EU states have reached an agreement in principle to ban Iran’s oil exports. But with the EU’s staggering economy dependent on Iranian oil, the economic problems crippling the West could increase twofold, says political analyst Christoph R. Hoerstel.
The European Union has given a tentative agreement on slapping an oil embargo on Iran. Consultations are continuing, but diplomats say the ban could come into force by January 30. Some EU countries would like a grace period to allow time to find other suppliers. The bloc is Iran’s second largest customer after China, with countries like Greece, Italy and Spain especially dependent on Iranian crude exports.
On top of the EU’s “principal” agreement, China, which buys some ten percent of Iran’s oil exports, is also considering cutting crude purchases from the country for another month. The prospect of sanctions has caused Tehran to bargain for a shorter credit period pending payment: 60 days as opposed to the 90 Beijing would like.
The EU’s proposed ban would increase the financial pressure on Iran as Washington has signed into law a decree targeting the Iranian central bank and institutions dealing with it. The West is concerned Tehran might be planning to build nuclear weapons under the cover of its civil nuclear program. Iran, enraged by the accusations, which came on the back of a November report by the International Atomic Energy Agency, is threatening to block the Strait of Hormuz if further sanctions are imposed. The strait lies in a major traffic lane for Gulf oil exports.
But it is not all sanction talk for Iran. On Thursday, Iran's President Mahmoud Ahmadinejad reiterated his support for Russia’s phased plan to restore confidence in the Iranian nuclear program. The comments were made in a telephone conversation with Russian President Dmitry Medvedev.
Moscow’s plan proposes easing or lifting another set of existing sanctions in response to Tehran replying to questions on its nuclear program. The proposal, which also suggests no new unilateral sanctions should be applied, was first mooted in Washington in July 2011, but has not gained much support in the West.
To discuss the spiking tensions around oil, the Strait of Hormuz and Iran’s nuclear program, RT has caught up with Christoph R. Hoerstel, a government consultant and political analyst in Berlin.
RT: Iran seems to be feeling the pain of the sanctions already. How serious an impact could they have if the oil embargo does in fact go through?
Christoph R. Hoerstel: As far as the oil is concerned, the impact is not very big. Germany is taking 1.5 million barrels per year – that is next to nothing. The European Union has 4 per cent of their overall oil imports done by Iran or from Iran. So that is not really a threat.
Of course, if they close the Strait of Hormuz, that is far more dangerous. Not for Germany, though: we take zero oil from the Middle East except a little from Iran and 2.5 million barrels per year from Syria. But this is not affected by the Strait of Hormuz.
For the rest, it is 15.5 million barrels per day going through the Strait. That is vital for 14-15 per cent of the European overall crude oil imports. That would definitely hurt us.
RT: What about the global economy as a whole? How much will the effects be felt if an embargo pushes oil prices higher, as we are already seeing a spike?
CRH: Everybody knows with the ongoing currency crisis of dollar and euro and the ongoing financial crisis, there is a slump in the economy to be reckoned with, already affecting the US. If that happens, the ongoing multiple crises will double through this single step.
RT: Britain is reportedly going to support Washington and pledge its military resources, if necessary, to the resolution of the current Persian Gulf deadlock. Are we actually seeing a preparation for war here?
Christoph R. Hoerstel: If you want, it is a kind of preparation of war we are seeing.
EU foreign policy chief Catherine Ashton’s letter asked Iran to respond to the latest International Atomic Energy Agency report on Iran's nuclear program and return to negotiations. The letter was sent to Iran's chief nuclear negotiator, Saeed Jalili, in October. Iran replied, saying they were awaiting a suggested date and venue from Ashton for the next meeting of the 5+1 group, which comprises China, France, Russia, the UK and the US, plus non-permanent member Germany. Iran will then "express their point of view" on whether to participate.
What usually happens behind the scenes, and in this case, is that the Ministry of Defense in the UK is checking its readiness status on paper. They are not moving any troops, but this is going to happen. And Washington, as we know, is constantly, every day, war-gaming the whole globe. So, for them, it is no surprise at all.
RT: Nuclear talks between Iran and the EU have been stalled for nearly a year now. That is despite a step-by-step solution proposed by Russia, and the fact that Iran agreed to allow inspectors near its enrichment centrifuges, which is unprecedented. What is the main stumbling block here?
CRH: I will give a very exact diplomatic answer first.
The stumbling block is that Iran wants to talk and the Western powers, who are represented by Catherine Ashton, are not ready for talks, but they want to have their agenda followed step by step. That means that a letter, written by Catherine Ashton to Iran, has to be answered first. The Iranians right now do not want to answer in the way the West wants to hear. This is a real stalemate.
But overall, I can say the situation is pretty serious since the West is trying to misuse Iran’s nuclear program, which is peaceful so far. Iran is definitely not building a bomb. The West are using fraudulent reports by the IAEA – I was there twice, I spoke to diplomats – there’s a big scandal. They are using it to build up a war case against Iran with the Western populations through our misguided media. It is a very dangerous situation.