Friday, January 20, 2006

EU Deprived of an Important Lever to Influence Iran

The Jerusalem Post:
Iran announced Friday it has begun pulling its foreign currency accounts out of European banks, an amount analysts said could reach USD50 billion, to protect its assets from possible UN sanctions over its nuclear program.

Iran also called for a reduction in OPEC oil production, raising the possibility that the country's oil prowess would be deployed in the standoff with the West.

The move also deprives Europe of an important lever to influence Iran and could weaken its resolve to push Iran to give up key parts of its nuclear program, analysts said. READ MORE

The US State Department responded Friday, saying Iran is isolating itself further from the world by withdrawing its foreign currency deposits from European banks.

"I don't know what it is that they hope to accomplish by doing this," spokesman Sean McCormack said.

Asked whether the Iranian action would result in lost leverage for Europe in its dealings with Iran, McCormack said the EU-3 tried to use the available levers that it had with Iran to promote serious negotiations. That effort, he said, "didn't work."

Stuart Eizenstat, who helped negotiate sanctions against Iran after the 1979 hostage crisis, said the Iranian currency action could weaken European resolve to ensure that Iran does not acquire nuclear weapons.

Also, according to a Channel 2 report Friday, Iran is working with an Italian company to build a spy satellite, showing documents outlining the deal and still photos of meetings between Italian company officials and Iranians.

The documents, with the title "The Mesbah Project," explain what the satellite's abilities would be and what it would look like.

The Iranians are working with the Italian company Carlo Gavazzi Space, the report said. An Israeli satellite expert said Mesbah would be a simple satellite, but that the Iranians are gathering important research and development data that will allow them to independently build their own satellite in the future.

In related news, an Iranian exile group claimed Friday that Tehran had acquired banned machinery to further the country's nuclear weapons ambitions.

The group, the National Council of Resistance of Iran, also claimed that the machinery, which they identified as a "hot press" and a "hot iso-static press," was being kept at a secret site 40 kilometers (25 miles) west of Tehran.