15 Restrictive measures against Iran
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| Council Regulation on concerning restrictive measures against Iran and repealing Council Regulation 423/2007
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| Legal base | Article 291(2) TFEU; QMV
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| Department | Foreign and Commonwealth Office
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| Basis of consideration | EM and Minister's letter of 15 September 2010
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| Previous Committee Report | None; but see (31905) 13082/10: HC 428-ii (2010-11), chapter 24 (15 September 2010) and (31779) — : HC428-i (2010-11), chapter 61 (8 September 2010)
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| Discussed in Council | 26 July 2010 Foreign Affairs Council
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
15.1 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.
15.2 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.
15.3 Consideration by the previous Committee of subsequent
changes is set out in those Reports referred to in the headnote
above.
15.4 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).
15.5 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).
15.6 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.
15.7 In his accompanying Explanatory Memorandum of
9 July 2010, the Minister for Europe (David Lidington) affirmed
the government's commitment to what he described as 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.[55]
15.8 The Minister also explained 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.
15.9 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.[56]
The Minister's letter of 29 July 2010
15.10 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, it
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
15.11 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. His Explanatory Memorandum had talked twice
of a Regulation being negotiated and an expectation of its adoption
in October. Moreover, an earlier 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.
15.12 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 our Standing Order.
15.13 We also asked the Minister to deposit the amended
Regulation with an Explanatory Memorandum. Given that the Regulation
was 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.[57]
15.14 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.
15.15 In the meantime, we cleared the Council Decision.[58]
The further Council Regulation
15.16 In his Explanatory Memorandum of 9 September
2010, the Minister for Europe said that the Iran Regulation would
make the measures agreed in the Council Decision that fall under
EU competence legally binding upon Member States.
15.17 With regard to the fundamental rights aspects
of the proposed Council Regulation, the Minister said that the
procedures for designating individuals as subject to asset freezes
were compliant with fundamental rights, explaining that:
— provision
was 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 were exempted where
necessary for humanitarian purposes, or where necessary for supply
of foodstuffs, medical equipment or provision of health care.
In addition, these prohibitions did not apply to transfers having
a value below €40,000 and the Member State's competent authority
had been notified (unless to a designated person or entity where
separate licensing arrangements would apply). Provision of bunkering
services to Iranian ships and engineering and maintenance services
to Iranian cargo aircraft were prohibited where there were reasonable
grounds to believe that the vessel was carrying goods covered
by the EU Common Military List or goods prohibited under the Regulation.
These prohibitions were subject to services necessary for humanitarian
purposes;
— the Regulation said that the Council
shall provide designated persons and entities an opportunity to
present observations on the reasons for their listing. Where observations
were submitted, the Council would review its decision in the light
of those observations and inform the person or entity concerned accordingly.
In addition, the asset freezing measures would be reviewed at
regular intervals and at least every 12 months;
— challenges to a listing could 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.
15.18 The Minister set out the Government's position
in very similar terms to those in his earlier Explanatory Memorandum
of 9 July. In an accompanying letter of 9 September 2010, the
Minister:
— reiterated
the Government's commitment to ensuring that the Committee had
an opportunity to express its views on texts, so that it could
hold the Government to account on EU decision making;
— said that was why he had sent the Regulation
in its current form, along with an unnumbered EM, so that
the Committee had time to scrutinise the proposals;
— went on to say that he would submit
the final Regulation as soon as it had been agreed at official
level and would write in advance of the adoption, outlining the
main differences from the draft text;
— said that he expected any differences
to be on the detail of the text rather than the substance of the
policy covered by the draft Regulations; and
— concluded 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."
Our assessment
15.19 We had no wish to seek to hold up this process,
and accordingly cleared the draft Council Regulation.
15.20 In so doing, we reminded the Minister that
we still awaited his response to the matters outstanding from
our earlier Report (c.f. paragraphs 15.12-15.14 above).[59]
Council Implementing Regulation (EU) No. 668/2010
of 26 July 2010
15.21 This is the Council Regulation adopted by the
Foreign Affairs Council on 26 July ahead of the timetable envisaged
by the Minister and prior to parliamentary scrutiny.
15.22 In his Explanatory Memorandum of 15 September
2010, the Minister for Europe (David Lidington) says that the
UK strongly supported the adoption of implementing regulation
668/2010 alongside the Council Decision on 26 July 2010. He again
says that implementing regulation updates the list of designated
individuals and entities subject to asset freezes in the existing
regulation, and that its adoption in concurrence with the Council
Decision was important to mitigate the risk of asset flight.
15.23 With regard to the Fundamental Rights
aspect of the Regulation, in response to our earlier request the
Minister says:
"Community acts must respect fundamental rights
in accordance with the principles outlined in the European Court
of Justice in Kadi and Al Barakaat v Council of the EU and Commission.
If the Regulation breached fundamental rights this would be reviewable
by the European Court of Justice. 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 are subject to challenge in Member
State's courts."
15.24 The Minister goes on to note that the Regulation
says that the Council shall provide designated persons and entities
an opportunity to present observations on the reasons for their
listing and to say that, where observations are submitted, the
Council will review its decision in the light of those observations
and inform the person or entity concerned accordingly; and that,
in addition, the asset freezing measures will be reviewed at regular
intervals and at least every 12 months.
15.25 He also notes that challenges to a listing
can be brought before the General Court, while challenges to the
application of an asset freeze may be brought in the courts of
the Member State concerned.
The Government's view
15.26 The Minister goes on to reiterate the Government's
basic position and to highlight his conviction that targeting
key individuals and entities is among the most effective measures
to target Iran's proliferation sensitive activity, saying that
for individuals, in addition to the stigma of being internationally
blacklisted, being subject to sanctions prevents travel to acquire
new knowledge and contacts, and describing the asset freezing
of entities as an effective tool to impact the revenue available
for proliferation sensitive activity and help disrupt the transport
of goods for use in Iran's nuclear programme.
The Minister's letter of 15 September 2010
15.27 The Minister begins by apologising for over-riding
scrutiny of the amendment of the implementing Council Regulation
without giving the Committee prior warning. He refers again to
the initial plan for EU Member States to begin the negotiation
of the Council Regulation following the adoption of the Council
Decision, and to Member States and the Commission subsequently
agreeing to adopt an amending Regulation solely to implement the
asset freezes agreed in the Council Decision, in order to prevent
the risk of asset flight in period between the adoption of the
Council Decision and the adoption of the Regulation.
15.28 On the question of the timing of the first
draft of the amending Regulation, the Minister says that:
— the
first draft was circulated to Member States on 9 July but only
finalised on 23 July, before its adoption on 26 July;
— the draft should have been submitted
to the Committee with an Explanatory Memorandum, but this was
overlooked;
— he has taken steps to prevent this from
happening again by instructing officials to submit draft Regulations
to the Committee, along with an Explanatory Memorandum, as soon
as they have been received.
15.29 The Minister concludes his letter with the
hope that his Explanatory Memorandum answers the Committee's concerns
on the fundamental rights aspects of the Regulation.
Conclusion
15.30 It does, and we thank the Minister for his
clarification.
15.31 On the scrutiny aspect, it is now up to
the Minister and his officials to live up to the standard that
he has laid down.
15.32 In the meantime, we clear the document.
55 See (31779) - : HC428-i (2010-11), chapter 61 (8
September 2010). Back
56
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
57
Joined cases C-402/05 and C-415/05. Back
58
See (31779) - : HC428-i (2010-11), chapter 61 (8 September 2010). Back
59
See headnote: (31905) 13082/10: HC 428-ii (2010-11), chapter 24
(15 September 2010). Back
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