Documents considered by the Committee on 15 September 2010 - European Scrutiny Committee Contents

24   Restrictive measures against Iran



COM(10) 459

Draft Council Regulation on restrictive measures against Iran and repealing Council Regulation (EC) No. 423/2007

Legal baseArticle 215 TFEU; QMV
DepartmentForeign and Commonwealth Office
Basis of considerationEM and Minister's letter of 9 September 2010
Previous Committee ReportNone; but see (31779) — HC 428-i (2010-11), chapter 61 (8 September 2010); (29812) — and (29813) —: HC 16-xxvii (2007-08), chapters 16 and 17 (16 July 2008); and (29912) 12463/08: HC16-xxx (2007-08) chapter 16 (8 October 2008)
To be discussed in CouncilSeptember 2010
Committee's assessmentPolitically important
Committee's decisionCleared, but further information requested


24.1  On 23 December 2006, the UN Security Council adopted Resolution 1737, which imposed a number of sanctions on Iran. In broad terms UNSCR 1737:

  • prohibited the sale/transfer to Iran — and also the export by Iran or export from Iran — of certain goods and technologies that could contribute to sensitive activities (enrichment related, reprocessing and heavy water activities and the development of nuclear weapons delivery systems);
  • prohibited technical or financial assistance related to these activities;
  • froze the assets of named individuals and entities involved in, associated with or providing support to Iran's sensitive nuclear and missile programmes;
  • called on signatory States to "exercise vigilance" about the travel to or through their territories of individuals involved in, associated with or providing support to Iran's sensitive nuclear and missile programmes and required them to inform the Security Council when named individuals do so; and
  • called on States to prevent Iranian nationals from studying sensitive subjects.

24.2  On 7 February 2007 the then Committee cleared Common Position 2007/140/CFSP, which enabled EU Member States to fulfil their obligation to implement these restrictions. It was subsequently adopted by the Council on 27 February 2007.

24.3  Consideration by the previous Committee of subsequent changes is set out in those Reports referred to in the headnote above.

24.4  Most recently, on 9 June 2010, the UN Security Council adopted Resolution 1929 on Iran's nuclear programme and its failure to comply with its international obligations, which imposes a number of further restrictive measures against Iran. In broad terms it:

—  reaffirms that Iran shall cooperate fully with the International Atomic Energy Agency;

—  stops new Iranian nuclear facilities and bans Iranian nuclear investment in third countries;

—  imposes total bans on exports of several major categories of arms, and further restrictions on Iran's ballistic missile programme;

—  freezes the assets of 40 entities, including one bank subsidiary, several Islamic Revolutionary Guard Corps companies, and three Islamic Republic of Iran Shipping Lines subsidiaries, which have been involved in multiple sanctions violations cases;

—  freezes the assets of and bans travel on one senior nuclear scientist;

—  implements a regime for inspecting suspected illicit cargoes and authorising their seizure and disposal;

—  places restrictions on financial services, including insurance and reinsurance, where there is suspicion of a proliferation link;

—  bans existing and new correspondent banking relationships where there are proliferation concerns;

—  establishes a Panel of Experts to advise and assist on sanctions implementation; and

—  reaffirms the dual track strategy (of pressure and diplomacy).

24.5  EU Heads of Government welcomed the UN resolution in a Council Declaration on 17 June 2010, which invited the EU Foreign Affairs Council to adopt a Council Decision at its next session, on 26 July, to implement the measures contained in UNSCR 1929, as well as additional EU sanctions in the following areas:

—  the energy sector, including the prohibition of investment, technical assistance and transfers of technologies, equipment and service;

—  the financial sector, including additional asset freezes against banks and restrictions on banking and insurance;

—  trade, including a broad ranging ban on dual use goods and trade insurance;

—  the Iranian transport sector in particular the Islamic Republic of Iran Shipping Line (IRISL) and its subsidiaries and air cargo;

—  new visa bans and asset freezes, especially on the Islamic Revolutionary Guard Corps (IRGC).

24.6  The Committee was not formed at the time the Council Decision was adopted, and was not able to consider it until its first meeting on 8 September 2010.

24.7  In an Explanatory Memorandum of 9 July 2010, the Minister for Europe (David Lidington) said that the Government was "committed to tough additional EU sanctions against Iran, aimed at halting its proliferation sensitive activity and making it comply with its international obligations", and explained the government's position in detail.[107] In an accompanying letter of 9 July 2010, in addition to reiterating the essence of his Explanatory Memorandum, the Minister said that the Government was committed to ensuring that the Committee had an opportunity to express its views on texts, and thus hold the Government to account on EU decision making, and had therefore submitted the Decision, despite it being still a working document, so that the Committee had time to scrutinise the proposal.

24.8  The Minister went on to say that he would submit the final Decision for scrutiny as soon as it had been agreed by officials and, in advance of the adoption, will outline the main differences from the draft text — which, he said, he expected to be of detail rather than substance.

24.9  The Minister also explained in his Explanatory Memorandum that, once the Decision was adopted, the EU would negotiate an implementing Council Regulation, which would make these measures binding upon Member States; he expected this to be adopted in October 2010, and undertook to submit it for scrutiny when a draft was received.

24.10  The European Council adopted Council Decision 2010/413/CFSP at the 26 July Foreign Affairs Council, together with a Regulation extending the list of entities and individuals subject to an assets freeze.[108]

The Minister's letter of 29 July 2010

24.11  The Minister for Europe then wrote to the Committee on 29 July 2010 with regard to the updating of the existing Council Regulation:

"The update was necessary to allow Member States to implement the asset freeze and travel ban against newly designated individuals and entities contained in the Council Decision with immediate effect. It was imperative that the Regulation update was agreed along with the Council Decision on restrictive measures against Iran to prevent asset flight. There would have been a real threat if action had been delayed until adoption of a new Regulation in the autumn and would have weakened the impact of the new measures agreed. I regret that your Committee was not able to scrutinise the update to the Regulation before it was adopted. The final list of agreed names was only agreed and circulated on 23 July. As a result, I had to agree to the adoption of the Regulation amendment at the Foreign Affairs Council, before the Committee has cleared it from scrutiny.

"This is not a decision I have taken lightly. I am fully committed to the rigorous parliamentary oversight of the Government's policy in the EU. However, given the exceptional nature of this particular case, I believe that on balance was in the national interest to proceed without clearance. The Government, together with EU and international partners, has been clear that it is imperative to adopt tough additional EU sanctions against Iran in the shortest possible timeframe. The Government's approach to Iran has enjoyed consistent cross Party support in the House.

"As you know, I have attempted to keep the Committees fully informed on EU action against Iran. I submitted an Explanatory Memorandum on the draft Decision and I wrote to you separately on 9 July, where I raised the likelihood of further designations. My officials also updated the Clerk of the Lords Committee on 21 July, inter alia, that the EU would need to update the existing Regulation.

"Now that the Decision has been adopted, this will need to be translated into a Council Regulation, which we expect to be completed by the end of September. I will submit the draft Regulation to be scrutinised by your Committee in due course."

Our assessment

24.12  We found it disappointing that, despite his protestations regarding his commitment to rigorous scrutiny, the Minister had now agreed to override scrutiny of the amendment to the implementing Council Regulation without giving the Committee any prior warning. At paragraph 4 of his Explanatory Memorandum the Minister said that "once the Decision is adopted, the EU will negotiate a Regulation. This will make these measures binding on upon Member States. On current timing, we expect the Regulation to be adopted in October 2010." And at paragraph 27 he said again "Once the Decision is adopted EU member states will begin negotiation of the Council Regulation". His letter of 9 July similarly made no mention of an amendment to the implementing Regulation being adopted at the same time as the Decision. So it was only in his letter of 29 July, after the meeting of the Council, that we were told that in fact an amended Regulation was adopted at the same time as the Decision.

24.13  We accordingly asked the Minister to explain when the Commission forwarded the proposed amendment to the Regulation to the Council, and why the Government did not deposit it with an Explanatory Memorandum, as is the procedure for EU documents under Standing Order No. 143.

24.14  We also asked the Minister to deposit the amended Regulation with an Explanatory Memorandum. Given that the Regulation is directly effective, we asked that the Explanatory Memorandum should cover the fundamental rights implications of the travel restrictions and asset freezes in the Regulation, in particular in the light of the ECJ's decision in Yusuf and Kadi.[109]

24.15  Given our understanding that a second implementing Regulation was to be adopted, we also looked forward to its early deposit with an accompanying Explanatory Memorandum.

24.16  In the meantime, we cleared the Council Decision.[110]

The Council Regulation

24.17  In his Explanatory Memorandum of 9 September 2010, the Minister for Europe says that the Iran Regulation will make the measures agreed in the Council Decision that fall under EU competence legally binding upon Member States.

24.18  With regard to the fundamental rights aspects of the proposed Council Regulation, the Minister says the procedures for designating individuals as subject to asset freezes are compliant with fundamental rights, explaining that:

—  provision is made for competent authorities of Member States to authorise the release of frozen funds where necessary in certain circumstances, for example, to satisfy the basic needs of listed persons or their dependents and where necessary for extraordinary expenses. Decisions by competent authorities of Member States in this regard would be subject to challenge in Member State's courts. Prohibitions on transfer of funds and financial services are exempted where necessary for humanitarian purposes, or where necessary for supply of foodstuffs, medical equipment or provision of health care. In addition, these prohibitions do not apply to transfers having a value below €40,000 and the Member State's competent authority has been notified (unless to a designated person or entity where separate licensing arrangements will apply). Provision of bunkering services to Iranian ships and engineering and maintenance services to Iranian cargo aircraft are prohibited where there are reasonable grounds to believe that the vessel is carrying goods covered by the EU Common Military List or goods prohibited under the Regulation. These prohibitions are subject to services necessary for humanitarian purposes;

—  the Regulation says that the Council shall provide designated persons and entities an opportunity to present observations on the reasons for their listing. Where observations are submitted, the Council will review its decision in the light of those observations and inform the person or entity concerned accordingly. In addition, the asset freezing measures will be reviewed at regular intervals and at least every 12 months;

—  challenges to a listing can be brought before the General Court;

—  challenges to the application of an asset freeze may be brought in the courts of the Member State concerned.

The Government's view

24.19   The Minister sets out the Government's position in very similar terms to those in his earlier Explanatory Memorandum of 9 July:

"HMG is committed to tough additional EU sanctions against Iran, aimed at halting its proliferation sensitive activity and making it comply with its international obligations.

"The UN Security Council has sent a strong signal that Iran's continued failure to comply with its international obligations cannot be ignored. The Government believes that the UN resolution is a clear response to continuing Iranian non-cooperation with the international community over its nuclear programme, which continues in contravention of previous UNSCRs and IAEA Board resolutions.

"It is clear that Iran has so far failed to reassure the international community, or the IAEA, that its programme is exclusively peaceful. The UK urges Iran to allow the IAEA the access it seeks to enable it do so, including answering their questions about the alleged military studies.

"The Government is deeply concerned by the revelations last year about the construction of the covert enrichment facility of Qom. And given that Iran continues to increase its stockpile of Low Enriched Uranium — a critical step towards a nuclear weapon — in defiance of six UNSCRs, and with no apparent civil use, the Government, along with the rest of the international community, remains critically concerned about Iranian intentions.

"The Government has said many times that we do not question or challenge Iran's right to peaceful nuclear energy. But with that right comes important responsibilities which Iran has continually failed to accept. We continue to make clear to Iran that the E3+3 remain willing to meet to pursue a diplomatic resolution to the nuclear issue.

"The United Kingdom pressed for tough action by the EU to accompany and reinforce the recent UN resolution. The European Council Decision adopted on 26 July contains strong additional restrictive measures and sends a strong message to the Iranian regime and the international community of the EU's resolve to halt Iran's nuclear proliferation sensitive activity and make it return to the negotiating table.

"The measures agreed in the Council Decision and set out in the draft Regulation will have a tangible impact on the Iranian regime's ability to finance nuclear proliferation activity, through freezing the assets of additional banks, close monitoring of all financial transactions with Iran and by cutting revenue to the regime through sanctions against the energy sector. The extended ban on dual use goods and the targeting of the transport sector will make it more difficult for Iran to acquire the goods and technology needed to advance its nuclear activity. The contribution of key individuals and entities to proliferation sensitive activity will be hit by additional asset freezes and travel bans, particularly the Iranian Revolutionary Guard Corps (IRGC). The UK Government welcomes the draft Regulation under negotiation. The Regulation sets out a coherent and stringent measures [sic] for the EU wide implementation of the restrictive measures that fall under EU competence. As part of the negotiation process the UK Government will look to make changes to the text, where necessary, to meet our twin objectives that the measures (i) are clear and easily implemented and (ii) are as stringent as possible."

The Minister's letter of 9 September 2010

24.20  In his accompanying letter of 9 September 2010, the Minister:

—  reiterates the Government's commitment to ensuring that the Committee has an opportunity to express its views on texts, so that it can hold the Government to account on EU decision making;

—  says that is why he is sending the Regulation in its current form, along with an unnumbered EM, so that the Committee has time to scrutinise the proposals;

—  goes on to say that he will submit the final Regulation as soon as it has been agreed at official level and will write in advance of the adoption, outlining the main differences from the draft text;

—  says that he expects any differences to be on the detail of the text rather than the substance of the policy covered by the draft Regulations, and

—  concludes by saying that, "given the importance of fulfilling both our scrutiny obligations, and the Council's commitment to adopt new sanctions measures on Iran as soon as possible", he "would welcome your views on whether this meets your Committee's requirements."


24.21   We have no wish to seek to hold up this process, and accordingly clear the draft Council Regulation.

24.22   In so doing, we remind the Minister that we still await his response to the matters outstanding from our earlier Report (c.f. paragraphs 0.12-0.14 above), as well as the further information that he has undertaken to provide with regard to this Council Regulation.

107   See (31779) - HC 428-i (2010-11), chapter 61 (8 September 2010). Back

108   The Iran conclusions are at pages 10 and 11 of the Conclusions of the 26 July 2010 Foreign Affairs Council, available at Back

109   Joined cases C-402/05 and C-415/05. Back

110   See (31779) - HC428-i (2010-11), chapter 61 (8 September 2010). Back

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