obviously lies in the many differences there are within the EU.
What is the status of the 22- billion-euro gas deal involving Austria’s partially state-owned energy company OMV-Iran to develop the Iran’s South Pars gas fields?
To date, OMV has not succumbed to pressure regarding the South Pars gas project. OMV executive board member Helmut Langanger stated that Iran is continuously pressing OMV to begin with investments, but OMV would rather wait for oil prices to recover. Furthermore, OMV has made it clear that it could still take on the role of a partner, should it decide not to become an investor.
Today, the IRGC [Iranian Revolutionary Guard Corps] constitutes a “state within a state,” thus making ever more realistic the possibility that OMV – should the deal come to a close – might have to sign agreements with the Army of the Guardians of the Islamic Revolution. Since the Revolutionary Guards control the nuclear and arms program, this in turn would mean that OMV would be indirectly co-financing the Iranian nuclear program.
How should the EU deal with the Swiss state-owned energy conglomerate EGL and its refusal to terminate its 18b.- 22b. euro gas deal with Iran?
Switzerland does not seem to understand its responsibility to make sure Iran does not get nuclear weapons. This is a pure affront against Iran sanctions and the efforts to isolate Iran economically. The EU should call upon Switzerland to revoke the EGL deal with Iran and abide by the EU and US sanctions. Furthermore, the US should reconsider having the Swiss Foreign Ministry represent US interests in Iran. Switzerland is clearly avoiding its responsibility to international security.
The US recently implemented human rights sanctions against Iran. Why is the EU unwilling to sanction Iran in connection with human rights?
As concerns about Iran’s quest for nuclear weapons and its regional ambitions grow, a new international trend is emerging in which Iran is sanctioned for its human rights abuses as a means to weaken the regime while strengthening the West in this nuclear face-off.
However, the official focus on human rights abuses has not gone far enough. The true potential that lies within the EU falls short of what could actually be done to further isolate Iran. The EU has not yet decided whether it will implement human rights sanctions against Iran. Such sanctions would undermine the current regime and contribute to the West’s nuclear standoff with Iran, while sending out the right moral signal for supporting human rights in the Islamic Republic.
What is your view of Europe’s “critical dialogue” and “change through trade” policies toward Iran?
I am convinced that many European states, such as Switzerland, Italy and Austria, to name only a few, have succumbed to Iran’s game of fooling the West. Dialogue, whether critical or not – particularly without the precondition of Iran’s compliance with the demands of the international community – has not proven successful to date. The Iranians seem to dictate the pace, while the West follows suit. Things should, however, be the other way around as Iran does not abide by international rules. To “reward” the Islamic Republic with business deals and increasing trade relations seems wrong on so many levels.
Europe has a submissive attitude towards Iran and its nuclear weapons development program, and this needs to change!
Critics argue that Germany is a major key to solving the Iranian nuclear and human rights crisis. How do you analyze German-Iranian relations?
What happened with regard to the German hostages in Iran is symptomatic of Germany’s overall relationship with Iran. [She is referring to Marcus Hellwig and Jens Koch, two German journalists seized by the Iranian government in mid-October for interviewing family members of Sakineh Mohammad Ashtiani, an Iranian woman sentenced to death by stoning for alleged adultery.] Berlin is reluctant to impose harsh sanctions and continues to be a major trade partner of the Islamic Republic. The German economy is reacting with caution to the possible tightening of economic sanctions against Iran. Supposedly, Teheran would no longer have reason to repay its debts once the guarantees for Iran (Hermes-Bürgschaften) are further reduced, or discontinued altogether. This would include outstanding payments in the amount of approximately 5.2b. euros; which, in the event that they are not repaid, the Federal Treasury would have to cover. With more than 1,900 members, the Chamber of Commerce in Teheran is among Germany’s largest foreign trade chambers.
The hostage crisis shows how much Germany is under pressure now: As long as Teheran holds the hostages, Berlin will think twice about acting against the Islamic Republic and/or jumping on Washington’s bandwagon. The German government needs to take a tougher line and stance toward Iran.
What more can the UN Security Council do to penalize Iran?
Targeting more entities, such as IRISL, the Islamic Republic’s Shipping Lines, and IRGC-controlled companies, as well as individuals, is vital to the global sanctions regime. With so many regimes still critical of Iran sanctions, it is of vital importance that these entities and individuals are “designated” at the UN, as this can ultimately contribute to a wider implementation of sanctions.
Of course, and unfortunately, multilateral action is very difficult to achieve. Targeting IRGC-affiliated companies is one effective strategy. These sanctions are, however, are just reinforcements of previously issued sanctions, and not completely new ones. The good and important thing about the new set of UN sanctions is the language, as it calls upon all states to take more stringent action against the IRGC and IRGC-affiliated entities.
In addition to focusing on IRGCaffiliated companies, the UN-sanctions are targeting [40] individuals [putting them under a travel ban and freezing their assets] and requiring countries to inspect ships or planes headed to and from Iran if they suspect banned cargo is on board.
However – and this is one of the weaknesses of these sanctions – there is no authorization to actually board ships by force at sea. In addition, Iran has proven to be very adept at obscuring its ownership of cargo vessels. Another weakness of the new sanctions is the fact that there is a non-retroactive requirement, which makes it very difficult to stop pre-existing contracts.
Dr. Gregor is an Austrian-born political analyst with Réalité-EU, a NGO that mainly tracks European- Iranian economic and political relations and advocates hard-hitting sanctions against the Islamic Republic to force Iran’s government to cease building its nuclear weapons program.