Deal on EU embargo of Iran's oil remains in doubt

January 19, 2012 - 2:55 PM

BRUSSELS (AP) — A possible European Union ban on oil deals with Iran remains in doubt just days before EU foreign ministers meet in Brussels in hopes of adopting it, a diplomat said Thursday.

Such an embargo would choke off funding for Iran's nuclear program, which many Western governments believe is geared toward developing nuclear weapons — something Iran denies. The embargo would prevent EU countries from buying crude oil from Iran and also from selling refined oil to Iran, the diplomat said.

The diplomat, who is accredited to the European Union, spoke on condition of anonymity in order to discuss ongoing talks.

EU foreign ministers will meet Monday to consider an embargo and possibly action to freeze the assets of Iran's central bank.

A number of Western leaders say they are determined that Iran, which is ruled by a fundamentalist Islamic government, should not acquire nuclear weapons. France, Germany and the United Kingdom are eager to have an oil embargo against Iran take effect quickly.

But other EU countries — Greece in particular — are concerned because they are in dire economic difficulty and rely heavily on oil from Iran.

Under a compromise being offered by the Danes, who hold the rotating presidency of the EU, the ban would take effect immediately but existing contracts would be honored during a transition period, the diplomat said.

The embargo would have a strong effect at once, the diplomat said, as short-term contracts for the purchase of Iranian oil expired. But longer-term contracts would remain in force until July 1, when the transition period would end, which might happen only after a review of the impacts of the ban on world oil prices.

That review would allow countries reliant on Iranian oil to assess whether the price of alternatives sources had risen to unaffordable levels, the diplomat said.

Permanent representatives to the European Union discussed the issue Thursday but broke up without agreement, the diplomat said.