EU readies unprecedented Iran oil, bank sanctions

The European Union is readying its toughest action to date against Iran, moving to dry up funding of its contested nuclear drive by targeting both its oil and financial sector, diplomats said today.

Foreign ministers from the 27-nation bloc meeting in Brussels on Monday are expected to agree to sanction Tehran's central bank, and possibly other banks, and announce an embargo on purchasing Iranian oil, EU officials and diplomats said.

"We need to send a very strong signal to Iran," said a diplomat, speaking on condition of anonymity.

Also expected are bans on the sale of gold, diamonds and other precious metals to Iran as well as delivering newly minted coins and notes. Existing bans on petrochemical imports and investment are due to be enlarged.

Greece's dependency on Iranian oil meanwhile was holding up a deal on the timing and conditions of the oil embargo.

The political willingness was in place, but the bloc was still in search of new suppliers able to match the easy conditions offered by Tehran to the cash-strapped nation.

Greece, which relies on Iranian oil for more than a third of its total oil imports, had concluded "good financial arrangements" with Iran that include 60-day payment and no financial guarantees, sources said.

"Greece has agreed on a political level to stop its imports from Iran, the question is who can compensate," a diplomat said. "Of course it will be more difficult to find alternative suppliers because of the present financial situation of Greece."

Diplomats said a political decision on the embargo was expected from the ministers on Monday although "the financial solution will require more time."

The new EU sanctions are part of a concerted effort with the United States to pressure Iran into halting its controversial nuclear activities, which the West suspects are aimed at developing nuclear weapons.

Iran says its nuclear programme is purely for civilian use.

The EU imported some 600,000 barrels of Iranian oil per day last year, according to the International Energy Agency, making it a key market alongside India and China, which has refused to bow to pressure from Washington.

Iranian oil accounted for 34.2 per cent of Greece's total oil imports, 14.9 per cent of Spain's and 12.4 per cent of Italy's in the first nine months of last year, according to the latest EU statistics.