Proposals by the EU to introduce sanctions against Iranian oil are likely to be delayed for six months amidst fears of the economic consequences to debt ridden nations Italy, Spain and Greece.
The 27 member states of the European Union are likely to delay the planned embargo on Iranian oil imports, due to the impact sanctions would have on heavily indebted Italy, Spain and Greece.Bloombergreport that whilst Britain, Germany and France are pushing heavily for sanctions to be introduced, they face opposition from member nations that would suffer further economic distress if forced to find more expensive suppliers. EU countries buy 500,000 barrels of oil from Iran each day.
Greece was the only country to veto proposed EU sanctions against Iran in December, designed to deter the Islamic Republic from proceeding with its nuclear development program. However, Digital Journal reported that in early January Greece agreed in principle to lift its objections. Further discussions have resulted in a compromise situation, with a-six month delay proposed to to satisfy Greek requests for a 12-month delay.
NPRquotes various analysts voicing their views on the situation. Dr. Evangelos Venetis points out "Greece has been one of the most friendly countries towards Iran in the 20th century and - both prior and after the Islamic Revolution. Both countries share a mutual respect, and these have an impact on political and economic relation."
Analyst Robin Mills said "One reason why Greece is so dependent on Iranian oil right now is because of the credit terms, and Iran has been prepared to offer very easy credit. And I don't think any other supplier - whether Russia or somebody else - would be so keen to offer easy credit. There'd be no real reason for them to do so."
An official from the EU stressed that finding oil from alternative suppliers at similar prices is key. There are hopes that Russia and Kazakhstan may provide oil at reduced prices to the southern European countries suffering from the debt crisis.
Interestingly Nigel Kushner, an international trade lawyer, is cited by Bloomberg saying “No doubt the Greeks are saying to rest of EU, ‘If we play ball, what are you giving us in return?'" This contrasts with Greek agreement to approve the sanctions which appeared as if they were under EU pressure to comply when the Greek veto was suddenly lifted.