U.S. to Exempt EU, Japan on Iran Sanctions

The United States said Tuesday it was exempting European Union members and Japan from tough new sanctions on Iran, praising them for reducing dependency on oil from the Islamic republic.

Under a new law aimed at pressing Iran over its nuclear program, the United States will penalize foreign financial institutions over transactions with Iran's central bank, which handles sales of the country's key export.

Secretary of State Hillary Clinton said that the United States will exempt financial institutions from 11 nations -- Belgium, Britain, the Czech Republic, France, Germany, Greece, Italy, Japan, the Netherlands, Poland and Spain.

"The actions taken by these countries were not easy," Clinton said in a statement.

"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.

Twelve other nations also buy crude oil from Iran. Notable nations not on the exemption list included China, India and South Korea.

China is a major economic partner of Iran. India, despite friendly relations with the United States, has defied pressure to shut off oil from Iran.

President Barack Obama will ultimately have to decide by March 30 whether to impose the sanctions, which under the law take effect on June 28.

The European Union announced a ban on Iranian crude oil on January 23. A U.S. official said that the 10 nations listed for exemption from the sanctions were the European Union members that previously imported Iranian oil.

Japan has said that it is reducing oil imports and pressed hard for an exemption from the U.S. sanctions, noting its energy shortfall after the Fukushima crisis a year ago led it to shut down its nuclear plants.

"Japan's significant reductions in crude oil purchases is also especially noteworthy considering the extraordinary energy and other challenges it has faced over the past year," Clinton said in her statement.

"We commend these countries for their actions and urge other nations that import oil from Iran to follow their example," Clinton said.

Japan -- which has virtually no fossil fuels of its own -- has historically maintained cordial relations with Iran. But Japan has pared down its investments in the Islamic republic in recent years over the nuclear concerns.

Carlos Pascual, a State Department official who focuses on energy resources, estimated that Japan's imports of Iranian crude oil have gone down by 15 to 22 percent since it started efforts to comply with the U.S. law.

Pascual, testifying before the Senate shortly after Clinton's announcement, declined to name which countries were likely to be hit by sanctions and said that the United States would speak with governments before any action.

"What we are looking for is for countries to come to us" and discuss "the kind of significant reductions that they are willing to pursue," Pascual told the Senate Foreign Relations Committee.

The new law bars financial institutions that do business with Iran from operating in the United States, effectively making them choose between the Islamic republic and the world's largest economy and banking superpower.

The U.S. effort has already contributed to economic havoc in Iran, which has defiantly pursued sensitive uranium work.

Iran says that its nuclear program is meant for peaceful purposes, but Israel and a number of Western officials fear that the clerical regime is building a nuclear bomb.

"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," Clinton said.

Iranian Oil Minister Rostam Qasemi recently denounced foreign powers for using oil as a "political tool."