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The EU’s Fragmented Iran Policy

2:08 PM, Nov 23, 2011 • By BENJAMIN WEINTHAL
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The European Union is stumbling through a new Iran sanctions discussion, as member states wrestle with conflicting policies to thwart Iran's quest to obtain nuclear weapons.

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France, the United Kingdom, and Netherlands favor the toughest sanctions; Germany, Austria, Sweden, Italy, and Finland, to name just a few, lag behind. Indeed, Berlin is now one of the main European obstacles to crippling Iranian sanctions, largely because of its massive bilateral trade volume with Tehran.

Despite public opposition to Iran’s nuclear program, Germany continues to deliver valuable technologies and products to the Islamic Republic.  The most recent example, revealed this week, was the sale of Chancellor Angela Merkel's luxury jet to Mahan, a sanctioned Iranian airline. The absurd spectacle of Iranian president Mahmoud Ahmadinejad touring the world in Chancellor Merkel's old jet speaks volumes about Germany's meek posture toward the Islamic Republic.

The stakes, however, have changed. The Vienna-based International Atomic Energy Agency reported earlier this month that Iran had “carried out activities relevant to the development of a nuclear explosive device.” This has prompted the EU to act; it will decide on December 1 whether to ratchet up economic pressure on the regime in Tehran.

France has put forth a far-reaching proposal to starve the Islamic Republic's energy and financial sector. It falls just short of a total embargo of the country's economy and ports. To this end, French president Nicolas Sarkozy issued a statement on Monday, proposing “the European Union and its member states, the United States, Japan and Canada and other willing countries to take the decision to immediately freeze the assets of the Iranian central bank [and] stop purchases of Iranian oil.”

Some countries are not waiting until December 1 to take action. For example, the UK ceased all financial transactions with Iran’s banks on Monday, including the Central Bank of Iran (CBI). As British chancellor of the exchequer George Osborne said: “We're doing this to improve the security not just of the whole world, but the national security of the United Kingdom.”

The UK could go further still and designate the Iranian Revolutionary Guards Corps (IRGC), an elite military unit that simultaneously safeguards the regime against domestic threats, exports terrorism around the world, and procures technology for Iran’s nuclear program, a terror entity. The U.S. already sanctioned the IRGC in 2007, but Europe—with its more than €25 billion Iranian trade volume in 2010—is filled with anxiety about jeopardizing business. The IRGC has its tentacles in as much as 75 percent of Iran's economy.

While the British government has taken bold steps, other European states are still skittish about increasing the pressure on Iran.

Italy's foreign ministry issued a statement on Tuesday, saying that it “supports with full conviction the plan for economic sanctions announced by the US administration.” Conspicuously absent from Italy's remarks, however, was a statement about reducing its Iranian crude oil imports or cutting its diplomatic ties with Iran.

Austria, for its part, remains on the sidelines. Foreign Minister Michael Spindelegger has stayed mum on new sanctions. This only serves to weaken the European position, and raises doubts about the kind of impact the EU can have after December 1. Indeed, the lack of a coherent EU policy will only buy Iran more time—and time is now what stands between the Iranians and nuclear weapons at this moment.

Ultimately, the EU posture toward Iran will be determined by Berlin. For those seeking to thwart Iran’s nuclear ambitions, the hope is that Germany will lead the way to pass a resolution that simultaneously punishes Iran's regime and buttresses the struggling pro-democracy movement. A crackdown on the Central Bank of Iran and the IRGC, coupled with a policy that places a hold on EU imports of Iranian crude oil, can still impact Iran's political system and, with a bit of luck, deter its nuclear weapons program.

Benjamin Weinthal is a Berlin-based fellow at the Foundation for Defense of Democracies.

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