TNAG-0930-FCO40-1148-Sanctions-against-Iran-extension-to-Dependent-Territories-1980 — Page 261

LONDON

HKG. 122/324/1

22 MAY 1980

PRESSRVICE

Mi

J13.6

LATE SECTION (REGIONAL)

SUNDAY

Taken:

Transmission

35

Confirmation Copy

19TH MAY 1980

ITEM: ONE. EC TO TAKE ECONOMIC SANCTIONS AGAINST IRAN

BY LPS DIPLOMATIC STAFF

Enter

NAPLES, SUNDAY, 18 MAY (LPS): THE EUROPEAN COMMUNITY IS TO IMPOSE ECONOMIC AND TRADE SANCTIONS AGAINST IRAN WITHOUT DELAY** BECAUSE OF THE ABSENCE OF DECISIVE PROGRESS TOWARDS THE RELEASE OF THE AMERI- CAN DIPLOMATIC HOS TAGES IN TEHERAN.

THIS WAS ANNOUNCED TODAY FOLLOWING AN INFORMAL WEEKEND MEETING HERE OF EC FOREIGN MINISTERS. THE EFFECTIVE DATE FOR SANCTIONS TO BEGIN WILL BE NEXT THURSDAY, (TWENTYTWO) MAY IN ORDER TO ALLOW SOME COUNTRIES TO COMPLETE THEIR PREPARATIONS.

IN A STATEMENT, THE MINISTERS REITERATED THAT CONTINUED DETENTION OF THE HOSTAGES CONSTITUTES A FLAGRANT VIOLATION OF INTERNATIONAL LAW. THEY DECIDED TO TAKE THE TRADE AND ECONOMIC SANCTIONS ENVISAGED IN THE UN SECURITY COUNCIL RESOLUTION OF TEN JANUARY WHICH WAS VETOED BY THE SOVIET UNION.

THESE INCLUDE PREVENTION OF ALL EXPORTS TO IRAN EXCEPT FOOD AND MEDICINE, A BAN ON SHIPMENTS TO IRAN IN SHIPS OR AIRCRAFT OF FLAG CARRIERS OF ** THE NINE". A BAR ON NEW CREDITS AND LOANS TO IRAN, AND PROHIBITION OF NEW SERVICE CONTRACTS IN SUPPORT OF IRANIAN INDUSTRIAL PROJECTS.

EXISTING CONTRACTS

A KEY PROVISION IN THE MINISTERS' DECISION IS THAT EXISTING CONTRACTS WITH IRAN ENTERED INTO BEFORE FOUR NOVEMBER NINETEEN- SEVENTYNINE, THE DATE UPON WHICH THE AMERICANS WERE TAKEN HOSTAGE, WILL NOT BE AFFECTED BY SANCTIONS. ONLY CONTRACTS AGREED AFTER THAT DATE WILL HAVE TO BE TERMINATED.

THIS, ACCORDING TO INFORMED SOURCES, LEAVES THE VAST BULK OF EXISTING CONTRACTS TO CONTINUE UNAFFECTED BY THE SANCTIONS DECISION.

EC DELEGATIONS, HOWEVER, RESISTED SUGGESTIONS THAT BECAUSE OF THIS RESERVATION THE SANCTIONS WERE LARGELY COSMETIC' ".

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THE PRESIDENT OF THE EC FOREIGN AFFAIRS COUNCIL, ITALIAN FOREIGN MINISTER EMILIO COLOMBO, POINTED OUT THAT IN THE ABSENCE OF SANCTIONS, BUSINESS WITH IRAN COULD HAVE PICKED UP. NOW THIS WAS BLOCKED AND THIS FACTOR SHOULD NOT BE UNDERVALUED.

SGR. COLOMBO SAID US SECRETARY OF STATE EDMUND MUSKIE HAD BEEN INFORMED FROM NAPLES OF THE SANCTIONS PROVISIONS AND HAD EXPRESSED HIS APPROVAL AND SUPPORT.

COMMUNITY SOURCES POINTED OUT THAT, FOR SOME EC COUNTRIES, A TOTAL BAN ON ALL EXISTING CONTRACTS WOULD HAVE MEANT GREAT LEGAL DIFFICULTIES AND PROBLEMS OVER COMPENSATION. THESE FACTORS APPLIED PARTICULARLY TO ITALY AND GERMANY BOTH OF WHICH HAVE VERY LARGE ONGOING CONTRACTS WITH IRAN. THERE WAS ALSO A GENERALLY HELD VIEW AMONG DELEGATIONS THAT THE BREAKING OF EXISTING CONTRACTS WOULD HURT EUROPE MORE THAN IT WOULD IRAN, AND THAT ECONOMIC SANCTIONS AGAINST THAT COUNTRY WERE VERY MUCH MORE COSTLY FOR EUROPE THAN FOR THE