US gives exemption on Iran sanctions to 11 nations

Posted March 20, 2012, at 9:48 p.m.

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.

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.

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