By James G. Neuger
Spurred by President George W. Bush, the European Union agreed to exercise "restraint" on new government backing for trade with Iran, going beyond the call for "vigilance" made by the UN Security Council in a resolution in March.
EU governments "shall exercise restraint in entering into new commitments for public provided financial support for trade with Iran, including the granting of export credits, guarantees or insurance," the 27-nation bloc said in a statement on its Web site in Brussels early today.
The European step is a prelude to a new UN showdown in which the U.S. and its European allies try to overcome Russian and Chinese resistance to a further ratcheting up of sanctions against Iran.
The EU said it yesterday began enforcing the third set of UN sanctions, passed in March, that restrict public loans to support trade with Iran and mandate tougher inspection of cargo.
The EU will "exercise vigilance" over transactions between European banks and Iran's Bank Saderat, today's statement said. EU governments also pledged not to offer any financial aid to the Iranian government, except for "humanitarian and developmental purposes."
Nuclear Program
The U.S. began the drive for a fourth set of sanctions this week after Iran refused to freeze its nuclear program at current levels in exchange for a western offer of economic incentives and technological expertise.
International pressure has targeted Iran's enrichment of uranium, which can have civilian and military uses. Iran says its program is for civilian electricity generation, denying U.S. suspicions that it wants to build a bomb.
U.S. Secretary of State Condoleezza Rice accused Iran this week of "stalling."
The incentives package includes the construction of a light- water nuclear reactor and a guarantee of a fuel supply. It would also widen Iran's access to international markets, back its entry into the World Trade Organization and help upgrade Iran's agricultural and telecommunication industries.
The U.S. showed its commitment to the offer by sending Undersecretary of State William Burns to a meeting of European and Iranian diplomats in Geneva last month, the highest-level contact between American and Iranian officials since the 1979 Islamic revolution.
Settlement Prospect
European governments want to keep the prospect for a negotiated settlement alive, and aren't shutting the door by taking the formal steps to enact the latest UN resolution, EU officials said.
"The door is always open to launch negotiations," the French government, holder of the EU's six-month presidency, said in a statement yesterday. "Should it fail to cooperate, Iran would be making the choice of exposing itself to new sanctions."
Russia voiced skepticism over further sanctions after an Aug. 6 teleconference among officials from the five permanent Security Council members — the U.S., U.K., France, Russia and China — plus Germany and the EU.
In June, following the UN's lead, the EU shut down branches of Tehran-based Bank Melli Iran, which the EU accused of facilitating purchases for Iran's nuclear and missile programs.
After doubling to 14.4 billion euros ($22 billion) between 2003 and 2006, European imports from Iran dipped to 13.9 billion euros in 2007 as U.S.-led pressure to isolate Iran's theocratic leadership took hold.
