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75 firms likely to be affected by move - The European Union is expected to impose a new wave of sanctions on Iran next week in the wake of UN and unilateral US sanctions. The sanctions target nearly 75 companies and banks and practically ban all European investments in the Iranian economy. However, analysts say the toughest sanctions on Iran yet in response to its controversial nuclear programme do not amount to an embargo. “They are certainly the toughest sanctions, but at the same time, they will not by any stretch of imagination bring the [Iranian] economy to a standstill,” said David Butter, Regional Director for Middle East and North Africa at the Economist Intelligence Unit. “Clearly, Iran is still free to export as much oil as it wants. It has had to adapt its import practices anyway for some time. It has to make more adjustments in the time to come. But this is still not a blanket embargo on the Iranian economy,” Butter told Gulf News. Strictures The European sanctions expected to be announced on Monday include strictures against 41 Iranian officials, and about 75 corporate entities, according to a draft published in the pan-Arab newspaper Al Sharq Al Awsat yesterday. Also, the sanctions aim to stop European investments in Iran’s oil and gas sector, as well as scrutinise the monitoring procedures on Iranian planes, ships and bank branches in European cities, as well as money transfers. Any money transfer over 35,000 euros will require government approval, the published draft noted. Also, it said that the 27 EU members will not allow more Iranian banks to open branches in any of their cities. While analysts believe Iran will continue to export its oil to “the same people it was exporting to before”, Butter noted that “there have been no significant US or European investments in Iran anyway for about the past five years”. Iran produces 3.7 million barrels per day of oil and is the second largest oil producer in Opec after Saudi Arabia. However, Tehran relies on imports of up to 40 per cent of its gasoline needs as it lacks the refining capacity to meet domestic consumption. The imported amount is likely to be reduced by nearly 75 per cent in the next few years as Iran is expected to expand its refining capacity, according to a recent report by the International Energy Agency. Fuel imports Iran’s gasoline imports will shrink to 100,000 barrels a day in five years from 400,000 in 2009, the IEA said in its latest report. But the sanctions on Iran are expected to affect Iran’s future investment plans, according to experts. “The process will be accumulative,” Butter said. “Effective, yes from the point of view that it will make it more difficult for the Iranian government to continue to increase its investments in key areas, particularly in oil and gas,” he added. “But effective in terms of achieving political results, probably not in the short term, although there might be some impact in the medium to long term.” Uncertainty A South Pars gas processing plant in Iran’s southern port of Assaluyeh. The country’s plans to increase its refining capacity may be hit by a new wave of sanctions. Flexibility Tehran vows to cope; International sanctions against Iran are not new and it will adapt to the latest round of more severe US and European measures that specifically target the oil and gas industry, Iran’s Opec governor told Reuters. He also said Iran was willing to be flexible about which currencies it used for oil trade following statements it was contemplating the United Arab Emirates currency for its European transactions. “The point is the sanctions are not new. The shape is different. We can carry on,” Mohammad Ali Khatibi said in a telephone interview yesterday. The US, which suspects Iran of trying to build a nuclear bomb — something it has denied — has signed into law new sanctions that US President Obama said are the toughest yet. Analysts have said the tougher measures would make it even more difficult for Iran to develop its dilapidated oil industry and to import refined products to make up for the country’s lack of refining capacity. Source: Gulf News, July 27, 2010 |
