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Iran Nuclear Offer Isn’t Enough to Delay EU Oil Embargo

June 18, 2012

Iran Nuclear Offer Fails to Delay EU Oil Embargo at Talks

EU foreign policy chief Catherine Ashton, left, and chief Iranian nuclear negotiator Saeed Jalili meet in Moscow. Photographer: Kirill Kudryavtsev/AFP/Getty Images

Iran’s signal of willingness to compromise over the most contentious part of its nuclear program failed to convince the European Union to reconsider a pending embargo on oil shipments from the Persian Gulf country.

Diplomats adjourned in Moscow after five hours of meetings and will reconvene talks tomorrow over Iran’s atomic work that officials say probably won’t yield enough progress to end the threat of military strikes. Chinese, French, German, Russian, British and U.S. negotiators met with their Iranian counterparts behind tight security at a hotel near Russia’s Foreign Ministry.

“All the sanctions that are supposed to come into force on July 1 will come into force on July 1,” EU foreign-policy spokesman Michael Mann said in an interview today in the Russian capital. “We’ve taken a political decision that this is an important measure to put pressure on the Iranian regime.”

The so-called P5+1 group wants Iran to suspend production of uranium enriched to 20 percent, while the Islamic republic is pressing for relief from sanctions set to tighten when the EU oil embargo kicks in. European insurers and shipping companies carrying Iranian crude to other parts of the world will be affected by the embargo and shouldn’t expect relief, Mann said.

Today’s talks were “constructive and serious,’’ Iran’s deputy negotiator, Ali Bagheri, told reporters after the meeting ended. Mann said that while the negotiations were “very intense, tough,” they had been more substantive than those in Baghdad last month.

Iranian Offer

“On a voluntary basis we are now willing to take a positive step, if the other side also takes steps,” Iranian President Mahmoud Ahmadinejad told Germany’s Frankfurter Allgemeine Zeitung in an interview published on June 16. While emphasizing that Iran has the right to enrich 20 percent uranium, Ahmadinejad said his government was open to importing the fuel for its research reactor.

Oil dropped from the highest level in a week. Crude for July delivery fell as much as $1.38 to $82.65 a barrel in electronic trading on the New York Mercantile Exchange and was at $83.01 at 3:45 p.m. London time. The odds that Israel or the U.S. will carry out an overt air strike against Iran by the end of the year declined to 24 percent on June 15 from 28 percent the week before, according to bets made on Intrade.com.

Iran is the second-biggest producer in the Organization of Petroleum Exporting Nations and about 20 percent of the world’s traded oil passes through the Strait of Hormuz, the waterway separating Iran and Oman, the U.S. Energy Department says.

Slim Chances

“Chances are not good for success,” Thomas Pickering, a former U.S. ambassador to Russia and the United Nations, said today in an e-mailed reply to questions. “It appears that Iran wants some progress, but so distrusts the U.S. that they are asking for more than they can get.”

Following April talks in Istanbul and negotiations last month in Baghdad, the round that began today takes place in one of the last remaining capitals that has shown support for Iran’s atomic work. Russia, which backs the UN inquiry into Iran’s nuclear activities, built the country’s only functioning atomic reactor in Bushehr and has criticized unilateral sanctions against the Persian Gulf nation.

Iran today outlined its legal case for enriching uranium to 20 percent, according to a member of the country’s delegation who asked not to be identified because of the talks’ sensitivity. Refusal by the P5+1 to recognize Iran’s right to enrich uranium would cause the negotiations to fail, the Iranian delegate said after Mann said the Nuclear Non-Proliferation Treaty makes no explicit enrichment guarantees to states.

Time Needed

The UN International Atomic Energy Agency said on May 25 that Iran increased its stockpile of higher-enriched uranium by a third. The heavy metal purified to 20 percent can make medical isotopes. Only a small technical step is required to enrich uranium to the weapons-grade 90 percent level.

“The talks are so difficult that two days won’t be enough for us,” Russia’s top negotiator, Sergei Ryabkov, told reporters after the meeting ended, adding that he wants another round of talks to be scheduled. “The difficulty here is not only quite a distance between the positions of the parties, but also the sequencing of the effort: what comes first, what comes next, what reciprocity means. It’s very complex.”

Presidential Elections

Iran is facing growing pressure from economic sanctions as well as from statements by Israeli leaders that their patience for diplomacy is limited. Major world powers will impose “a certain time limit” on efforts to reach a negotiated settlement with the Islamic republic over its nuclear program, a European diplomat said on June 13 on condition of anonymity.

This year’s presidential election in the U.S., along with the 2013 vote for a new Iranian president, complicate the diplomacy, according to Nikolay Kozhanov, Russia’s former attache to Iran who now teaches at St. Petersburg State University.

Both U.S. President Barack Obama and Ahmadinejad “have very limited room to maneuver,” he wrote in a June 14 analysis for the Washington Institute. “Any action on the nuclear front could potentially improve their opponents’ chance. Both sides will probably try to secure a status quo in the nuclear issue until 2013.”

One compromise within reach would be for Iran to pledge conversion of its entire uranium stockpile into reactor fuel pellets, according to the Arms Control Association and International Crisis Group. Converting the metal would make it more difficult for the country to assemble a bomb if it ever decided to do so. Iran has already converted 33 percent of its 20 percent-enriched uranium into reactor fuel plates, according to the IAEA.

Concrete Steps

Iran must be prepared to take concrete steps to respond to the P5+1 proposal made in Baghdad concerning its enrichment and stockpiling of 20 percent-enriched uranium, a Western official said yesterday in Moscow.

The international community is willing to take reciprocal steps in exchange for verifiable Iranian actions to address these concerns, said the official, who asked not to be identified because the talks are confidential. The Islamic republic will face intensified pressure and isolation if it refuses to compromise, the official said.

“It is difficult to see any significant room for agreement,” Paul Ingram, executive director of the British American Security Information Council, a London-based policy- advisory group, said in an e-mailed reply to questions. “There are good solutions out there for win-win agreements; it’s just that the politics in Washington are not conducive to any form of compromise.”

It’s no secret that “hardliners in Washington and Tel Aviv are waiting for the talks to fail to justify further sanctions, or even military action,” he said.

To contact the reporters on this story: Jonathan Tirone in Vienna at jtirone@bloomberg.net; Ilya Arkhipov in Moscow at iarkhipov@bloomberg.net; Henry Meyer in Moscow at hmeyer4@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net; James Hertling at jhertling@bloomberg.net


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