US gives exemption on Iran sanctions to 11 nations (AP) Associated Press) By MATTHEW LEE and DONNA CASSATA WASHINGTON 03/20/12 5:31 pm ET)
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WASHINGTON – The Obama administration on Tuesday exempted 10 European
Union countries and Japan from U.S. economic sanctions because they
have significantly reduced their purchases of petroleum from Iran.
Secretary of State Hillary Rodham Clinton granted waivers to Belgium,
Britain, the Czech Republic, France, Germany, Greece, Italy, the
Netherlands, Poland, Spain and Japan, meaning that banks and other
financial institutions based there will not be hit with penalties
under U.S. law for a renewable period of 180 days.
President Barack Obama has until March 30 to determine whether oil
prices and supplies are sufficient to levy sanctions later this year
on countries that still buy oil from Iran. Pending that decision,
another 12 nations — including India, China and South Korea — that
are deemed to be major importers of Iranian oil have until June 28 to
take similar steps or face sanctions. Administration officials
believe granting some exemptions before officially authorizing the
sanctions could motivate other countries that buy oil from Iran to
reduce their purchases.
The sanctions target foreign financial institutions that do business
with Iran´s central bank by barring them from opening or maintaining
correspondent operations in the United States. It would apply to
foreign central banks only for transactions that involve the sale or
purchase of petroleum or petroleum products.
The petroleum penalties only apply if the president determines there
is a sufficient alternative supply and if the country with
jurisdiction over the financial institution has not significantly
reduced its purchases of Iranian oil. It also allows the president to
waive the penalties based on national security.
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In a statement, Clinton lauded the countries granted exemptions,
noting that the actions they had taken to reduce their imports from
Iran "were not easy."
"They had to rethink their energy needs at a critical time for the
world economy and quickly begin to find alternatives to Iranian oil,
which many had been reliant on for their energy needs," she said. "We
commend these countries for their actions and urge other nations that
import oil from Iran to follow their example."
Clinton singled out Japan for praise, noting that it had acted
despite severe energy constraints brought about by last year´s
earthquake and tsunami. Japan has reduced its imports by between 15
percent and 22 percent by finding other suppliers and focusing on
alternative energy sources, according to U.S. officials.
There have been concerns that the squeeze on Iranian customers could
send oil prices sharply higher as countries reduced Iranian exports
and made up for it by buying from other suppliers. However, oil
producers like Saudi Arabia have said they are willing to help offset
the difference and U.S. officials have said the restoration of
Libya´s crude output to levels produced during the regime of Col.
Moammar Gadhafi will also help. Many European countries imported
large amounts of oil from Libya, which essentially dried up as a
source during the revolt in that country.
Oil prices dropped Tuesday after the exemptions were announced.
Traders noted that the exemptions mean some countries that import
Iranian oil won´t have to cut off all of it.
Some had feared that if many countries had been required to
cut off all their imported Iranian oil, it could have created a run
on supplies and caused prices to jump.
"It´ll reduce the squeeze," said Peter Donovan, an oil
broker at Vantage Trading.
Concerns about tightened oil markets have boosted
benchmark crude prices 7 percent this year. Brent crude, which prices
foreign oil imported by U.S. refineries, is up 16 percent.
A prolonged dispute with Iran could eventually lead to
supply shortages in parts of the world, driving both oil and gas
The European nations were already subject to European Union rules
requiring them to phase out their imports. Those rules were put in
place after the passage of the U.S. sanctions legislation that is
designed to further isolate Iran and compel it to comply with U.N.
demands to come clean about its nuclear program. The U.S. and its
allies accuse Iran of using the program to develop atomic weapons
while Iran insists it is to produce nuclear energy.
"The United States is leading an unprecedented international
coalition of partners that has brought to bear significant pressure
on the Iranian regime to change its course," Clinton said. "Diplomacy
coupled with strong pressure can achieve the long-term solutions we
seek and we will continue to work with our international partners to
increase the pressure on Iran to meet its international obligations."
Sen. Bob Menendez, D-N.J., who co-authored the sanctions legislation
designed to thwart Iran´s suspected nuclear weapons program with
Republican Sen. Mark Kirk of Illinois, said in a statement that he
supported the secretary´s decision.
"The sanctions are working — many countries and companies have
stepped up in recognition of the real threat that Iran poses to its
neighbors and the global community and are terminating business
relations with Iran," he said. "For the first time we are seeing a
real impact on the Iranian economy."
"I think our message to Iran is clear and time will tell what they
value more, their nuclear program or the political and economic
stability of their state," Menendez said. ___ Associated Press writer
Julie Pace in Washington and Energy Writer Chris Kahn in New York
contributed to this report. (© 2012 The Associated Press 03/20/12)
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