Quoted from Daily Telgegraph
By David Blair, Diplomatic Editor
Iran faces a new round of financial sanctions as the European Union has agreed to freeze the overseas assets of its largest bank. The counter-measures, announced by Gordon Brown, may indicate the failure of last weekend’s talks in Tehran. Senior diplomats from five nations, including Britain, visited Iran and formally offered to help the country’s civilian nuclear programme and extend other economic benefits if Tehran obeys the United Nations and stops enriching uranium.
Before this mission took place, a senior British official said that Iran would have “about a month” to respond to the offer before any further sanctions were imposed. Instead, new penalties were announced on the day after the mission ended, suggesting that the talks in Tehran made no progress.
During a press conference in London with President George W Bush, the Prime Minister said: “Today Britain will urge Europe, and Europe will agree to take further sanctions against Iran.
“We will take action today that will freeze the overseas assets of the biggest bank Iran, the Melli Bank, and secondly action will start today for a new phase of sanctions on oil and gas.”A Foreign Office spokesman said that all of the EU’s 27 member states had agreed to freeze any assets held in their jurisdictions by Bank Melli, Iran’s largest state-owned bank.The spokesman added that “work was in hand” to bring this measure into effect and it was likely to happen “in the next few days”.
But further sanctions designed to stop European investment in Iran’s crucial oil and natural gas industries were “still in discussion” and no final agreement had been reached.Bank Melli, which has branches in Paris and Hamburg, was Iran’s first commercial bank. Like all of Iran’s finance houses, it is state-owned. America has already imposed unilateral financial sanctions on Iran and frozen any dollar assets held by its banks. In effect, the EU is now adopting the same measures, significantly increasing the economic pressure on Tehran.
This leaves the commercial centres of the Middle East, notably Dubai, as Iran’s crucial financial outlets. Bank Melli’s regional headquarters and two subsidiary branches are in Dubai.Financial sanctions raise the cost of doing business inside Iran, but high oil prices cushion the country from the full effects of economic counter-measures.The apparent failure of last weekend’s talks indicate that financial pressure has not yet changed Iran’s decision to continue enriching uranium. This highly sensitive process could be used to produce weapons-grade uranium Â the essential material for a nuclear bomb.