EU's toughest sanctions yet put Iran on final warning over nuclear programme

Embargoes on oil and banking will hit ailing EU countries dependent on trade with Tehran

The toughest sanctions yet imposed on Iran will be unveiled by the European Union on Monday amid warnings it could be the last chance to resolve the nuclear stand-off before military strikes are considered.

The punitive measures will include embargoes on oil, the country's central bank and financial institutions, with the aim of driving the Tehran regime to the negotiating table as it faces its revenue lifeblood being choked off.

Failure to persuade Iran to halt its nuclear weapons programme through the EU's sanctions, alongside similar moves by the US, would inevitably lead to pressure by Israel for air strikes. General Martin Dempsey, Chairman of the US Joint Chiefs of Staff, was in Tel Aviv yesterday to discuss the unfolding scenario and, according to diplomatic sources, dissuade Benjamin Netanyahu's government from taking pre-emptive action.

Details of the economic offensive show the extent to which Europe and the US intend to put Iran in a trade stranglehold while, at the same time, revealing the problems in enforcing the measures. The EU countries which buy 25 per cent of Iran's oil output are also the ones affected the worst by the eurozone crisis – Greece, Portugal and Spain. They will have to pay more for alternative supplies and also to modify refineries, but there are, at present, no plans by other member states to bail them out.

There is also apprehension that the embargo may end up by creating an oil shortage which will drastically push up prices, actually helping the beleaguered Iranian regime. China, a large-scale purchaser of Iranian fuel will, it is believed, continue with existing contracts, while other major buyers such as India, Japan and South Korea have indicated they will have to find alternative sources of supply before jettisoning Iranian oil.

The uncertainties have forced the EU to put a review system in place to monitor the effect of the sanctions. Iranian clients such as Greece will be given an extended time period, of between three and eight months, to find replacement for Iranian supplies.

The policy will be reassessed if it appears to be backfiring, with the price of oil rising steeply and the weakened economies going into tailspins.

Intense negotiations have been held with other members of OPEC (Organisation of the Petroleum Exporting Countries) to try to persuade them to raise production. Western diplomats insist there are strong signs that Saudi Arabia and producers in the Gulf, fierce Sunni rivals of Shia Iran, will help. The issue was discussed during a visit to Bahrain by Prince Turki al-Faisal, the highly influential former head of Saudi intelligence, earlier this week.

The UK's trade links with Iran are small, with only 0.7 % of oil, worth £147m out of a total import bill of £19.4bn, coming from the country. Exports of goods and services from Britain in 2010 amounted to £414m – a fall of around 41 per cent from the previous year. Import of goods from January to September last year were around £178m.

Information obtained by The Independent shows there are six Iranian companies operating in the UK – Bank Saderat, Bimeh Iran Insurance, Bank Sepah, Melli Bank, NPC and the National Iranian Oil Company. Some of these may be on the sanctions list being drawn up over the weekend. Five British companies – Shell, BP, Rio Tinto, BAT and Clontarf – continue to operate in Iran and will be affected by both the EU oil sanctions and the US regulations on counties trading with Tehran.

The Central Bank of Iran will be on the sanctions list and there will be a freeze on the movement of the country's gold reserves held abroad, putting further strain on trading activities and triggering what President Ahmadinejad complained was "the heaviest economic onslaught on a nation in history".

The value of the national currency, the rial, has fallen to an all-time low of 18,000 to a dollar, a drop of 6,000 in a month. With fresh tightening of the screw to come, the foreign minister, Ali Akber Salehi, warned Gulf states against putting themselves in a "dangerous position" if they sided with the West and raised production. The minister claimed, at the same time, that the US, in particular, was "playing a two-faced game". "They are flexing their muscles in public but also secretly saying 'come and talk with us'," he said.

Kim Sengupta: The West knows air strikes will only stir up hornet's nest

Ofcom switches off Iranian broadcaster

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
Chris Martin of Coldplay performs live for fans at Enmore Theatre on June 19, 2014 in Sydney, Australia. (Photo by Mark Metcalfe/Getty Images)
music
Sport
Dave Mackay lifts the FA Cup in 1967 having skippered Spurs to victory
football
Life and Style
Marie had fake ID, in the name of Johanna Koch, after she evaded capture by the Nazis in wartime Berlin
historyOne woman's secret life as a Jew in wartime Berlin
News
Jihadi John
newsMonikers like 'Jihadi John' make the grim sound glamorous
Arts and Entertainment
As depicted in Disney's Robin Hood, King John was cowardly, cruel, avaricious and incompetent
film
Life and Style
Travis Kalanick, the co-founder of Uber, is now worth $5.3bn
tech
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Client Services Executive - Enfield, North London

Negotiable: Ashdown Group: Client Services Executive - Enfield, North London ...

Recruitment Genius: Telesales & Customer Service Executive - Call Centre Jobs

£7 - £9 per hour: Recruitment Genius: Are you outgoing? Do you want to work in...

Ashdown Group: Finance Manager - Covent Garden, central London - £45k - £55k

£45000 - £55000 per annum + 30 days holiday: Ashdown Group: Finance Manager - ...

Ashdown Group: Systems Administrator - Lancashire - £30,000

£28000 - £30000 per annum: Ashdown Group: 3rd Line Support Engineer / Network ...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn