EC scowls as it starts Iran embargo
European Common Market sanctions against Iran went into effect Thursday amid widespread feelings that even their limited bite may be further diminished. * Recent reports from Iran indicate that many European firms are already signaling their intention to reroute shipments to Iran through communist or other Middle East countries.
"There are going to be a lot of countries wanting to go through middlemen," notes another EC official here. "How do you stop companies going through subsidiaries in India or Pakistan?" he asked, nothing that such diversion would cost more.
* Further uncertainty surrounds Britain's last-minute rebuff of the May 18 EC decision to backdate the sanctions to Nov. 4 (the date the US Embassy in Tehran was seized).
The other eight EC countries are sticking unenthusiastically to their effort at US-allied solidarity. The British government's failure to gain parliamentary approval for retroactive sanctions aggravates London's weak standing in the EC and unexpectedly sours a hard-won effort to muster support for Washington.
But even as the rest of the EC launched what many feel is a symbolic gesture, there is little hard information on the amount of trade involved or its impact on Iran.
Dutch sources estimate the move will affect only 8 percent of the EC's approximately $1.1 billion trade per month with Iran.
The proportion accounted for by contracts signed before the November embassy seizure, which are not covered by the European embargo, is not known.
But British trade figures reveal a surge in export orders to Iran in the past month, which had a decisive impact on its reversal of retroactive sanctions. While British exports for the first three months of 1980 totaled about $200 million, they jumped to some $120 million in April alone in what officials believe was a drive to beat a US-EC trade ban.
The May 19 House of Common debate on the issue left no doubt that this business was at the heart of the revolt against the government's decision to side with the allies' sanction move. It indicated, to US annoyance, the ban would not cover existing contracts. One labor opposition member noted, "Those who will suffer and who feel most strongly are the people whose jobs could be at risk in this country."
Actively lobbying against the retroactive step was the trouble-plagued Talbot auto firm, whose car kits for assembly in Iran could bring $360 million this year. Most of its contracts probably would not have been affected by the November retroactive date. But company officials feared possible delivery and payment problems.
Sources here and in other European countries indicate the ban may not affect their already-slumping exports to Iran. But there is considerable resentment against Britain for again shattering European solidarity.
Many feel the British move might further undermine the largely symbolic trade restrictions.
While Germany was Iran's leading EF supplier last year with $1.2 billion in exports, this was a far cry from the 1978 level. It's important purchases of Iranian oil had dwindled during the same period. The German colony in Iran, which numbered 14,000 two years ago, is down to about 1,300 following the murder of a Merck Company executive last year. German goods destined for Iran ar reportedly piling up in Hamburg and other European ports with litle hope of finding ships bound for the troubled Gulf.
Italy's crucial $6 billion in contracts and 1,750 workers in Iran may be largely unaffected by the embargo. The government agreed to apply -- but is still divided -- over the sanctions. Socialist Trade Minister Enrico Manca, for one, points out that sanctions levied against Italy in the 1930s were unsuccessful and even reinforced the fascist regime.
In addition, the French have replaced Iran with Iraq as an important trading partner. France now buys some 20 percent of its crude oil from Iraq. Baghdad has reciprocated by buying French civilian and military goods.
Yet Europe is still hoping for a major break in in the hostage situation with the establishment of Iran's new parliament and a possible show trial for the Americans.
It is also feared that the sanctions might be counterproductive in both economic and political terms, and that they could lead to trade diversions through other countries. Many are especially concerned over communist countries supplanting them in Iran, even if they know that the Soviet or other Comecon transport networks or goods are not up to European standards.