BLBG:Iran Nuclear Offer Isn’t Enough To Stall EU Oil Embargo
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 have begun a two-day round of discussions in Moscow 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 convened today 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 also be affected by the embargo and shouldn’t expect relief, Mann said.
“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 Slips
Oil dropped from the highest level in a week. Crude for July delivery dropped as much as 37 cents to $83.66 a barrel in electronic trading on the New York Mercantile Exchange and was at $83.79 at 9:49 a.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 fell to 24 percent on June 15 from 28 percent the week before.
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, according to the U.S. Energy Department.
“Chances are not good for success,” Thomas Pickering, a former U.S. ambassador to the Russia and the United Nations, said today 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.”
Russian Support
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.
The sides broke off talks at 1 p.m. in Moscow and will resume later today. In the opening session, Iran told the P5+1 it was unhappy with the level of communication between the sides and outlined its legal case for enriching uranium to 20 percent, according to a member of the Iranian 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. He spoke after the EU’s Mann said the Nuclear Non-Proliferation Treaty makes no explicit enrichment guarantees to states.
While the P5+1 has offered Iran spare airplane parts and nuclear-safety help in return for suspension of its enrichment program, the Islamic republic has sought relief from sanctions hitting its financial and oil industries.
‘Practical Results’
“In Baghdad, Iran’s preliminary agreement to discuss the possibility of keeping its uranium-enrichment efforts below 20 percent gave hope that the negotiations could lead to practical results,” Russia’s former attache to Iran, Nikolay Kozhanov, wrote in a June 14 analysis for the Washington Institute. “Russian officials have stated that they would like to see movement toward such results during the Moscow summit.”
The UN International Atomic Energy Agency said on May 25 in its quarterly verification report 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.
Time Limit
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.
“Tehran appears to bank on a re-elected President Obama displaying more flexibility and an economically incapacitated Europe fearing the adverse consequences of tougher sanctions,” the Brussels-based International Crisis Group wrote in a June 15 policy brief. “None of this is likely. If prospects for a deal fade, mutual escalation is more probable and pressure by Israel for a military strike may intensify.”
This year’s presidential election in the U.S., along with the 2013 vote for a new Iranian president, complicate the diplomacy, according to Kozhanov.
Status Quo
Both U.S. President Barack Obama and Ahmadinejad “have very limited room to maneuver,” wrote the former diplomat, who now teaches at St. Petersburg State University. “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.
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.
Reciprocal Steps
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. If the Islamic republic refuses to compromise, it will face continuing and intensified pressure and isolation, 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
