The European Union agreed Monday to impose a phased ban on oil purchases from Iran that officials said was needed to help force a shift in policy and avert the risk of military strikes against Tehran, as the United States expanded its sanctions to include the country’s third-largest bank.
European Union countries will not sign new oil contracts with Iran and will end existing ones by July 1, foreign minister meeting in Brussels said in a statement. The ban will cover imports of crude oil, petroleum products, and petrochemical products. It will also cover the export of key equipment and technology for the sector. The European market accounts for about a fifth of Iran’s oil exports.
“To avoid any military solution, which could have irreparable consequences, we have decided to go further down the path of sanctions,” Alain Juppé, France’s foreign minister, told reporters. “It is a good decision that sends a strong message and which I hope will persuade Iran that it must change its position, change its line and accept the dialogue that we propose.”
The decision, while significant for the numbers of countries it encompasses, will do nothing to stop the continued flow of oil to Asia, a far larger market for Iran. According to the U.S. Energy Information Administration, Iran’s top export destinations in 2010 included China, with 20 percent of exports, Japan, with 17 percent, India with 16 percent and South Korea with 9 percent. Europe’s biggest importer was Italy, with 10 percent.
The American move targeted Bank Tejarat, the 23rd financial institution in Iran now subject to American sanctions, even as the Obama administration considers including the country’s central bank in its restrictions.
“At a time when banks around the world are cutting off Iran and its currency is depreciating rapidly, today’s action against Bank Tejarat strikes at one of Iran’s few remaining access points to the international financial system,” the under secretary of treasury overseeing terrorism, David S. Cohen, said in a statement. “Today’s sanction against Bank Tejarat will deepen Iran’s financial isolation, make its access to hard currency even more tenuous, and further impair Iran’s ability to finance its illicit nuclear program.”
The European ministers said the assets of the Iranian central bank within the European Union would be frozen, with limited exemptions to permit the continuation of legitimate trade, the statement said. “Trade in gold, precious metals and diamonds with Iranian public bodies and the central bank will no more be permitted, nor will the delivery of Iranian-denominated bank notes and coinage to the Iranian central bank,” the statement said.
The European measures include a plan to review the economic impact of the oil ban on certain ailing European Union members, notably Greece and Italy. But officials said such a review would do no more than possibly delay sanctions in certain areas.
Western politicians believe Iran is building a nuclear weapons capability, but the government in Tehran insists that its nuclear program is for civilian uses only. Amid the heightened tensions over the standoff, Iran has threatened to block the Strait of Hormuz, a strategic corridor for western energy supplies. Two Iranian lawmakers repeated that threat Monday.
European diplomats said they believed that tougher sanctions were their best hope of reducing the risk of a military strike against Iran, probably by Israel. Israel has publicly agreed that sufficiently tough sanctions could force an economically shaky Iran to comply with international demands to curtail its nuclear program.
The Israeli prime minister, Benjamin Netanyahu, called the new sanctions a “step in the right direction.”
“True, it is still impossible to know what the result of these sanctions will be,” his office said in a statement. “Very strong and quick pressure on Iran is necessary. Sanctions will have to be evaluated on the basis of results.”
In a joint statement, Britain’s prime minister, David Cameron, the German chancellor, Angela Merkel and the French president, Nicolas Sarkozy, described the measures as “an unprecedented package of sanctions on Iran.”
“Iran has so far had no regard for its international obligations and is already exporting and threatening violence around its region,” said the statement. “Until Iran comes to the table, we will be united behind strong measures to undermine the regime’s ability to fund its nuclear program.”
American officials welcomed the decision in Brussels.
“The measures agreed to today by the E.U. Foreign Affairs Council are another strong step in the international effort to dramatically increase the pressure on Iran,” said a statement released by Treasury Secretary Tim Geithner and Secretary of State Hillary Clinton. “This new, concerted pressure will sharpen the choice for Iran’s leaders and increase their cost of defiance of basic international obligations.”
But the reaction from Moscow was critical. “In essence this is an attempt to strangle an entire sector of the Iranian economy,” the Russian Foreign Ministry said in a statement. “It is clear that this is pressure, diktat, an attempt to punish Iran for intractable behavior. As we have told our European partners before, this is a mistaken policy. Under this kind of pressure, Iran will not agree to any kind of concessions or change in its policies.”
In a separate statement, Russia’s foreign minister, Sergei V. Lavrov, said that “we have continued hope that negotiations will be resumed soon.”
Stephen Castle reported from Brussels, and Alan Cowell from London. Michael Schwirtz contributed reporting from Moscow, Isabel Kershner from Jerusalem and Steven Lee Myers and Brian Knowlton from Washington.