EU Wimps Out on Oil Sanctions to Halt Iran’s Nuclear Drive: View - Bloomberg
Who would have thought a week in which protesters rampaged through the U.K. Embassy in Tehran would end with Europe going soft on the Iranian regime? Yet that’s exactly what happened.
At a meeting Dec. 1 in Brussels, European Union foreign ministers signed off on measures against some 180 individuals and companies in reaction to Iran’s continued support for terrorism and an International Atomic Energy Agency report finding that Iran had conducted secret activities “specific to nuclear weapons.” This was expected and deserves a positive response (as do new penalties the ministers announced against Syria).
The real news, however, was what the EU didn’t do: Announce an agreement, proposed by France and backed by the U.K., Germany and the Netherlands, to proceed with a full embargo on imports of Iranian oil. Instead, Catherine Ashton, the EU foreign policy chief, said that any consideration of steps against Iran’s energy sector would go “to the technical experts.”
There are two main arguments against a European embargo: It would disproportionately harm the EU’s weakest economies, such as Spain and Greece, and Iran would simply ferret out other markets if Europe is shut off. Both are valid points but unpersuasive.
An embargo on Iranian crude would doubtless put pressure on oil prices in Europe. Greece has recently stepped up its purchases of Iranian oil because other suppliers are leery of the country’s credit risk; shaky Spain and Italy use much more of it than say, France. Still, Iran accounts for only 5.7 percent of Europe’s oil imports.
And oil is a global commodity, with European prices affected by any number of variables. For example, the Nov. 30 move by the Fed and other central banks to ease borrowing costs for financial firms drove Brent crude prices to a two-week high. Should the banks’ move have been rejected over Greece’s oil concerns?
An embargo on Iran can be coordinated with increases from other producers, and Europe already stands to see increased imports as Libya ramps up production after the ouster of Muammar Qaddafi. The costs of an embargo can be borne.