EU and US plan tough Iran sanctions

Sydney Morning Herald

BRUSSELS: The European Union and the United States are ready to go beyond agreed United Nations sanctions if Iran shuns demands that it suspend sensitive nuclear work.

A communique, which was set to be unveiled at an EU-US summit in Slovenia yesterday, raises the possibility of a crackdown on Iranian banks, the area where Washington has long urged the EU's 27 states to apply more pressure on Tehran.

An Iranian newspaper, Etemad-e-Melli, reported Iran had begun withdrawing assets from European banks before the summit.

Details of the communique emerged as the Iranian Defence Minister, Mostafa Mohammad Najjar, warned Israel of a "very painful" response if it staged a military strike over Iran's disputed nuclear program.

On Friday, the Israeli Transport Minister, Shaul Mofaz, said an attack on Iran looked "unavoidable" given the apparent failure of UN sanctions to deny Tehran nuclear technology with bomb-making potential.

Asked about Mr Mofaz's comments, Mr Najjar was quoted in the Iranian media yesterday as saying: "Our armed forces are at the height of their readiness and if anyone should want to undertake such a foolish job the response would be very painful."

Diplomats said that the joint EU-US communique was agreed last week. The sanctions will target Bank Melli, Iran's biggest bank, and will be enforced if Tehran refuses to respond to a number of incentives to be presented next week.

The EU's foreign policy chief, Javier Solana, is scheduled to fly to Tehran with foreign affairs officials from France, Germany, Russia, Britain and China to underline the international consensus behind the package, which offers Western economic aid and technical assistance for Iran's civil nuclear program.

In return Iran would have to suspend its enrichment of uranium, which Western governments believe could be used to make weapons. The Iranian Government insists that it has the right to run a comprehensive nuclear program.

The UN Security Council has imposed three waves of sanctions against Tehran, but there is resistance from Russia and China to further punitive measures.

"The emphasis is now shifting from the Security Council to the European Union," one European diplomat said.

The latest round of UN sanctions called only for member states to "exercise vigilance" on the activities of Bank Melli and Bank Saderat.

The Slovenian summit marks the start of the farewell visit to Europe of the US President, George Bush. It will be followed by trips to Germany, Italy, the Vatican, France and Britain. Mr Bush, whose second term ends in January, has been keen to persuade the EU to do more to stop the flow of money through Iranian banks.

Meanwhile, Iran's Supreme Leader, Ali Khamenei, told the visiting Iraqi Prime Minister, Nouri al-Maliki, on Monday that the presence of US forces in Iraq was the biggest obstacle to its development as a united country.

Ayatollah Khamenei hit out at the "occupiers" in Iraq at a time when Baghdad is negotiating with the US on a new agreement aimed at giving a legal basis for US troops to stay in Iraq after December 31, when their UN mandate expires.

The US Defence Secretary, Robert Gates, on Monday dismissed suggestions that the US should abandon plans to secure the agreement. He indicated the Pentagon was not ready to ask the UN to renew its mandate despite disagreements with Baghdad over a new arrangement, known as a status of forces agreement.

Iraqi MPs say the US is demanding 58 bases as part of the proposed agreement. US officials have accused Iran of seeking to derail the talks by "inspiring" media reports that the US is trying to force Iraq to accept a deal on permanent bases.