France and UK look forward to the EU meet this week to thrust their demand for a complete embargo on oil imports from Iran. Although the meeting is predominantly about sustaining the future of Euro, the two countries are using the cause to forward their concerns over Iran’s nuclear programme and recommend strong measures against it.
EU has started working on the proposed ban from last week, intending to put Iran’s foreign currency receipts under pressure by starting to impose sanctions from January 2012.
Of all the European countries, Greece relies the most on Iran for its oil supplies which is between 25 percent to 30 percent. It is obvious for the country to raise serious objections to the ban on Iranian oil imports, but they should be sorted out by January meeting.
EU members sympathize with Greece’s rapidly declining economy and austerity concerns, with the oil ban bringing more difficult days ahead. However, EU’s €110bn bail-out package has given it immense deciding power over Greece. In the coming weeks, EU will help Greece to look out alternative sources of oil supply.
Europe’s move towards intensifying the sanctions on Tehran, would be a hard blow to the Iranian economy as they need to radically re-think about their nuclear programme. At present, Iran exports 18 percent of its oil to the EU.
Iran would certainly try to compensate for the loss by trying to increase its exports to countries like China, India and South Korea. But that wouldn’t be a rational decision on the part of oil importing countries like China who is already taking 22 percent of oil imports from Iran. Increasing imports from a country like Iran who is facing political instability would be risky.
The EU is suspending the decision for another month, giving enough time to major Iranian oil importers to find alternative sources of supply. Saudi Arabia will likely turn out to be the alternative solution in addition to giving time to Libya to recover from the civil war disaster.
One of the biggest and riskiest sanctions imposed by the European Union on Iran till date, the embargo if approved, may find the US and Russia comforting Iran to bring it back in the international community fold.
The sanctions mirror the Western countries increased concerns over Iran’s intentions of building nuclear weapons and testing it a couple a years from now.