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BICOM

Britain Israel Communications and Research Centre

Analysis

BICOM Briefing: UK announces new sanctions on Iran

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Key points

  • In an announcement today, the Treasury ordered all UK financial and credit institutions to stop doing business with Iranian Bank Mellat and the Islamic Republic of Iran Shipping Lines.
  • This affirms the UK’s leading role within the EU in confronting Iran and indicates UK determination not to allow Iran to use engagement to play for time.
  • Britain, France and the US, along with Germany, have increasingly called for tough sanctions if Iran does not comply with international demands. This could include future measures targeting the energy industry and other sectors critical to Iran’s economy and regime stability.

What are the new sanctions?

  • Today the Treasury has announced new sanctions against two Iranian companies, Bank Mellat and the Islamic Republic of Iran Shipping Lines (IRISL). The sanctions are being applied under new powers granted to the Treasury in the 2008 Counter-Terrorism Act. The measure orders all UK financial and credit institutions to cease business with these two organisations and not enter into any new business with them. The measure follows a series of warnings from the Treasury about dealing with Iranian financial institutions.
  • Britain, France and the US, along with Germany have increasingly called for tougher sanctions if Iran does not comply with international demands. This could include future measures targeting the energy industry other areas critical to Iran’s economy and regime stability.

Why are they being imposed?

  • Today’s Ministerial statementby Treasury Minister Sarah McCarthy-Fry explained the danger posed by Iranian activities, saying:
    • ‘Activity in Iran that facilitates the development or production of nuclear weapons poses a significant risk to the national interests of the UK.’
    • ‘The International Atomic Energy Agency… is being refused the access it seeks by Iran, which also declines to answer questions put to it by the Agency’s staff about alleged studies suggesting a military aspect to Iran’s programme. As a result, the IAEA Director General has stated that he is unable to verify Iran’s nuclear programme is for exclusively peaceful purposes.’
    • ‘Iran’s ongoing improvement of its ballistic missile capabilities also continues to cause international concern. Its failure to answer questions from the IAEA about possible military dimensions to its nuclear programme increase concerns that its ballistic missile programme represents a potential nuclear delivery system.’
    • David Miliband said yesterday in a joint press conference with US Secretary of State Clinton: ‘I think that Iran’s history of covert secret programmes before 2003 where there is their dispute with the IAEA and more recently in respect of the Qom facility explains why the international community does not have confidence in the Iranian regime’s protestations about the purely peaceful aspects or purely peaceful purposes of their nuclear programme.’

Why now?

  • The announcement of the new sanctions come less than two weeks after the P5+1, the five permanent members of the Security Council and Germany, met with Iranian representatives in Geneva to discuss Tehran’s nuclear activity.
  • The meeting ended on a positive note and a tentative agreement that Iran would allow the inspection of the newly revealed nuclear facility in Qom. Iran also agreed to shipping part of its uranium stockpile to Russia and France where it will undergo further processing and will be returned to Iran in the form of nuclear fuel rods and nuclear isotopes for medical research.
  • The new sanctions suggest that the international community will seek to maintain pressure on Iran to ensure that the regime in Tehran does not attempt to stall progress and buy more time before actual steps are taken.

Why are these institutions being targeted?

Islamic Republic of Iran Shipping Lines (IRISL)

  • According to the Treasury statement: ‘Vessels of the Islamic Republic of Iran Shipping Lines (IRISL) have transported goods for both Iran’s ballistic missile and nuclear programmes.’
  • The US imposed sanctions on the shipping line in September 2008. Stuart Levey, Under Secretary for Terrorism and Financial Intelligence in the US Treasury, said at the time that: ‘IRISL facilitate the transport of cargo for U.N. designated proliferators, it also falsifies documents and uses deceptive schemes to shroud its involvement in illicit commerce.’
  • This new British measure could create difficulties for IRISL acquiring Protection and Indemnity insurance. Much of the world’s shipping insurance is brokered in London.

Bank Mellat

  • According to the Treasury statement: ‘Bank Mellat has provided banking services to a UN listed organisation connected to Iran’s proliferation sensitive activities, and been involved in transactions related to financing Iran’s nuclear and ballistic missile programme.’
  • Bank Mellat along with its branches and subsidiaries was accused by the US Treasury in October 2007 of providing ‘banking services in support of Iran’s nuclear entities, namely the Atomic Energy Organisation of Iran and Novin Energy Company.’ A British-based subsidiary, Persia International Bank PLC London, is 50% owned by Bank Mellat.
  • UN Security Council Resolution 1803 calls upon all states to exercise vigilance over the activities of financial institutions in their territories with all Iran banks and their branches, mentioning in particular two other banks, Bank Melli and Bank Saderat. In June 2008 the EU froze the assets of Bank Melli.

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