EU-US Financial Crackdown on Iran

The European Union will impose sanctions on Iran beyond those mandated by UN to force Iran to halt its uranium enrichment program. The crackdown would include denying Iranian banks access to European financial systems. US has already tightened the squeeze on Iran’s financial links to outside world.

The new measures were outlined in a draft statement today at EU-US summit in Brdo, Slovenia, President Bush’s farewell European summit. EU Commission President Jose Manuel Barroso and President Bush were scheduled to announce the summit results later today.

“We are ready to supplement UN sanctions with additional measures,” said the EU-US statement. “Both sides would work together to take steps to ensure Iranian banks cannot abuse the international banking system to support proliferation and terrorism.” [Deutsche Presse-Agentur dpa, 10 June].

The EU agreement to tighten the financial sanctions on Iran was clinched last week in Brussels where Italy agreed to drop its opposition to adding Iran’s Bank Melli to an EU blacklist.

UPDATE: US and EU today issued a joint communiqué saying both sides were ready to take additional measures on top of three rounds of United Nations sanctions if Iran did not halt its uranium enrichment activities.

“A group of countries can send a clear message to the Iranians, and that is: We're going to continue to isolate you ... we'll find new sanctions if need be, if you continue to deny the just demands of the free world, which is to give up your enrichment program," President Bush said.

EU foreign policy chief Javier Solana is due in Tehran on 15 June to present a new offer of incentives for Iran to suspend the enrichment program but he has played down prospects of a breakthrough.

The new EU sanctions would deny some major Iranian banks access to the world financial system. European External Relations Commissioner Benita Ferrero-Waldner said further EU steps could entail a freeze on Iranian bank assets.

Tehran was already withdrawing assets from European banks, transferring them to Asian financial institutions and converting some of its foreign exchange holdings into gold and equities to neutralize the impact of coming sanctions.