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EU set to impose new sanctions on Iran

Latest update : 2008-06-23

In a move to tighten measures against Iran, EU nations agreed on new sanctions over Tehran's nuclear programme. The sanctions include banning the country's large commercial bank, Bank Melli, from operating in Europe.

BRUSSELS, June 23 (Reuters) - European Union states agreed
on Monday to impose new sanctions against Iran, including an
asset freeze on its biggest bank, over its refusal to meet
demands to curb its nuclear programme.

But the EU said the door remained open to possible talks
over an international package of incentives delivered to Tehran
earlier this month by EU foreign policy chief Javier Solana for
Iran to suspend uranium enrichment.

The new EU sanctions are the latest attempt by the West to
put pressure on Iran over the nuclear issue and will target
businesses and individuals the West alleges are linked to its
nuclear and ballistic programmes.

"The individuals will be banned from entering the EU and the
entities will be banned from operating in the EU," said an EU
official, who wanted to remain anonymous, after EU ministers
rubber-stamped the measures at a meeting in Luxembourg.

The EU is due to publish the names of those affected on
Tuesday but the official said Bank Melli would face an asset
freeze under the moves, while the visa bans would target "very
senior experts" inside Iran's nuclear and ballistic programmes.

"Its impact (will be) more expensive imports," Iranian
analyst Saeed Laylaz said of the impact on Iran of the move
against Bank Melli, a key supplier of export guarantees.

"The economy of Iran will be more dependent on Chinese
markets," he added of a growing shift in Iran's focus to Asia
that has seen Europe's share of the Islamic Republic's trade 
dwindle to 25-30 percent from twice that five years ago.

Bank Melli has branches in Paris and Hamburg and a unit in
London called Melli Bank Plc. A source close to the subsidiary
said it was seeking information from British authorities on
whether and how the sanctions would affect it.



The EU official stressed the sanctions were based on
measures agreed by the U.N. Security Council and that six powers
-- the five permanent members of the Council plus Germany --
still sought an answer from Iran to their incentives offer.

"We are continuing with the double-track," the official said
of the carrot-and-stick policy that has until now not induced
Iran to curb a nuclear programme, suspected by the West of being
a cover for making an atom bomb.

The United States and the EU agreed this month they were
ready to take additional steps aimed at ensuring Iranian banks
could not back proliferation and terrorism.

Diplomats say there are exploratory talks in the West about
the possibility of targeting Iran's energy sector with future

Iran insists its nuclear work is a peaceful programme, but
the dispute has sparked fears of military confrontation and
helped push up oil prices to record highs.

Iran's oil minister has put its windfall crude export
earnings at $6 billion per month and acting economy minister 
Hossein Samsami said at the weekend existing sanctions were not
having a major impact on the country's economy.

Iranian weekly Shahrvand-e Emrooz reported this month that
Iran had withdrawn $75 billion from Europe to prevent the assets
from being blocked, but Samsami played down such reports and
insisted the situation was "as yet not serious".

The new incentives offer is based on an updated version of
one rejected by Iran in 2006 and includes help in developing a
civilian nuclear programme and trade benefits.

Diplomats said on Friday major powers had offered Iran
preliminary talks on its nuclear programme, on condition it
limit enrichment to current levels for six weeks in exchange for
a freeze on moves towards harsher sanctions.

Earlier, Iran said it was encouraged by similarities between
the offer and proposals it has put forward to defuse the row,
but again rejected suspending uranium enrichment.

The United States says it is focusing on exerting diplomatic
pressure but has not ruled out military action as a last resort.

Friday's New York Times quoted U.S. officials as saying
Israel, which is believed to have nuclear weapons of its own,
had carried out a large military exercise, apparently as a
rehearsal for a potential bombing of Iran's nuclear facilities.

Iran's defence minister was quoted on Sunday as saying his
country would give a "devastating" response to any attack and
the U.N. nuclear watchdog chief, Mohamed ElBaradei, has warned a
strike on Iran would turn the Middle East into a fireball.

Date created : 2008-06-23