Perilous
Times
EU prepares unprecedented attack on Iranian economy
The European Union is preparing to launch an unprecedented attack
on Iran’s economy at a moment when experts believe the
confrontation over the country’s nuclear ambitions is entering a
dangerous new phase.
Iran's Azadegan oil field. The regime has threatened to disrupt
oil supplies in the Gulf
By David Blair, Chief Foreign Correspondent
8:00PM GMT 20 Jan 2012
The Telegraph UK
An embargo on Iran's oil is due to be agreed by EU foreign
ministers on Monday, potentially depriving Tehran of a quarter of
its total exports. This step, designed to maximise the pressure on
Iran’s leaders to negotiate over their nuclear programme, is also
a measure of the scale of concern.
Officials note a series of events, ranging from the storming of
the British Embassy in Tehran to the regime’s threats to disrupt
oil supplies in the Gulf, and judge that Iranian decision-making
is becoming more belligerent and unpredictable.
“This is a dangerous moment. We’re coming to the point where
options are narrowing and there’s very little fat left in the
system,” said Paul Cornish, professor of international security at
Bath University.
The EU is likely to phase in the oil embargo over between three
and eight months so that Greece, Italy and Spain – who together
buy 450,000 barrels of Iranian crude every day – can make
alternative arrangements.
Iran should be able to find other customers: the surplus barrels
will probably be redirected to Asian buyers, notably India and
China. But officials anticipate they will drive a hard bargain and
insist on lower prices, costing Iran billions of dollars in lost
revenue.
In effect, an embargo would tell Tehran’s Asian customers to “buy
Iranian oil, but only at a knockdown price which will destroy
Iran’s revenues,” said Nigel Kushner, chief executive of Whale
Rock Legal, a firm that advises on sanctions and trade.
This process has probably started already. China has cut its
imports of Iranian crude by half this month, reducing its daily
purchase to 285,000 barrels. Beijing probably judges that Iran’s
oil will become much cheaper after any EU embargo starts to bite.
The foreign ministers are likely to balance oil sanctions with an
offer to negotiate. Because of the consequences for its economy,
however, Iran may ignore any conciliatory gesture and view this
step as an escalation, possibly even a precursor to war.
“It will be easy for them to present it in that way,” said Mr
Cornish. “We know what we mean by it, but will they see it in the
same way? You can’t guarantee how they are going to react.”
China and Russia remain opposed to tightening United Nations
sanctions on Iran. But after four UN resolutions designed to
squeeze the Iranian economy, in addition to unilateral steps taken
by the US and the EU, the effects are clearly showing. On
Thursday, President Barack Obama said that sanctions had been “so
effective that even the Iranians have had to acknowledge that
their economy is in shambles”.
Underlying all this is increasing concern about the progress of
Iran’s nuclear programme. Earlier this month, it entered a new
phase with the onset of uranium enrichment inside a previously
secret plant. This facility, dug into a mountainside near the holy
city of Qom, could be immune from military attack.
Earlier, Iran took its enrichment programme a stage further,
producing uranium at 20 per cent purity, instead of the 3.5 per
cent needed to run nuclear power stations. The official aim is to
produce medical isotopes in a civilian research reactor. But this
brings Iran’s scientists a step closer to producing uranium at the
95 per cent purity needed to make nuclear weapons.
Its experts have also studied how to design nuclear weapons and
load them onto ballistic missiles, according to the latest report
from the International Atomic Energy Agency.
Experts and officials have no doubt that Iran wants the option of
building a nuclear weapon. But there are questions about whether
it would actually go ahead and build a bomb. “Iran is looking for
a latent nuclear weapons potential or capability and not for
nuclear bombs,” said Peter Jenkins, who was Britain’s permanent
representative to the IAEA between 2001 and 2006.
Iran would then be in the same category as Japan and Germany, both
of which have the technology to make nuclear weapons. “I don’t see
the Iranians as being any more likely to make use of a latent
capability than the Japanese, the Brazilians or the Germans,”
added Mr Jenkins. “Capability would give them a lot of what
they’re after at relatively low cost, whereas going the full way
involves great risk.”
By seizing the ability to make a bomb, Iran’s regime could
guarantee its own survival and extend its influence across the
Middle East. If they were to take the final step and make a
weapon, however, Iran would have to expel the IAEA inspectors, who
currently monitor its declared nuclear facilities, and publicly
withdraw from the nuclear non-proliferation treaty. Put simply,
Tehran would have to place the entire world on notice that it was
about to build a bomb.
Instead, Iran would probably prefer to be permanently on the verge
of breaking out of these constraints and becoming a nuclear-armed
power.
A secret effort is now underway to sabotage Iran’s efforts to
reach “break-out” ability. In the last two months, one scientist
and the head of the country’s missile programme have died in
explosions in Tehran. In all, five nuclear scientists have been
killed since 2007, while another was wounded by a bomb attached to
his car and one more disappeared in mysterious circumstances.
The injured man, Fereydoun Abbasi, was then promoted to become
head of the Atomic Energy Organisation.
“The situation certainly is escalating. What has been a covert
type of activity is becoming more open,” said Mark Fitzpatrick,
director of non-proliferation at the International Institute for
Strategic Studies.
The most effective act of sabotage was the introduction of the
Stuxnet computer virus into Iran’s main enrichment plant at Natanz
in 2010. This caused hundreds of centrifuges to spin out of
control and explode, forcing the suspension of all enrichment for
emergency repairs.
But Mr Fitzpatrick said the ruined centrifuges had since been
replaced and Iran had “recovered better than expected” from the
Stuxnet attack. This virus, the most powerful yet devised, set
back its efforts by “less than a year”.
The timing of any military strike on Iran’s nuclear plants would
probably be determined by two factors: the success of covert
efforts to delay the programme, and the steady transfer of
centrifuges into the previously secret plant at Qom.
The development of this facility showed that Iran was “expanding
what we call 'the zone of immunity’,” said Danny Ayalon, the
Israeli deputy foreign minister. “This is the biggest concern we
have right now.”
The immense effort that Iran is making to press on with enriching
uranium is a measure of the regime’s determination to master this
process, which breaches five UN Resolutions.
But Mr Ayalon judged that sanctions could still work. “Iran can be
stopped by economic and by diplomatic means,” he said. “As radical
and as dangerous as the Ayatollah regime appears, it is not
completely irrational, especially when it comes to its own
political survival.”
Others believe that Iran’s leaders have invested so much in the
enrichment programme that they could not halt this effort, even if
they were minded to do so. A wiser goal of Western policy might be
to allow Iran to continue enriching, but only under the strictest
IAEA safeguards. “Everything I’ve heard, read and seen makes me
believe they will not concede a cessation of enrichment,” said Mr
Jenkins, who negotiated directly with Iran as Britain’s
representative at the IAEA.
In 2005, Iran offered a deal based on enrichment with
state-of-the-art safeguards, he added. “We could have had a very
good deal which would have given the IAEA excellent access, but we
had to turn it down because our policy at the time was not a
single centrifuge should be turning inside Iran,” said Mr Jenkins.
This was “with hindsight, a profound mistake,” he added.
Allowing Iran to continue enriching uranium would, however, amount
to running a permanent risk that it could become a nuclear-capable
state. That would probably be intolerable not only to Israel but
to Iran’s Arab neighbours.
Saudi Arabia would almost certainly respond by seeking a nuclear
weapons capability of its own, said Jonathan Eyal, head of
international studies at Royal United Services Institute. “The
alternative for the Saudis is an absolute nightmare, in which they
would be relegated to the ringside of the Middle East in
perpetuity with the Iranians calling all the shots,” he added.
If sanctions and covert action – or even military strikes –
succeeded only in delaying Iran’s progress, they would still be
worthwhile, he argued. “Buying time,” said Mr Eyal, “is a
perfectly respectable strategy.”