Iran Threatens To Use "Oil Weapon" In Nuclear Standoff

Iran threatens to use 'oil weapon' in nuclear standoff

· Energy crisis would leave people 'shivering in cold'
· UN deadline looms for Tehran to accept deal

http://www.guardian.co.uk/iran/story/0,,1838645,00.html

Simon Tisdall in Tehran
Monday August 7, 2006
The Guardian

Iran warned Britain and the US yesterday that the international community could face a new oil crisis if the United Nations security council imposes sanctions on Tehran over its alleged attempt to acquire a nuclear weapons-making capability.

Speaking in Tehran, Ali Larijani, the country's chief nuclear negotiator and head of the supreme national security council, said Iran would be reluctant to cut its oil exports. "We do not want to use the oil weapon. It is them who would impose it upon us."

But Mr Larijani added that if the west did decide on sanctions, "we will react in a way that would be painful for them ... Do not force us to do something that will make people shiver in the cold."

Iran is the world's fourth largest oil exporter and is estimated to have the second largest oil and gas reserves.

Global energy prices could be expected to reach new highs if Tehran's threat is carried out - although analysts point out that one of the first economic casualties might be Iran itself.

Urged on by Britain, the US, France and Germany, the UN security council passed a resolution last week imposing a deadline of August 31 for Iran to accept a western package of incentives in return for suspending uranium enrichment at its Natanz facility, or face the prospect of political, economic and financial sanctions.

Mr Larijani rejected the resolution as "illegal" and said Iran would not abide by the deadline. He reiterated Tehran's argument, repeated during the course of three years of largely fruitless negotiations with the "EU three" (Britain, France and Germany), that Iran was legally entitled to pursue uranium enrichment for peaceful purposes under the terms of the 1970 nuclear non-proliferation treaty (NPT).

"We won't accept suspension. Such resolutions will not have any impact on our behaviour," he said. He went on to warn that Iran was prepared to further expand its nuclear research activities "if required". That could include building additional cascades of centrifuges at Natanz for enrichment purposes.

Iran has built a cascade of 164 centrifuges and announced plans to build 3,000 this year. Experts say it would need more than 50,000 centrifuges for industrial production of low-grade enriched uranium, a process that could take years.

Tehran insists its aim is to increase Iran's ability to generate electricity for domestic use. The US and others believe the technology could be used to enrich uranium to atomic weapons grade.

Mohammad Saeidi, vice-president of Iran's Atomic Energy Organisation, said yesterday that Iran needed to find alternative energy supplies because its fossil fuel resources would run out in 25-30 years' time. "In the 21st century, the only way for any country to provide electricity is nuclear power." This was the same conclusion that Britain, France, the US and many others had reached, he added.

Mr Saeidi said Iran's nuclear facilities and future power stations would continue to be open to inspection by the UN's International Atomic Energy Agency (IAEA) under the terms of the NPT. If an agreement was reached with the western countries, short-notice challenge inspections under the "additional protocol" could be resumed, he said. It was "impossible" for Iran to divert materials for bomb-making purposes under such an intrusive inspection regime, he added.

Iranian officials said yesterday there would be a formal response to the west's nuclear offer on August 22, as previously announced by President Mahmoud Ahmadinejad. While Tehran was likely to reject demands that it suspend enrichment immediately, the officials said the government would offer to resume negotiations on all outstanding issues without preconditions.

But pressure from hardliners in parliament is increasing. They are demanding that if sanctions are imposed Iran should discontinue cooperation with the IAEA and suspend its NPT membership.