11 Nations Exempted From Financial Sanctions On Iran

Last Updated: 21, March 2012

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The Obama administration has said it would exempt Japan and 10 European Union nations from financial sanctions, imposed on countries who deal with Iran. However, countries like India and China who are heavily dependent on Iranian oil are at high risk of being cut off from the U.S. financial system under fresh sanctions meant to increase pressure on Iran.

The exemptions, combined with news of Saudi Arabia’s promise to boost oil output by as much as 25 percent this year, saw oil prices fall after days of steady gains. Analysts say the exemptions reflect the United States’ efforts to minimise volatility in the global energy market.

As part of the U.S.-led sanctions signed into effect in December, foreign firms and countries that continue to do business with the Iranian central bank and purchase Iranian oil are at risk of heavy U.S. financial penalties.

However, Japan, and 10 other EU nations (Belgium, Britain, the Czech Republic, France, Germany, Greece, Italy, the Netherlands, Poland and Spain) were given a six-month exemption, in recognition of their ‘significant’ reductions in Iranian oil imports.

In a statement, U.S. Secretary of State Hillary Clinton said:

[quote] The actions taken by these countries were not easy. We commend these countries for their actions and urge other nations that import oil from Iran to follow their example. [/quote]

Japan’s finance minister Jun Azumi welcomed the decision, and reiterated Japan’s promise to cut Iranian oil imports by 20 percent this year.

In January, members of the European Union agreed to an embargo on Iranian crude, banning new purchases from January 23 and phasing out existing contracts by July 1.

Under U.S. law, the exemptions will apply for 180 days and can be renewed every six months thereafter.

Ray Takeyh, an Iran expert at the Council on Foreign Relations think tank, told Reuters the exemptions for Japan and the European Union were predictable because they had done the most to cut their imports of Iranian crude:

[quote] Japan has taken action in looking for alternative suppliers, while India and China have not demonstrated that they are in compliance with the sanctions. [/quote]

Separately, the United States is threatening Iran’s oil importers, allowing them until June 28 to adjust their purchases. Already, the State Department says that 12 countries remain at risk of facing U.S. financial penalties this year – including traditional allies like South Korea, India, Turkey, as well as China and South Africa.

The penalties can see a foreign bank cut off from the U.S. financial system, a risk that many countries are unlikely to take.

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