* EU diplomats meet in Luxembourg to discuss sanctions
* Western push against government in Tehran mounting
By Justyna Pawlak and Sebastian Moffett
LUXEMBOURG, Oct 15 European Union governments
plan to ratchet up sanctions pressure against Iran over its
nuclear programme on Monday, approving new measures against
Tehran's banking sector, industry and shipping.
The new sanctions mark one of the toughest pushes against
Iran by Europe to date, and come amid mounting concerns over the
Islamic Republic's military intentions and the failure of
diplomacy to solve the atom stand-off this year.
Iran insists its nuclear work has only peaceful dimensions
and has refused in three rounds of talks since April to scale it
back unless major economic sanctions are lifted.
But governments in Europe and the United States have refused
to do so and, instead, are tightening the financial screws
against Tehran as fears grow that the nuclear dispute could
envelop the Middle East in a new war.
"In the last couple of months Iran has not budged on any of
the key issues and we must therefore increase the pressure
through sanctions," German Foreign Minister Guido Westerwelle
said in Berlin.
Speaking a day before his counterparts meet in Luxembourg to
approve new sanctions, he said diplomacy was still an option.
"Our offer to Iran still stands: substantial negotiations
with the clear aim of preventing Iran from arming itself with
nuclear weapons. It is time for a political solution."
Iran's nuclear interlocutors -- Germany, France, Britain,
United States, China and Russia -- asked Tehran this year to
abandon the enrichment of uranium to 20 percent, a crucial
technological step on route to producing an atom bomb.
Tehran's refusal has lead Israel, widely understood to be
the only nuclear power in the Middle East, to threaten to bomb
its nuclear installations.
At Monday's Luxembourg meeting, foreign ministers will also
extend measures levied against Belarus over human rights abuses,
and approve a new round of sanctions against Syria to pressure
President Bashar al-Assad to halt violence against rebels.
On Sunday night, EU foreign ministers dined with Sergei
Lavrov, foreign minister of Russia, a longtime supplier of arms
to Assad's government - though Lavrov said in June that Moscow
is not delivering offensive weapons to Syria.
"We must not cease to strive for common solutions to
international problems, even when this is very difficult, as
with the current conflict in Syria," Westerwelle said.
The dinner lasted three-and-a-half hours, and was "very open
and frank and friendly", according to one EU diplomat. The
foreign ministers talked first about bilateral issues between
the European Union and Russia, and then about international
issues, in particular Syria and Iran.
The new sanctions on Iran mark a significant change of
policy for the European Union which has focused in the past on
targeting specific people and companies with economic
It has traditionally lagged the United States in imposing
blanket industry bans, wary of punishing citizens while
inflicting pain on governments.
But pressure on Iran is already doing significant damage to
its economy, in part due to an oil embargo levied by the EU this
year and Washington's new financial sanctions.
Earlier this month, riots broke out in protest against the
collapse of the rial currency, which has lost some two thirds of
its value against the dollar in the last year.
An EU diplomat has told Reuters the new European measures
include a ban on financial transactions, with some exceptions
for those involving humanitarian aid, food and medicine
purchases and provisions for legitimate trade.
In a reversal of existing European policy, the ban will
require European traders to apply to their governments for
authorisation before they can finance any transactions in
allowed goods. Previously, the EU's more narrow approach was to
allow trade broadly while banning specific products.
Trade will be hampered further by a new ban on Europeans
extending short-term trade guarantees.
"The new EU sanctions will augment the already severe pain
that sanctions are inflicting on Iran's economy," said Cliff
Kupchan, a Middle East analyst at consultancy Eurasia Group.
EU states will be banned from selling metals and graphites -
crucial in steel-making - to Iran. The EU will also ban imports
of natural gas from Iran.
The EU is also targeting Iran's shipping industry, in an
effort to curb Tehran's ability to sell oil outside of Europe
and the United States to obtain funds and hard currency.
New measures will forbid European companies from providing
shipbuilding technology and oil storage capabilities, as well as
flagging and classification services to Iranian tankers.