By: Billy Dean Valentine
Pace International Law Review, Editor in Chief
The European Union intensified the economic isolation of Iran over its nuclear program by ordering its toughest economic sanctions yet against the Iranian government in July. European energy companies and insurers affected by the new controls promised to comply. Meant as punishment for Iran’s refusal to halt its enrichment of uranium, the measures appeared to prompt a flurry of diplomatic activity, with Iran saying it was ready to return to talks on a nuclear fuel swap. But it was unclear whether the offer was anything more than another in a series of maneuvers by Tehran to buy more time. Western nations suspect Iran is trying to build a nuclear weapon; the country insists that its nuclear program is peaceful and that sanctions will not persuade it to change course.
While American investment in Iran has dwindled over recent years, the European Union, with 27 member nations, is Iran’s largest trading partner, taking in a third of its exports and selling it billions of dollars in goods and services.
The draft text on which the European Union sanctions are based calls for a bar on the “sale, supply or transfer of key equipment and technology” for refinement, liquefied natural gas, exploration or production. European companies would not be able to provide technical or financial help “to enterprises in Iran that are engaged in the key sectors of Iranian oil and gas industry.” The draft requires European Union governments to monitor Iranian banks in their jurisdiction closely. Financial transfers above about $50,000 would require prior authorization.
Iranian banks are expected to be prohibited from opening new branches or subsidiaries in the European Union. There would be a ban on providing insurance and reinsurance “to the government of Iran, or to entities incorporated in Iran or subject to Iran’s jurisdiction.” The draft also specifies that countries in the bloc would be expected to stop “all cargo flights operated by Iranian carriers or originating from Iran with the exception of mixed passenger and cargo flights.”