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Iran tells UN of enrichment increase – Peugeot, Citroen maker to pull out


VIENNA, June 5, (Agencies): Iran has informed the UN nuclear watchdog of “tentative” plans to produce the feedstock for centrifuges, the machines that enrich uranium, the agency said on Tuesday after Iran said it was preparing to increase its enrichment capacity.

Iranian Supreme Leader Ali Khamenei said on Monday he had ordered preparations to increase uranium enrichment capacity if its nuclear deal fell apart after US President Donald Trump announced his country’s withdrawal last month.

European powers are scrambling to salvage the deal, which imposes restrictions on Iran’s nuclear activities in exchange for lifting sanctions. “The Agency received a letter from Iran on 4 June informing the Agency that there is a tentative schedule to start production of UF6,” a spokesman for the International Atomic Energy Agency (IAEA) said, referring to uranium hexafluoride, the feedstock for centrifuges. The deal allows Iran to enrich uranium to 3.67 percent — far below the 90 percent of weapons grade — and caps its stock of enriched uranium hexafluoride at 300 kg. “If conditions allow, maybe tomorrow night at Natanz, we can announce the opening of the centre for production of new centrifuges,” said Vice- President Ali Akbar Salehi, head of the Iranian Atomic Energy Organisation, according to conservative news agency Fars.

“What we are doing does not violate the (2015 nuclear) agreement,” he said, adding that a letter was submitted to the International Atomic Energy Agency (IAEA) “yesterday regarding the start of certain activities”.

He specified this was just the start of the production process and “does not mean that we will start assembling the centrifuges”. Under the 2015 nuclear agreement that Iran signed with world powers, it can build and test parts for advanced centrifuges, but specific restrictions exist on what technology can be researched and in what quantity within the first decade of the deal.

Salehi also emphasised that these moves “do not mean the negotiations (with Europe) have failed.” European governments have been trying to salvage the nuclear deal ever since the United States announced its withdrawal last month and said it would reimpose sanctions on foreign companies working in the Islamic republic by November.

The remaining parties — Britain, France, Germany, China and Russia — have vowed to stay in the accord but many of their companies have already started to wind down Iranian operations. France’s PSA, which manufactures Peugeot and Citroen cars, on Monday became the latest to announce its plans to pull out of Iran, where it sold nearly 445,000 cars last year.

French energy giant Total is also preparing its departure from a $4.8-billion gas project in Iran, with its CEO saying last week that the chances of a US exemption were “very slim”.

EIB balks
The European Investment Bank has balked at an EU proposal to do business in Iran to help offset US sanctions and save the 2015 nuclear deal, EU sources told Reuters, under pressure from the United States — where the bank raises much of its funds. The resistance from the European Union’s lending arm underscores the limits of the bloc’s ability to shield trade with Iran from the reimposition of US sanctions after President Donald Trump abandoned the nuclear accord last month.

European Commissioners are expected on Wednesday to endorse the EU executive’s plan to encourage the EIB to support investments by European businesses in Iran, where the bank has never before done business.

The move has symbolic value as EU officials see it as one of the easiest to deliver on in response to Iran’s demands that it show proof of its commitment to the nuclear deal. A total of six EU diplomats, EU officials and sources at the bank said that within the EIB there are growing concerns that the Commission’s plan would imperil its multi-billion-dollar funding programme. “The bank is unhappy with the Commission proposal because the bank raises funds on US markets,” said one EU diplomat. As one of the world’s largest borrowers, the EIB raised 56.4 billion euros ($66 billion) last year on international capital markets.

The bank fears that the threat of US sanctions over Iran could scare off bond buyers. While Iran was added in March to a list of potentially eligible countries for EIB activity, any plan to upgrade that status needs the approval of EU governments and the European Parliament.

The bloc wants the measure in place before Aug 6, when US sanctions begin to take effect. Even then, it would be up to the bank’s governors, made up of the finance ministers of the EU’s 28 member states, to decide whether to seek an agreement with Tehran to engage there. The bank declined to comment on the Commission’s plan. “This would be an enabling measure, which would not oblige the EIB to take action,” the Commission said in an emailed statement to Reuters. Despite its political mandate, sources say the plan throws up many hurdles.

The bank currently steers clear, for instance, of engaging in jurisdictions listed as high-risk under the FATF, a global group of government anti-money- laundering agencies. That includes Iran. Roughly a third of its lending operation is dollar denominated, given the global reach of the US financial system. And while an EU budget guarantee partly shields the bank against losses outside the bloc, it would not address the funding risks. “This isn’t going to be easy,” another EU diplomat said. “The bank is well aware of the dangers of US sanctions on its own operations.” In back channels, Washington has also been lobbying the bank to object to the Commission’s plan, two EU sources said. “The United States is pushing pressure on the bank not to go ahead and invest in Iran, warning of the consequences,” an EU official said.

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