The above question has been looming over relations between Iran and the EU since the 1979 Islamic Revolution. The EU foreign policy, which has been actually a desideratum, has kept ever since a cautiously neutral stance toward the Islamic Republic. In spite of the appointment of the Baroness Kathrin Ashton as the EU High Representative for Foreign Affairs and Security Policy, there has been not much progress in establishing common ground between the EU member states regarding various geopolitical challenges. In the case of the Iranian nuclear programme the EU inability to address and handle this issue constructively and effectively has been more than obvious. Recent dramatic developments highlight the EU inability to proceed smoothly.

It is quite evident that the EU foreign policy is not homogeneous and is not based on an EU communal interest. It is actually overshadowed by unilateral policy making of major European countries. This is quit evident in the case of the increasing sanctions on Iranian oil exports to the EU as part of the wider transatlantic sanctions against Tehran for its nuclear programme. On the one hand you have the British initiative to ban fully Iranian oil exports to the EU from July 1 onwards. London’s move is supported by Paris, Berlin and other North European countries. On the other hand there is the European South that actually, due to the Eurozone crisis, is against the British bid over Iranian oil ban. This conflict of interests within the EU manifests the lack of foreign policy common census with potentially dangerous repercussions for the EU economy at difficult economic times. But the rising question is what the EU is after regarding Iran. Why this escalation in the relations with Tehran now?

The official justification from some EU countries for the increasing sanctioning of the Iranian oil sector is Iran’s continuous lack of cooperation and transparency regarding its nuclear programme. There are also allegations in the West that Iran is very close to no-return point of acquiring a nuclear warhead. Undoubtdely Iran is progressing day after day in its nuclear programme but the issue about these allegations is that they are unfounded, thus raising questions about their credibility, reminding us of the case of Iraq’s WMD. In spite of Tehran’s gradual progress in its nuclear programme and the US-Israeli nervousness about such a progress, it is must be noted that Iran is still far from acquiring a nuclear warhead. In this context the current timing for imposing further sanctions on Iran’s shoulders seems to be a kind of pre-emptive policy. So far so good, or bad depending on which angle someone approaches the conflict. But is the nuclear programme the only aim of the EU and US increasing sanctions policy now? Apparently not, especially if we take into account the fact that in less than two months Iran will hold its parliamentary elections.

Given the 2009 presidential elections outcome in Iran and the subsequent destabilization of the domestic political scene, one can imagine how important the forthcoming elections are for the political future of the country. The government has been already taking precautions in order to secure a peaceful atmosphere throughout and after the elections. But the government is nervous because it knows that the legitimate opposition is also getting prepared to secure that the vote transparency issue of the 2009 elections will not be repeated this time. And there are also the anti-regime opponents, royalists and mainly Islamic Marxists, who try to sabotage the process in order to gain brownie points as far as the destabilization of the Islamic Republic is concerned. It is understandable that in the next two months the stability of the Iranian establishment will undergo a crucial test for its future. The stability of the domestic scene is fragile and there you have the increasingly threatening sanctions against Iranian economy. Is it a coincidence?

In the last few months Iranian economy has dramatically deteriorated in every sector. The deterioration of the status of the exchange rate of the Iranian currency in regard to Euro and the US dollar is an alarming sign for the status of the Iranian economy. For instance, compare the current rate of 1 Euro=2.400 Tuman vis-à-vis the previous 1=1450). Lack of liquidity is ongoing in the Iranian market as a result of the sanctions against the Iranian banking sector. The Iranian stock market is in a bad shape and inflation is out of control. Given that the gas sector remains underdeveloped due to western sanctions, the oil sector is the heart of the Iranian economy. If Iranian oil sales are restricted then Iran economy is expected to face existential problems.

The aim of the US and some EU countries is not to ban Iranian oil sales 100%. It is impossible due to China’s oil needs. Given that Iranian oil exports to the EU account to 10% of the total Iranian oil exports, Tehran will be able to cope with such a ban by selling to Asian markets. The aim of the US and some EU countries is to diminish Iranian oil exports by 40-50% for a restricted period of 3 to 6 months. According to some estimations, this time will be enough for a ban to be observed worldwide both in terms of finding alternative oil resources for replacing the Iranian oil output, e.g. the Saudi, Qatar and UAE oil, and regarding the needs of oil customers. Moreover the aforementioned time could be more than enough to test the limits of Iranian economy and to influence the public opinion in Iran, especially in the middle of parliamentary elections.

From the preceding analysis it becomes evident that western sanctions in Iran aim to have multiple results going beyond the case of Iran’s nuclear programme and threatening the very existence of the Islamic Republic. At least this was the initial plan for sanctioning Iran now. The fact that some EU countries proposed to postpone the ban for July manifests the failure of the bid regarding the time prior to the Iranian elections. Given the reaction of the European South, this scenario could be still valid in the aftermath of the Iranian parliamentary elections.

It is expected that in the forthcoming months the Iranian establishment will be tested both politically and economically inside and outside the country. Iranian leaders know that the EU foreign policy toward Iran is not unified and their threat to cut first their oil exports to Europe is still on the table.