European Scrutiny Committee Contents

61 Restrictive measures against Iran


Council Decision concerning restrictive measures against Iran and repealing Common Position 2007/140/CFSP

Legal baseArticle 29 TEU; unanimity
DepartmentForeign and Commonwealth Office
Basis of considerationEM and Minister's letters of 9 July 2010 and 29 July 2010
Previous Committee ReportNone; but see (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 Council26 July 2010 Foreign Affairs Council
Committee's assessmentPolitically important
Committee's decisionCleared; further information requested


61.1 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.

61.2 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.

61.3 In his Explanatory Memorandum of 10 July 2008, the then Minister for Europe (Mr Jim Murphy) recalled the adoption of UNSCR 1803 imposing further restrictive measures against Iran, and explained that the measures were to be given effect in the EU by the adoption of a Common Position amending Council Common Position 2007/140/CFSP. The previous Government was "keen to build on this by adding to the Common Position additional clarity and detail on the UN's call for financial vigilance measures as well as extensions of the list of prohibited items, restriction of export credits and increased inspections and reporting requirements on cargoes of certain Iranian carriers." The extension of the restrictive measures was "important in the increasing pressure being placed on Iran by the international community", and represented "a significant further measure, building upon the designation of further individuals and entities, including Bank Melli, adopted on 23 June 2008." The UK remained committed to a dual track strategy of sanctions and engagement, but Iran had still not complied with four successive Security Council Resolutions; it was important to continue to take steps to prevent the financing and proliferation of Iran's nuclear and missile programmes. The measures, particularly in the area of financial vigilance, in the amended Common Position meant that European implementation would be concrete and robust. The notification burdens on transactions with Bank Saderat and increased vigilance over transactions with Iranian linked banks were particularly significant; combined with extension of the list of prohibited items, restriction of export credits and increased inspections and reporting requirements on cargoes on certain Iranian carriers, the amended Common Position provided "a clear message to Iran."

61.4 The then Committee concluded that no questions arose about the document, and that time would tell if the policy of "sanctions + engagement" was effective, and accordingly cleared the document.[258]

61.5 Then, in his further Explanatory Memorandum of 2 October 2008, the then Minister for Europe said that the complementary implementing Council Regulation further defined the clarity and detail provided in the Common Position on the UN's call for financial vigilance measures as well as extensions of the list of prohibited items, restriction of export credits and increased inspections and reporting requirements on cargoes of Iranian carriers. He continued as follows:

"The UNSCR was not as strong as the UK would have preferred but it usefully went beyond the more proliferation focused measures in earlier resolutions by introducing restrictions on export credits and the activities of Iranian banks. The extension of restrictive measures is an important element in the increasing pressure being placed on Iran by the international community.

"These represent a significant further measure, building upon the designation of further individuals and entities, including Bank Melli (a major Iranian bank listed for providing or attempting to provide financial support for companies which are involved in or procure goods for Iran's nuclear and missile programmes), adopted on 23 June 2008."

61.6 The then Minister talked of a "refreshed offer" by the E3+3 to Iran thus:

"On 19 July the E3+3 (the UK, France, Germany, the US, Russia, China) presented a new offer of incentives to Iran in return for the suspension of enrichment related activities. The Iranians delivered a reply to Javier Solana, High Representative for the Common Foreign Security Policy, on 5 August. They failed to provide a clear response to the offer. E3+3 countries have expressed disappointment that Iran failed to give a clear positive response, reiterated their commitment to both engagement and sanctions tracks and made Iran aware that the E3+3 are examining further measures in the absence of a positive response."

61.7 The Minister then reaffirmed the previous government's commitment to "a dual-track strategy of increasing sanctions while offering genuine engagement" and continued as follows:

"Iran has still not complied with four successive Security Council Resolutions. The IAEA (International Atomic Energy Agency) issued a report on Iran on 15 September. The report highlighted Iran's continuing failure to meet UNSCRs by continuing its enrichment programme and installation of new cascades. This is the second report in a row that has noted Iran's failure to answer the IAEA's questions relating to studies with a possible military dimension. Dr ElBaradei (IAEA Director General) reported that, 'The Agency, regrettably, has not been able to make any substantive progress on the alleged studies and other associated key remaining issues which remain of serious concern'. Dr ElBaradei noted his 'serious concerns' about these issues in May."

61.8 He went on to say that:

"The Government believes that it is important to continue to take steps to prevent the financing and proliferation of Iran's nuclear and missile programmes through increasing the weight and effectiveness of sanctions. The UK has played a leading role in pursuing restrictive measures at the EU as well as the UN level. For example, the measures adopted in the Common Position on 7 August provided a robust implementation of UNSCR 1803, going beyond it in several areas. The UK fully supports this extension of measures. The Government believes that notification burdens on transactions with Bank Saderat and increased vigilance over transactions with Iranian linked banks are particularly significant."

61.9 The then Minister went on to note that on 29 September the UN had adopted a new Security Council Resolution against Iran:

"The Resolution sent a clear signal to Iran. It demonstrated the continued resolve of the E3+3 to ensure that Iran does not continue on the path towards a nuclear weapon. It reaffirmed the strategy of engagement plus sanctions and drew attention to Iran's defiance of IAEA inspectors. We will continue to press for stronger UN measures."

61.10 Turning to the situation in Iran, the then Minister said:

"Despite the rhetoric of the Government of Iran there are early signs of an internal debate beginning in Iran over the E3+3's recent offer of negotiations and incentives if Iran suspends the enrichment of uranium.

"Media reports also indicate that investors have become increasingly nervous over investing in Iranian enterprises, blaming the political tensions surrounding Tehran's nuclear programme. Stronger sanctions, particularly increasing vigilance over Iranian financial institutions appear to be having an impact."

61.11 Summing up, the then Minister concluded:

"At present Iran is enriching uranium for which it has no credible civilian need. The United Kingdom, with our E3+3 partners, is pursuing a dual-track strategy to persuade Iran to engage in negotiations to lead to an agreement on the future of its nuclear programme that is acceptable to the international community, the IAEA, and Iran. This involves engagement on one hand, and pressure on the other. The E3+3 made a generous offer in June 2006, refreshed in June 2008. This offers Iran all it needs to pursue a modern nuclear industry, in a less proliferation-sensitive manner, as well as a range of other benefits. Javier Solana, on behalf of the E3+3, has met the Iranian Chief Nuclear Negotiator (Sa'id Jalili) a number of times, but Iran has so far failed to take up the offer. As for pressure, the UN Security Council has passed three sanctions resolutions against Iran. The EU has implemented each of these by going beyond the requirements of the UN text. The US also has unilateral sanctions in place against Iran."

61.12 Given the high level of public concern about Iran's nuclear activities, as well as clearing the Regulation, the then Committee reported this exposition of the Government's approach and assessment to the House (and, for the same reason, also forwarded that chapter of its Report to the Foreign Affairs Committee).[259]

The proposed Council Decision

61.13 In his Explanatory Memorandum of 9 July 2010, the Minister for Europe (Mr David Lidington) says that 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 and which, he says, in broad terms:

—  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).

61.14 The Minister then explains that 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; and

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

61.15 Consequently, the Minister says, the EU Council Secretariat has produced a draft Council Decision that incorporates all of these elements in addition to the latest UN measures.

61.16 With regard to the Fundamental Rights aspects of the Decision, the Minister says that:

—  the procedures for designating individuals as subject to travel restrictions and asset freezes are compliant with fundamental rights. Individuals may only be listed where evidence suggests that they are engaged in activities listed under Articles 18 (1) (b) and 19 (1) (b) of the draft Decision. Member States may grant exemptions from the travel ban and asset freeze for specified reasons including, inter alia, where travel or payments are justified on the grounds of humanitarian need by application to the UN Sanctions Committee on Iran;

—  the draft Decision says that the Council will communicate their listing to designated persons and entities, so as to give them an opportunity to present observations. Where observations are submitted or where substantial new evidence is presented, the Council will review its decision in the light of those observations and inform the person or entity concerned accordingly. In addition, the travel ban and asset freezing measures will be reviewed at regular intervals and at least every 12 months; and

—  challenges to a listing can be brought before the General Court. Challenges to the application of a travel ban or asset freeze (e.g. grant of exemptions) may be brought in the courts of the Member State concerned.

The Government's view

61.17 In his Explanatory Memorandum of 9 July 2010, the Minister says that the Government "is committed to tough additional EU sanctions against Iran, aimed at halting its proliferation sensitive activity and making it comply with its international obligations", and continues as follows:

"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 has been pressing hard for tough action by the EU to accompany and reinforce the recent UN resolution. The European Council Declaration on 17 June sent a clear and strong signal of our unity and resolve.

"The Government welcomes the strong additional restrictive measures that are included in the draft Council Decision, which 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 under negotiation 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 Minister's letter of 9 July 2010

61.18 In his accompanying letter of 9 July 2010, in addition to reiterating the essence of his Explanatory Memorandum, the Minister says that the Government is committed to ensuring that the Committee has an opportunity to express its views on texts, and thus hold the Government to account on EU decision making, and has therefore submitted the Decision, despite it being still a working document, so that the Committee has time to scrutinise the proposal.

61.19 The Minister goes on to say that he will submit the final Decision for scrutiny as soon as it has been agreed by officials and, in advance of the adoption, will outline the main differences from the draft text — which, he says, he expects to be of detail rather than substance.

61.20 The Minister also explains in his Explanatory Memorandum that, once the Decision is adopted, the EU will negotiate an implementing Council Regulation, which will make these measures binding upon Member States; which he expects to be adopted in October 2010; and upon which he will submit for scrutiny when a draft is received.

61.21 The Council Decision was adopted by the 26 July 2010 Foreign Affairs Council, together with a Regulation extending the list of entities and individuals subject to an assets freeze.[260]

The Minister's letter of 29 July 2010

61.22 The Minister for Europe's letter of 29 July 2010 is 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."


61.23 It is disappointing that, despite his protestations regarding his commitment to rigorous scrutiny, the Minister has 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 follow-up 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 is only in his letter of 29 July, after the meeting of the Council, that we are told that in fact an amended Regulation was adopted at the same time as the Decision.

61.24 We ask 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.

61.25 We also ask the Minister to deposit the amended Regulation with an Explanatory Memorandum. Given that the Regulation is directly effective, 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.[261]

61.26 If, as we understand, there is a second implementing Regulation to be adopted, we look forward to its early deposit with an accompanying Explanatory Memorandum.

61.27 In the meantime, we clear the Council Decision.

258   See headnote: (29812) - and (29813) -: HC 16-xxvii (2007-08), chapters 16 and 17 (16 July 2008). Back

259   See headnote: (29912) 12463/08: HC16-xxx (2007-08) chapter 16 (8 October 2008). Back

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

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

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