41 Restrictive measures against Iran:
nuclear issues
| Committee's assessment
| Politically important |
| Committee's decision | Cleared from scrutiny
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| Document details | Council Decision concerning restrictive measures against Iran (36237)
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| Legal base | Article 29 TEU; unanimity
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| Department | Foreign and Commonwealth Office
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Summary and Committee's conclusions
41.1 This Council Decision extends the suspension
of restrictive measures specified in the Joint Plan of Action,
agreed between the E3+3 and Iran, until 24 November 2014.
41.2 On 24 November 2013 in Geneva, the Foreign Ministers
of the E3+3 (China, France, Germany, Russia, the United Kingdom
and the United States), supported by the EU High Representative,
reached an agreement with Iran — the Joint Plan of Action.
The 17 January 2014 EEAS Fact Sheet on the negotiations describes
the Joint Plan of Action thus:
"The Joint Plan of Action is an interim
agreement setting out an approach towards reaching a long-term
comprehensive solution. As a first step, it includes the implementation,
by both sides, of a series of voluntary measures, for a duration
of six months. This first step could be renewed by mutual agreement.
"A Joint Commission of the E3/EU+3 and Iran
will be established to monitor the implementation of these measures,
with the IAEA responsible for the verification of nuclear-related
measures. The Joint Plan of Action also includes elements for
the final step — i.e. the common goal of reaching a final,
comprehensive solution which would lead to the full resolution
of the international community's concerns about Iran's nuclear
programme, along with UN Security Council resolutions."
41.3 The E3+3 and Iran agreed in the early hours
of 19 July to extend the JPoA for a further four months until
24 November. This amendment was agreed on 21 July and published
in the Official Journal on the same day. The Minister for Europe
expresses the hope that this will provide the additional time
needed to conclude an agreement, and continues to believe that
a deal is still possible —"we would not have agreed
to an extension had this not been the case" — but also
says that "reaching an agreement will be challenging",
and that it is "vital both sides continue efforts to reach
a comprehensive deal as soon as possible".
41.4 The Minister explains that, under the extension,
both sides will continue to implement all measures agreed under
the Geneva interim deal that have not yet expired, which he says
means that the limited sanctions relief under the JPoA will remain
in place until 24 November 2014.[174]
41.5 The Minister also makes the following points;
— in addition to these measures, Iran has
committed to convert an agreed amount of uranium oxide into fuel
for the Tehran Research Reactor and to dilute its UF6 enriched
up to 2% into natural uranium. In return, the E3+3 has committed
to enable the repatriation of $2.8 billion in instalments over
the course of the four month extension period. The IAEA will continue
to be responsible for verification of all nuclear-related measures;
— no additional sanctions have been suspended.
All other EU sanctions and restrictions remain in place and in
force and the Government's position remains not to encourage trade
with Iran.
— in order to achieve a comprehensive solution,
"Iran has to show more flexibility and have more realistic
expectations — given our concerns about break out —
about the future scope of its nuclear programme, in particular
on the core issue of enrichment";
— "all parties will now need to reflect
and evaluate the best way forward. We will reconvene in the coming
weeks with the clear determination to reach agreement on a Joint
Comprehensive Plan of Action by 24 November."
41.6 We are grateful to the Minister for his comprehensive
explanation. Time alone will demonstrate whether the Iranian authorities
show the increased flexibility and more realistic expectations
that the Minister regards as essential to reaching the main goal,
i.e. a comprehensive solution.
41.7 In the meantime, we clear this Council Decision,
noting that interested Members can pursue the questions that will
no doubt arise over the next six months via the many means at
their disposal.
41.8 We are also drawing this chapter of our Report
to the attention of the Foreign Affairs Committee.
41.9 In the circumstances, and on this occasion,
we do not object to the Minister having overridden scrutiny.
41.10 However, we note that the Minister has not
responded to an earlier request for further information —
which we made on 30 April when he submitted them for scrutiny
— concerning an earlier Council Decision amending Council
Decision 2010/413/CFSP concerning restrictive measures against
Iran and a related Council Implementing Regulation implementing
Regulation (EU) No. 267/2012. At that time, the Minister explained
that this Council Decision and Council Implementing Regulation
stemmed from:
· Safa Nicu — originally designated
for being a communications firm that supplied equipment for the
Fordow (Qom) underground enrichment facility — having challenged
its listing at the EU General Court; on the basis of the evidence
available, he had decided to support delisting; and
· the listing of North Drilling having
been annulled in January 2014, the EU Council has since decided
to relist North Drilling on the basis of new evidence and on a
different criteria.
41.11 In a separate letter, the Minister explained
that, due to the risk of a damages claim in the case of Safa Nicu,
and the risk of asset flight in the case of North Drilling, the
EU Council needed to agree these measures within a very short
space of time, and apologised for the consequential override.
We did not take issue with this.
41.12 But we agreed with the Minister on the importance
of maintaining the effectiveness of the sanctions regime (which
has implications for all such "listings-based" regimes).
We also noted that, although judgment was not anticipated until
around June 2014, on the basis of the evidence available the Minister
had decided to support delisting. We therefore asked the Minister
to explain what the evidence was that had thus persuaded him.
Pending receipt of the Minister's response, we retained the documents
under scrutiny.[175]
41.13 We are puzzled by the fact that, not only
has the Minister not responded, but records in his Explanatory
Memorandum that he has not done so. We now ask him to respond
forthwith.
Full details of the documents:
Council Decision 2014/480/CFSP of 21 July 2014 amending Decision
2010/413/CFSP concerning restrictive measures against Iran: (36237),
—.
Background
41.14 As the Committee's previous Reports illustrate
in detail, the EU has been engaged since December 2006 in a "dual
track" strategy — with both engagement and restrictive
measures — regarding Iran's nuclear activities, not simply
implementing in the EU, but also strengthening in that context,
successive UN Security Council Resolutions (UNSCRs).
41.15 UNSCR 1929 of 9 June 2010 imposed a number
of further restrictive measures which in broad terms:
— reaffirmed that Iran shall cooperate
fully with the IAEA;
— banned new Iranian nuclear facilities
and banned Iranian nuclear investment in third countries;
— banned exports of several major categories
of arms, and further restricted Iran's ballistic missile programme;
— froze 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 had been involved in multiple sanctions violations cases;
— froze the assets of, and banned travel
by, one senior nuclear scientist;
— implemented a regime for inspecting suspected
illicit cargoes and authorising their seizure and disposal;
— placed restrictions on financial services,
including insurance and reinsurance, where there was suspicion
of a proliferation link;
— banned existing and new correspondent
banking relationships where there were proliferation concerns;
— established a Panel of Experts to advise
and assist on sanctions implementation; and
— reaffirmed the dual track strategy (of
pressure and diplomacy).
Council Decision 2010/413/CFSP
41.16 As well as implementing the measures contained
in UNSCR 1929, the EU imposed 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).
41.17 Council Decision 2010/413/CFSP was adopted
by the 26 July 2010 Foreign Affairs Council, together with a Regulation
(Council Regulation (EU) 961/2010) extending the list of entities
and individuals subject to an assets freeze.
41.18 A further package of EU sanctions was adopted
by the 15 October 2012 Foreign Affairs Council. The Committee
cleared the relevant Council Decision on 31 October 2012. The
Council Regulation required to implement the October package was
adopted on 21 December 2012. It includes:
· Finance: a financial cut-off, prohibiting
all but specifically licensed trade with a notification system
for humanitarian payments up to €100,000 and other payments
(€40,000); a full listing of the Central Bank of Iran except
to permit channels for the provision of liquidity and repayment
of debts; a full ban on the public provision of export credit
guarantees (adding short term to the already prohibited medium
and long term);
· Energy sector: a gas embargo: a
further ban on exporting equipment for the Iranian Energy Sector;
a ban on construction of oil tankers;
· Trade: bans on exporting graphite
and metals that can be used in Iran's nuclear programme; naval
equipment for ship building and maintenance; software for integrating
industrial processes;
· Transport: bans on the flagging
and classification of Iranian oil tankers and cargo vessels; and
on the leasing/chartering of vessels for the transport or storage
of Iranian oil; and
· New Designations: the Council Decision
and Council Implementing Regulation imposed an asset freeze on
further Iranian companies and updated the entries for three already
listed entities.
The Minister's Explanatory Memorandum of 6 August
2014
41.19 In his Explanatory Memorandum, the Minister
for Europe (Mr David Lidington) recalls that The Joint Plan of
Action (JPoA) was agreed by the E3+3 and Iran in November 2013
and implementation began on 20 January 2014.
41.20 He continues as follows:
"The first step measures included in the JPoA
were that Iran would halt all key aspects of its nuclear programme,
and in some cases roll it back. Specifically, the agreement sets
out that as a first step Iran would;
· "Eradicate stockpile of 20% enriched
uranium in its most concerning form (UF6) (currently 196 KG) by
diluting half (to less than 5% enriched) and converting half to
oxide;
· "Suspend above 5% enrichment everywhere
in Iran, including at Natanz and Fordow;
· "Not install further centrifuges
at Natanz, and will only replace existing centrifuges with centrifuges
of the same type (i.e. not install or bring into operation advanced
centrifuges);
· "Not produce centrifuges, except
to replace damaged existing machines (and only replace like-for-like);
· "Limit the stockpile of less than
5% enriched uranium in its most concerning form (UF6) by converting
newly enriched UF6 into oxide;
· "Not establish new locations for
enrichment;
· "Halt fuel production for the Heavy
Water Research Reactor at Arak (which could potentially offer
Iran a plutonium route to a bomb) and not install remaining components
(i.e. control room equipment; refuelling machine; and reactor
cooling pumps);
· "Not develop a reprocessing facility
(i.e. to extract plutonium);
· "Allow enhanced monitoring and transparency
(which includes some of the requirements under the Additional
Protocol) of its nuclear facilities.
"In return, the US and EU agreed proportionate
and meaningful sanctions relief, although the bulk of the sanctions
measures remained in place. In summary:
· "The US will pause efforts to reduce
crude oil sales to Iran's oil customers;
· "The US will agree to repatriate
an amount to be agreed amount of oil revenue held abroad;
· "The EU and US will suspend oil-related
insurance and transport costs. (i.e. EU's P&I measures);
· "The EU and US will suspend sanctions
on petrochemical exports; and sanctions on imports of gold and
precious metals;
· "The US will suspend sanctions on
the auto industry; and allow licensing on the civil aviation sector;
· "No new nuclear-related sanctions
to be implemented by the UN, EU and US Administration;
· "The US will establish a financial
channel to facilitate humanitarian and legitimate trade, including
for payments to international organisations, and for Iranians
studying abroad;
· "The EU will increase the thresholds
for authorisation of financial transactions for humanitarian and
non-sanctioned trade."
41.21 The Minister then recalls that these measure
were suspended for six months — from 20 January 2014 to
20 July 2014 — to allow time for comprehensive negotiations
on the Iranian nuclear issue.[176]
41.22 The Minister then continues as follows:
"During that time talks have been productive
and both sides have worked hard on a draft text, but more time
is needed to bridge the differences that remain, in particular
on enrichment, and to agree the details of how an agreement would
be implemented.
"The E3+3 and Iran agreed in the early hours
of 19 July to extend the JPoA for a further four months until
24 November, which is exactly one year after the JPoA was agreed.
This Council Decision amends the 'end date' of EU sanctions from
20 July 2014 to 24 November 2014. We hope this will provide the
additional time needed to conclude an agreement. We believe that
a deal is still possible - we would not have agreed to an extension
had this not been the case - but reaching an agreement will
be challenging. It is vital both sides continue efforts to reach
a comprehensive deal as soon as possible.
"Under the extension, both sides will continue
to implement all measures agreed under the Geneva interim deal
that have not yet expired. This means the limited sanctions relief
under the JPoA will remain in place until 24 November 2014.
"In addition to these measures, Iran has
committed to convert an agreed amount of uranium oxide into fuel
for the Tehran Research Reactor and to dilute its UF6 enriched
up to 2% into natural uranium. In return, the E3+3 has committed
to enable the repatriation of $2.8 billion in instalments over
the course of the 4 month extension period. The IAEA will continue
to be responsible for verification of all nuclear-related measures.
"No additional sanctions have been suspended.
All other EU sanctions and restrictions remain in place and in
force and the Government's position remains not to encourage trade
with Iran.
"In order to achieve a comprehensive solution,
Iran has to show more flexibility and have more realistic expectations
— given our concerns about break out — about the future
scope of its nuclear programme, in particular on the core issue
of enrichment. All parties will now need to reflect and evaluate
the best way forward. We will reconvene in the coming weeks with
the clear determination to reach agreement on a Joint Comprehensive
Plan of Action by 24 November."
41.23 The Minister concludes by noting that the draft
Council Decision was agreed by written procedure on Monday 21
July 2014.
The Minister's letter of 6 August 2014
41.24 The Minister recalls that he wrote to the Committee
on 14 July about the likelihood that we would need to extend the
Joint Plan of Action by way of an amendment to Council Regulation
(EU) No. 267/2012[177]
— this extension to enable the EU to continue providing
Iran with some limited sanctions relief in exchange for actions
by Iran that would address the international community's most
important proliferation concerns. He then explains that:
"Since then, the Council has concluded that
an amendment to the Decision is now required and that the extension
can be agreed through an amendment to Council Decision 2010/413/CFSP
concerning restrictive measures against Iran."
41.25 He then says:
"The E3+3 and Iran agreed in the early hours
of 19 July to extend the JPoA for a further four months until
24 November, which is exactly one year after the JPoA was agreed.
This Council Decision amends the 'end date' of EU sanctions from
20 July 2014 to 24 November 2014. This amendment was agreed on
21 July and published in the Official Journal on the same day.
We hope this will provide the additional time needed to conclude
an agreement. We believe that a deal is still possible —
we would not have agreed to an extension had this not been the
case — but reaching an agreement will be challenging. It
is vital both sides continue efforts to reach a comprehensive
deal as soon as possible.
"Under the extension, both sides will continue
to implement all measures agreed under the Geneva interim deal
that have not yet expired. This means the limited sanctions relief
under the JPoA will remain in place until 24 November 2014.
"In addition to these measures, Iran has
committed to convert an agreed amount of uranium oxide into fuel
for the Tehran Research Reactor and to dilute its UF6 enriched
up to 2% into natural uranium. In return, the E3+3 has committed
to enable the repatriation of $2.8 billion in instalments over
the course of the 4 month extension period. The IAEA will continue
to be responsible for verification of all nuclear-related measures.
"No additional sanctions have been suspended.
All other EU sanctions and restrictions remain in place and in
force and the Government's position remains not to encourage trade
with Iran.
"In order to achieve a comprehensive solution,
Iran has to show more flexibility and have more realistic expectations
— given our concerns about break out — about the future
scope of its nuclear programme, in particular on the core issue
of enrichment. All parties will now need to reflect and evaluate
the best way forward. We will reconvene in the coming weeks with
the clear determination to reach agreement on a Joint Comprehensive
Plan of Action by 24 November."
41.26 The Minister concludes by expressing his regret
that he had to agree to the adoption of this Council Decision
before the Committee has had an opportunity to scrutinise it.
Previous Committee Reports
None, but see (35964) — and (35965) —:
Forty-seventh Report HC 86-xlii (2012-13), chapter 11 (30
April 2014) and (35712) 18163/13: Thirty-first Report HC 83-xxviii
(2013-14), chapter 15 (22 January 2014), and the earlier
Reports referred to therein.
174 See the "Background" section of this
chapter of our Report for full information on the EU sanctions
regime against Iran and the changes brought in earlier this year. Back
175
See (35964), - and (35965), -: Forty-seventh Report HC 86-xlii
(2013-14), chapter 11 (30 April 2014). Back
176
The Committee cleared the relevant Council Decision on 22 January
2014: see (35712), 18163/13: Thirty-first Report HC 83-xxviii
(2013-14), chapter 15 (22 January 2014) for full background. Back
177
Council Regulation (EU) No. 267/2012 of 23 March 2012 implements
additional restrictive measures against Iran imposed by Council
Decision 2012/35/CFSP of 23 January 2012 and Council Decision
2012/152/CFSP of 15 March 2012. Regulation 267/2012 consolidates
the pre-existing measures and the newly enacted measures into
a single legislative text. A list of targeted "petrochemical
products" is included in Annex V. The Council also prohibited
the supply of specialized financial messaging services to any
financial institution subject to the EU's Iranian sanctions (including
the Central Bank of Iran, Bank Tejarat and Bank Melli: thus, with
effect from March 17, 2012, SWIFT disconnected these institutions
from its financial messaging services, effectively blocking any
international wire transaction to the affected banks, regardless
of the jurisdiction of the parties involved in the transaction).
Regulation 267/2012 also prohibits any direct or indirect trade
in gold, precious metals and diamonds with the Government of Iran,
its public bodies, corporations and agencies, any person, entity
or body acting on their behalf or at their direction, or any entity
or body owned or controlled by them; this prohibition includes
any form of financial or technical assistance related to these
goods. Back
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