24 Restrictive measures against Iran
| (31905)
13082/10
COM(10) 459
| Draft Council Regulation on restrictive measures against Iran and repealing Council Regulation (EC) No. 423/2007
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| Legal base | Article 215 TFEU; QMV
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| Department | Foreign and Commonwealth Office
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| Basis of consideration | EM and Minister's letter of 9 September 2010
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| Previous Committee Report | None; 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)
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| To be discussed in Council | September 2010
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| Committee's assessment | Politically important
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| Committee's decision | Cleared, but further information requested
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Background
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."
Conclusion
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 http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/EN/foraff/115976.pdf. 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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