Iran Weighs Halting Nuclear Expansion to Avert EU Oil Ban

Photographer: Alexander Natruskin/RIA Novosti

Iran's Ambassador to Russia, Seyed Mahmoud Reza Sajjadi. Close

Iran's Ambassador to Russia, Seyed Mahmoud Reza Sajjadi.

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Photographer: Alexander Natruskin/RIA Novosti

Iran's Ambassador to Russia, Seyed Mahmoud Reza Sajjadi.

Iran is considering a Russian proposal to halt the expansion of its nuclear program in order to avert new sanctions, the country’s envoy in Moscow said.

“We need to study this proposal and to establish on what basis it has been made,” Ambassador Mahmoud-Reza Sajjadi said in an interview at the Iranian embassy in Moscow today. The Russian plan, announced by Deputy Foreign Minister Sergei Ryabkov last week, would let Iran avoid a European Union ban on its crude that is scheduled to come into force in July.

Iran will ensure it maintains its right to produce nuclear energy, Sajjadi said. The U.S. and European Union allege Iran is seeking to build a bomb, not just make fuel for electricity production and medical research, as the country maintains.

The EU is planning on July 1 to impose an embargo on crude from Iran, which accounts for about 4 percent of the world’s supply, as it works with the U.S. to ratchet up pressure on the Persian Gulf state. Oil prices retreated from a one-week high, dropping more than $1 today on the report.

In Washington, State Department spokeswoman Victoria Nuland dismissed Sajjadi’s remarks, saying the Iranian is “not a central player” in international talks over Iran’s nuclear program. “Frankly, what’s most important is what Iran says and does at the negotiating table,” Nuland said at briefing with journalists.

The U.S. and EU have imposed financial sanctions on Iran and are pressuring nations including China to buy less of its oil as they seek to curtail its nuclear activities.

Mutual Concessions

Ryabkov, who leads Prime Minister and President-elect Vladimir Putin’s delegation to the Iran talks, said the Russian proposal would be the first in a series of mutual concessions designed to end in an accord that would remove suspicions about Iranian intent regarding atomic weapons.

Iran might also be willing to ratify the so-called Additional Protocol, a step urged by the United Nations Security Council that includes more thorough inspections of Iranian facilities, as part of a wider settlement, Sajjadi said.

Under the Russian proposal, Iran would stop building centrifuges, machines used to enrich uranium, and mothball ones that haven’t been put into use yet.

“At that stage, as part of the step-by-step approach, the other side could announce that it will refrain from introducing new sanctions,” Ryabkov said April 17 after the latest round of talks in Istanbul between Iran and the five permanent Security Council members -- the U.S., U.K., China, Russia and France -- plus Germany. Those talks were the first Iran held with the so- called 5+1 group in 15 months. The next round, in Baghdad, is scheduled for May 23.

The EU will complicate efforts to resolve the feud if the 27-nation bloc goes ahead with the oil ban, Sajjadi said.

‘Not Serious’

“If they actually impose the embargo, it will mean that they’re not serious about resolving the nuclear issue,” the Iranian ambassador said. “How can they want to pursue nuclear talks on the one hand and introduce sanctions on the other? What meaning will these talks have then?”

The UN’s nuclear watchdog said in February that the number of centrifuges at Iran’s underground Natanz facility had grown 14 percent to 9,156 from 8,000 in November, of which 8,808 were operating. Iran began enriching uranium with more than 300 centrifuges at a different underground site, Fordo, the International Agency for Atomic Energy said in a Feb. 24 report.

The IAEA report said Iran had tripled monthly output of enriched uranium from November to 31 pounds (14 kilograms). The country may be able to produce bomb-grade uranium in a matter of months, Olli Heinonen, the IAEA’s former top inspector for Iran, said on April 12.

‘A Big Step’

“The proposed plan will keep the capacity to enrich uranium at the current level,” said Elena Sokova, executive director at the Center for Disarmament & Non-Proliferation in Vienna, by e-mail. “Thus it helps to avoid the expansion of enrichment but not to scale it back. In other words, no buildup of the program in exchange for no new sanctions.”

If Iran then ratified the Additional Protocol to the Nuclear Non-Proliferation Treaty it would be “a big step forward as it would allow for much better transparency of the Iranian nuclear program and for the IAEA to carry out rather intrusive inspections,” Sokova said.

The Iranian nuclear program is an “imaginary threat,” Sajjadi said, adding that he was astonished by comments made by Nikolai Makarov, head of the Russian military’s General Staff, warning about the risk of a nuclear-armed Iran in an interview with state broadcaster RT.

Won’t Benefit

Russia won’t benefit by cooperating with the U.S. and Europe, and the threatened EU oil embargo will damage the world economy by squeezing global supplies, the ambassador said.

Iran’s oil production, currently about 3.4 million barrels a day, may decline by as much as 950,000 barrels a day by the middle of this year as EU and U.S. embargoes take effect, the International Energy Agency said in its monthly Oil Market Report on April 12.

Crude oil for June delivery slipped 22 cents to $103.33 a barrel at 11:27 a.m. on the New York Mercantile Exchange. The contract earlier touched $104.49, the highest intraday level since April 18. Brent oil traded 31 cents lower at $117.83 in London after reaching $119.25.

Tensions over the Iranian program, including Israel and the U.S. leaving open the possibility of a military attack, helped drive Brent crude prices to about $125 a barrel last month, the highest level in more than 3 1/2 years. Prices fell more than 2 percent on the next trading day after the April 14 talks in Istanbul, which the U.S. and EU said made progress.

“There are two ways we can proceed after the Istanbul talks,” said Sajjadi. “Either the West understands that it’s pointless to use the language of force with Iran or their flexibility is a temporary phenomenon. I hope the first is true as we would like to see a resolution.”

To contact the reporter on this story: Stepan Kravchenko in Moscow at skravchenko@bloomberg.net Henry Meyer in Moscow at hmeyer4@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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