The Obama administration wants China, India and 10 other nations to present plans detailing how they will curtail Iranian oil imports, saying past cuts aren’t enough to win them an exclusion from new U.S. sanctions.
Secretary of State Hillary Clinton this week granted Japan and European Union countries six-month, renewable exemptions from the measures that take effect June 28, crediting them with “significantly reducing” imports from the Persian Gulf nation. While China and India, the two biggest buyers of Iran’s crude, have made cuts in recent months and years, they were not granted exemptions. The distinction is that the EU and Japan offered assurances they will go beyond past reductions and continue to curb purchases from the world’s fourth biggest producer, U.S. officials say.
“What we are looking for is for countries to come to us and tell us if they believe that they should be in that category that deserves an exemption, what are the kinds of significant reductions that they are willing to pursue,” said Carlos Pascual, the State Department’s special envoy and coordinator for international energy affairs.
Japan, the No. 3 importer of Iranian oil, detailed to the U.S. its plans to boost purchases from alternative suppliers, the U.S. officials said. China, India, South Korea, Turkey and eight other buyers of Iranian crude haven’t yet made similar pledges, and past cuts alone can’t be taken as evidence of future intent, said four U.S. officials who spoke on condition of anonymity because diplomatic discussions are private.
’Significant Reduction’
The new sanctions law, enacted Dec. 31, doesn’t define what constitutes the “significant reduction” needed to qualify for an exemption from penalties. U.S. officials say they haven’t quantified it because there’s no rule of thumb or percentage of cuts that applies to all cases. Each country has different energy needs, and all will be reviewed on a case-by-case basis, the officials said.If a country doesn’t prove it’s making the necessary reductions by the end of June, any institution in that nation that settles petroleum trades through Iran’s central bank will be cut off from the U.S. banking system.
The first round of exemptions, issued to EU nations and Japan and valid until Sept. 16, were meant to set an example to others, said Victoria Nuland, a spokeswoman for the State Department. The EU banned new oil contracts with Iran on Jan. 23 and embargoed all Iranian oil effective July 1.
Japan’s Cuts
Publicly available data shows Japan made “seasonally adjusted” cuts of between 15 percent and 22 percent in the second half of last year compared with the same period in 2010, depending on the data source, Pascual testified before Congress March 20.Japan bought 53 million barrels (8.4 million kiloliters) of oil from Iran from July through December 2011, compared with 64 million barrels (10.2 million kiloliters) in the same period of 2010, according to Japanese government statistics. That’s a 17.6 percent reduction. Japan’s finance minister, Jun Azumi, said his government welcomed the U.S. exemption and intends to “keep reducing oil imports at a certain pace.”
The American sanctions are among dozens of measures taken by the U.S. and the EU since November to ratchet up economic pressure on Iran’s leaders in an effort to persuade them to abandon any illicit part of their nuclear program. The U.S., Europe and Israel have accused Iran of seeking the capability to build a nuclear weapon. Iran says its program is solely for civilian energy and medical research.
Under Pressure
The Obama administration is under pressure to turn the screws on Iran even tighter as Israel warns that it’s prepared to take military action to prevent Iran from developing nuclear weapons.The administration should accelerate the sanctions on Iran that are due to take effect in June, Representative Mike Rogers, a Michigan Republican who is chairman of the House Intelligence Committee, said today on Bloomberg Television.
In addition, Rogers said, because neither Iran nor Israel believes the U.S. is seriously considering military action, the administration should signal that it’s willing to use force, for example by holding military exercises in the region and pre- positioning equipment that would be needed to strike Iran’s suspect nuclear facilities.
“This is as serious a problem as I’ve ever seen,” Rogers said.
Oil prices in New York have risen 7.2 percent this year, while Brent crude in London has climbed 15.6 percent, partly due to concerns over supply disruptions from escalating tension between Iran and the U.S. and its allies.
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