Iran Update: Number 145

  • Iran reported to be feeling effects of recently-imposed international sanctions
  • Energy business with Iran continues despite sanctions
  • Nuclear talks still possibility for Autumn
  • Military threat
  • Bushehr nuclear power plant to come online soon; Tehran announces update on addition of nuclear enrichment facilities


Iran reported to be feeling effects of recently-imposed international sanctions

Reports indicate that sanctions imposed on Iran during the past several months because of concerns over its nuclear program are beginning to make their impacts felt. Some of the world’s largest insurance companies have dropped Iranian shippers for fear of incurring penalties. Mohammed Rounaghi, deputy manager of Sea Pars, an Iranian company that provides services for maritime insurance and international ship owners, said, “Iranian-flagged ships all over the world are facing problems, as they currently have no insurance coverage because of the new sanctions” and subsequently are denied entry into port because they lack coverage for potential damages. Also following recent U.N. sanctions, Iranian ships and aircraft are increasingly subject to inspections. Iran’s Parliament has responded by authorizing a ‘tit-for-tat’ approach against countries that carry out these inspections. The sanctions have also harmed Iran’s development of the South Pars gas field.

On top of U.N. measures, the European Union and Canada passed on July 26 new sanctions that will target Iran’s foreign trade, energy and banking sectors. EU high commissioner Catherine Ashton said the sanctions “sent a powerful message to Iran” about the growing concern regarding their nuclear program. Several days later, Australia’s foreign minister announced similar new sanctions against Iran. Officials say any significant impact rests more on fines or the risk created by the uncertain commercial environment that will persuade firms to cut ties themselves. BP has recently refused fuel to Iran’s national airline, and Lloyd’s of London decided not to insure ships transporting petroleum products to Iran. The United States is looking to tighten restrictions on Iranian shipping worldwide.

Iran’s parliament speaker Ali Larijani said that the U.N. Security Council and the United States “insulted” Iran, Turkey and Brazil by imposing their latest sanctions despite the May 17th diplomatic agreement reached between the parties. Brazil agreed to abide by the sanctions on August 10th, with Foreign Minister Celso Amorim explaining, “there is a tradition of carrying out (U.N.) Security Council resolutions, including those we don’t agree with.”

Energy business with Iran continues despite sanctions

Despite EU and U.S. efforts to tighten the sanctions regime, others are resisting sanctions that go beyond those of the United Nations. China has recently invested about $40 billion in Iran’s oil and gas sector, according to a senior Iranian official, and continues to expand upon this. Turkish firms are providing Iran with gasoline. Turkey’s Energy and Natural Resources Minister Taner Yildiz said, “there is no demand for Turkey to halt trade of these products with Iran” and that the U.N.-levied sanctions did not include shipments of gasoline. Moreover, Iran reported that it has agreed with Som Petrol, Turkey’s largest energy company, to build a €1bn natural gas pipeline to Europe. According to the head of the National Iranian Gas Export Co., Javad Oji, the pipeline will “be constructed within three years.”

Nuclear talks still possibility for Autumn

Foreign ministers from Iran, Turkey and Brazil met in Istanbul on July 25 to discuss Iran’s next steps for nuclear negotiations following their agreement of May 17 to push forward a deal for fueling the Tehran Research Reactor (TRR) – an internationally-monitored facility used primarily for medical purposes. Turkish minister Ahmet Davutoglu said that Iran would probably be open to talking to the European Union about Iran’s wider nuclear program and that Turkey could offer to host the meeting. In July Iran’s chief negotiator, Saeed Jalili, outlined three conditions for such talks: “Countries who want to participate should make clear whether they oppose Israel’s nuclear arsenal, whether they support the NPT and whether they want to be friends with Iran.” Tehran has said, though, that it was ready to resume talks on a nuclear fuel swap after August “without conditions.” Russia’s U.N. ambassador Vitaly Churkin said the efforts to resume talks hold “promise” for success and that Iran was ready for immediate talks over a fuel swap deal with the United States, France and Russia, also known as the Vienna Group. Iranian Foreign Ministry spokesman Ramin Mehmanparast confirmed this readiness and called on the Vienna Group to commit to a date for commencing technical discussions over a fuel swap of low enriched uranium for TRR fuel rods.

The Iranian Parliament’s new law obligates Iran to produce nuclear fuel at 20% enrichment for the TRR, prohibits Iranian officials from cooperating with the International Atomic Energy Agency (IAEA) beyond minimum standards and “asks the government to retaliate for any inspection of Iranian cargo.” Iran’s atomic chief Ali Akbar Salehi had said previously that Iran would delay enriching uranium up to 20 percent if Iran’s “needs are met” and nuclear fuel for its research reactor could be obtained.


Military threat

Admiral Michael Mullen, chairman of the U.S. Joint Chiefs of Staff, said in an interview on NBC’s Meet the Press earlier in August that a military strike remains an option and that the United States has plans in place. Admiral Mullen added that he was ‘extremely concerned‘ about such a prospect.

According to deputy head of the Revolutionary Guards, Yadollah Javani, Iran’s military has prepared a “crushing plan” to react to any attack by U.S. or Israeli forces. Iran’s Foreign Minister Manouchehr Mottaki joined in the criticism of the Admiral’s remarks, warning that “an attack against Iran … will be worse than their pitiable destiny in Iraq and Afghanistan.” The former naval chief for Iran’s Revolutionary Guard General Morteza Saffari, said Iran has reserved “100 military vessels” for any military attack, adding, “We believe the enemy, through extensive psychological warfare, wants to coerce us, but Iran … is ready.”

In the September 2010 edition of the The Atlantic, Jeffrey Goldberg discusses the possibility of an Israeli strike and argues that, based upon interviews with numerous Israeli officials, there is greater than a fifty percent chance Israel will launch a strike on Iran by next July. His considerations have provoked various responses, both backing his findings, and minimizing it as “propaganda” or irresponsible “myth-building“, among other reactions.

At a conference in Tehran for Iranians living abroad attended by BASIC’s Executive Director, President Ahmadinejad invited President Obama to join him in front of the media and “offer our solutions for world issues to see whose solutions are better.” White House spokesman Robert Gibbs responded on Mr. Obama’s behalf: “we have always said that we’d be willing to sit down and discuss Iran’s illicit nuclear program, if Iran is serious about doing that … to date, that seriousness has not been there.” In a surprise session with journalists on August 4, President Obama repeated that he is open to finding a diplomatic settlement to the impasse – one that would still allow Iran to have a civilian nuclear program – while also saying that sanctions were having an impact.

Note: In a breaking development on August 18, Iran’s Supreme Leader Ayatollah Ali Khamenei warned that Iran would not hold talks with the United States until it ends “sanctions and threats” first. Iranian officials also filed a complaint with the United Nations over Admiral Mullen’s remarks on the United States retaining plans for using military force against Iran as a way to prevent the country from developing nuclear weapons.

Bushehr nuclear power plant to come online soon; Tehran announces update on addition of nuclear enrichment facilities

Russia will start providing fuel for Iran’s Bushehr nuclear power plant on August 21, thereby entering “the stage of physical start-up,” according to Sergei Novikov, spokesman of Russia’s Federal Atomic Energy Agency. Officials have argued that the project is essential to persuade Iran to cooperate with the IAEA, and say that recent U.N. sanctions do not apply to the supply. The nuclear power plant, which is Iran’s first, will not be operational until September, with Iranian Atomic Energy Organization chief Ali Akbar Salehi stating that the plant will not be fully operational for six to seven more months. The United States has long been critical of the drawn-out project, but toned down its reaction ahead of the launch – claiming that the plant serves as another reason Iran does not need to pursue its own uranium enrichment program. The reactor will be under IAEA monitoring, and as part of completing the deal with Russia, Iran must return the spent fuel. Mr. Salehi said on August 16 that Iran has completed its mapping for ten planned nuclear enrichment facilities and that it would begin constructing the first of these by the spring of 2011.

With additions from Maarten Fonteijn, Chris Lindborg, Christopher Carr, and Paul Ingram, BASIC

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