Via Realite EU
A European Union member and close U.S. ally, Italy has largely followed EU foreign policy in its dealings with Iran, both diplomatically and economically, though it is distinguished by being Iran’s largest European trading partner.
Diplomatic relations
Having maintained close diplomatic relations with Iran for many years, Italy is a key liaison between the West and Iran. Italy’s financial, naval, and military support for Iraq throughout the Iran-Iraq War strained the Italian-Iranian relationship, which was repaired in 1988 at the conflict’s end.
In recent years, the Italian government chose to align itself with EU and US diplomatic policy toward Iran, condemning Iran’s nuclear program and supporting the idea of stronger sanctions should Iran not comply with UN regulations.[1] However, Italy’s resolute attitude toward Iran’s nuclear program has shifted in recent months.
In February 2011, Italian Foreign Minister Franco Frattini congratulated Ali Akbar Salehi on his official appointment as Iran's Foreign Minister [2]. Salehi is designated by the European Council [3] and the United Kingdom [4] and is subject to a European Union travel ban for his activities in advancing his country’s sanctioned nuclear program. Salehi has spent many years in positions officially connected to the Iranian nuclear program, first serving as Iran’s representative to the International Atomic Energy Agency (1997-2005) and later as the head of the Atomic Energy Organization of Iran. He is also a vice president of the Islamic Republic, known for his defiance on the nuclear issue and belligerence vis-à-vis Western powers.
In October 2010, Italian Premier Silvio Berlusconi expressed to Germany's Frankfurter Allgemeine Zeitung newspaper, his doubts about the effectiveness of US and EU sanctions against Iran, saying “I fear that sanctions will not bring success.” Even though Italy has participated in such sanctions, Berlusconi claimed that sanctions have a tendency to reinforce regimes. He suggested that “a gentle and circumspect approach may be more helpful.”[5]
That same week, Italy's Secretary of State Stefania Gabriella Anastasia Craxi expressed her country's support for Iran's right to peaceful applications of nuclear development. She pointed out that the EU and Italy are feeling the effects of complying with sanctions against Iran.[6]
On Oct. 27, 2010, IPALMO, Istituto per le Relazioni tra l’Italia e i Paesi dell’Africa, America Latina, Medio ed Estremo Oriente (Institute for Relations among Italy and the countries of Africa, Latin America, and the Middle and Far East), held a conference during which former Italian foreign minister, Gianni De Michelis, criticized the US and other European countries for the most recent round of sanctions.[7] He also praised Iran’s ‘positive’ role in Iraq and Afghanistan and said that “Iran can play a central role in promoting peace and stability in the Middle East.”[8]
In a meeting between Frattini and Iranian Vice President, Hamid Baghei, on November 16, 2010, Frattini said “We recognize the right of all countries, including Iran, to peaceful nuclear energy.”[9] Frattini also called for an expansion of practical cooperation between the two countries on international issues. He pointed to the progress of finalizing a draft agreement for cooperation in war-ravaged Afghanistan.[10]
In January 2008, before Italy’s recent skepticism about the effectiveness of UN sanctions and before he became Italy’s Foreign Minister, Frattini, stated: "I support severe [Security Council] sanctions" if Tehran does not halt its uranium enrichment program within a month. Europe "cannot leave Israel alone" in its efforts to thwart Iran's pursuit of a nuclear bomb, and it should have the international community’s diplomatic support, said Frattini. Iran must freeze its nuclear program, including the parts it claims are for civilian use, until it provides complete information on it to the international community, Frattini added. "If they would have agreed about transparency of their nuclear exercise the situation would be different. But without that they are leading us toward adopting a third set of sanctions," he said.[11]
As the host of the February, 2009 G8 summit, Italian Foreign Minister, Franco Frattini, invited the Iranian Foreign Minister Manucher Mottaki to the G8 Foreign Ministers meeting in Trieste, in an attempt to use Italy’s relationship with Iran to improve relations between Iran and the West.[12] However, following the disputed June 2009 Iranian elections and the subsequent crisis which engulfed Iran, the Iranian government declared it would not attend the summit. Frattini affirmed that Iran would be a top priority topic at the G8 Summit, and called for the immediate cessation of violence, stating that there was a strong possibility that the G8 nations would impose some form of sanctions on Iran following the summit.[113]
Economic relations
Despite economic sanctions against Iran, Italian import of oil has increased by 92 percent in the first ten months of 2010-- imports from Iran accounted for 15.3 percent of Italy’s total crude oil imports [14] According to the Italian Institute of Foreign Trade, Italian imports went up by 161% in the first three quarters of 2010 compared to the same period in 2009, Italy buying over €3.744 billion worth of Iranian goods.[15] Italian exports to Iran have also increased during the first three quarters in 2010. Just in the engineering economic sector, Italian exports rose 50% last year. The Federation of Italian Associations of Mechanical and Engineering Industries reported that the robotics field increased its exports to Iran by 384%, the steam turbines exports increased by 236% and thermic machines imports grew by 106%.[16] The economic relationship between Italy and Iran is largely based on the trade of materials used for infrastructure, industry, and energy. Crude oil accounts for 85 percent of Iranian exports to Italy.[17]
On October 25, 2010, the EU issued new regulations on restrictive measures against Iran. An energy update published by Delphi Global Analysis, reported that the new regulations outlined tough restrictions on investment and the sale of equipment and technology to the Iranian oil and gas industry.[18] Unlike legislation passed in the US, the new EU regulations still allow for the import and export of oil and gas to Iran. An EU official said that in allowing imports and exports of oil and gas to Iran, the EU seeks to protect the Iranian population from feeling the negative effects of sanctions that could deprive them of energy.[19]
In April 2010, Eni SpA, an Italian oil and gas giant, handed over the Darkhovin oilfield, its sole operational asset in Iran, to local partners in order to avoid US sanctions.[20] Eni said its output in Iran was 35,000 barrels of oil equivalent per day in 2009 and that its capital expenditures were over $20 million per year in Iran over the last ten years.[21]
As part of the wide-ranged international sanctions against Iran, Eni, along with Total of France, Statoil of Norway, and Royal Dutch Shell of Britain and the Netherlands, drafted an agreement on September 30, 2010, in which they all pledged to end investments in Iran and avoid new projects in the country’s energy sector.[22] In response, the US said that the companies would be protected from possible penalties for doing business with Iran.[23] With the agreement, Eni settled to exit Iran when all current deals expire.[24] Because of the agreement, Iran Air is able to refuel at only three European airports, causing significant business disruptions.[25]
Eni CEO Paolo Scaroni announced on November 23, 2010, that Eni will continue to import Iranian crude oil for another three years in order to settle deals dating back to 2000 and 2001.[26] Of Eni’s original $3 billion investment in Iran, $1.4 billion is not yet recovered, which Scaroni said will be paid back in crude oil.[27] Eni has said that its current projects in Iran are reduced to these buy-back deals.[28]
In January 2008, the National Iranian Oil Company NIOC and Italy’s Edison International signed a $107-million (73-million-euro) contract for exploration in Persian Gulf waters. It involves geological and seismic studies as well as drilling up to two wells in Iran’s Dayyer Block. The Block is located in the most abundant hydrocarbon basin in the world with total reserves amounting to 18 TcF gas and an estimated oil pay at 1 billion barrels.[29]
In May 2010, it was confirmed that drilling for the project was well underway with an exploratory well projected to reach 3,600 meters.[30] At the same time, Edison International was seeking other partners for the venture, offering a stake ownership of more than 40%.[31] The project has another two years to run, open to a one-year extension.[32]
In July 2008, the Swiss power company Laufenburg (EGL), announced that its second gas-fired combined-cycle power plant in Italy, Rizziconi Energia, was operational after 27 months of construction.[33] The National Iranian Gas Export Company (NIGEC) signed a long-term agreement with EGL in March 2008 to provide the gas used to operate the Italian power plant.[34]
Italy has also played a role in the projected Iran-Pakistan natural gas pipeline for which the bidding process will soon begin. According to a Frattini press statement, it is expected that Eni will compete in the bidding process with the full support and even requisite funding from the Italian government.[35]
Wikileaks
According to Wikileaks, Italian PM Silvio Berlusconi believes Israel might attack Iran, even with nuclear weapons, as a preventive measure, if Israel feels threatened by the Iranian nuclear program. Berlusconi’s opinion was expressed to the U.S Secretary of Defense Robert Gates while he was visiting Rome on February 6, 2010. [36]
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