EU distances itself from U.S. push to curtail lending to Iran

Bloomberg: The European Union is cool to a U.S. push for stricter financial sanctions on Iran that the Bush administration is prodding European countries and banks to impose, a senior EU official said.
By Janine Zacharia

Jan. 5 (Bloomberg) — The European Union is cool to a U.S. push for stricter financial sanctions on Iran that the Bush administration is prodding European countries and banks to impose, a senior EU official said.

The official, who spoke to diplomatic reporters in Washington today on the condition he not be identified, said EU governments were focused solely on implementing a United Nations Security Council resolution passed last month that targets Iran’s nuclear program.

To complement that resolution — whose penalties were less severe than what the Bush administration had sought — the U.S. is trying to persuade international lenders to curtail business with Iran.

“We’re going to try to convince countries, especially the European Union countries, Japan, to consider some of the financial measures that we have undertaken,” Undersecretary of State Nicholas Burns told reporters on Dec. 23.

“This is a campaign we’ve launched to convince some of the international lending institutions and private banks that they should shut down lending to Iran,” Burns added.

The U.S. already restricts loans to Iran under a broad set of penalties in place for the past 27 years, since the severing of relations during the Islamic revolution. Burns said the U.S. would like to see European countries limit export credits to Iran.

Japan’s Action

Japan, the world’s second-largest oil importer, halted financing for energy and industrial projects in Iran — the Middle East’s second-biggest producer of crude — until the Iranian government complies with demands to halt its nuclear program.

“New projects, no thanks,” Fumio Hoshi, senior executive director of state-owned Japan Bank for International Cooperation, told reporters on Nov. 22. Lending will cease until “we have a good outcome from the negotiations between Iran, the Europeans and the U.S.”

The senior EU official, asked whether countries would accede to the U.S. request to limit export credit guarantees that would normally encourage European companies to invest in Iran, said implementation of the UN resolution was the priority.

The Security Council measure, passed on Dec. 23, asks “all states” to “take the necessary measures” to end “financial assistance, investment, brokering or other services” that relate to nuclear and ballistic missile programs in Iran.