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Lord Howell of Guildford (Conservative)

My Lords, I should like to repeat the Answer to an Urgent Question in another place.

"Mr Speaker, yesterday I attended the European Union Foreign Affairs Council in Brussels, where member states agreed a new and unprecedented set of sanctions against Iran. These include a phased oil embargo, a partial asset freeze of the Central Bank of Iran, measures against Iran's petrochemical sector and a ban on Iranian transactions involving gold. This is a major increase in the peaceful, legitimate pressure on Iran to return to negotiations over its nuclear programme. It follows the financial measures that the United Kingdom imposed on 21 November and the widening of EU measures on 1 December.

Sanctions measures, often close to those of the European Union, have been adopted by the United States, Canada, South Korea, Norway, Switzerland and Japan. These are in addition to the sanctions imposed by the United Nations Security Council itself. The Australian Foreign Minister has already announced this morning, at our joint press conference, that his country will replicate these new EU sanctions, and we will urge other nations around the world to do the same.

Iran is in defiance of six UN Security Council resolutions that call on it to suspend its uranium enrichment programme and to enter into negotiations. Its recent decision to enrich uranium to 20 per cent at an underground site at Qom demonstrates the urgent need to intensify diplomatic pressure on Iran to return to negotiations. This is a programme that can have no plausible civilian use and which Iran tried to keep secret. The International Atomic Energy Agency has expressed serious concerns about the possible military dimensions of Iran's nuclear programme, most recently in a report last November, and Iran is now in breach of 11 resolutions of the IAEA board of governors.

Sanctions are a means to an end, not an end in themselves. Our objective remains a diplomatic solution that gives the world confidence that Iran's nuclear programme is for purely peaceful purposes. We are ready to talk at any point if Iran puts aside its preconditions and returns to negotiations. Iranian Vice-President Rahimi was reported as saying in December:

'If sanctions are adopted against Iranian oil, not a drop of oil will pass through the Strait of Hormuz'.

However, it must be borne in mind that 95 per cent of Iran's oil exports, representing over 80 per cent of its foreign trade earnings, transits the Strait of Hormuz. It is very much against Iran's interests to seek to close the strait to oil exports.

Britain maintains a constant presence in the region as part of our enduring contribution to Gulf security. The Royal Navy has been conducting such patrols since 1980. At the weekend, HMS 'Argyll' and a French vessel joined a US carrier group transiting through the Strait of Hormuz. This was a routine movement but it underlined the unwavering international commitment to maintaining rights of passage under international law. Any attempt by Iran to block the strait would be both illegal and unsuccessful.

We call on Iran to answer the questions raised by the International Atomic Energy Agency: to adhere to UN Security Council resolutions; to suspend its enrichment programme; and to return to the negotiations that are the only way of reaching a peaceful and long-term settlement to its dispute with the international community".

4:09 pm
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Baroness Royall of Blaisdon (Labour)

My Lords, I thank the noble Lord for repeating the Statement on the EU, Iran and the Strait of Hormuz, made in the other place by the Foreign Secretary.

We on these Benches welcome the extensive international engagement in this policy, especially from our European partners, but also from other long-standing friends and allies. I was, of course, pleased to learn of the announcement by the Australian Foreign Minister this morning. Will the Minister outline how much support this policy has managed to garner at international level, particularly from Russia, China, India and Japan? The ban by Russia and China on supplying military equipment as well as training and maintenance is very welcome, but will the Minister say what assurances they are giving that this will be continued, and what influence they are exerting on Tehran to ensure a more responsible attitude from the regime?

On the diplomatic front, we have seen reports that at a meeting in Moscow on 18 January, Russian officials presented the Iranians with a proposed framework for negotiations with the P5+1, probably based on Russian proposals made in August. Can the Minister inform the House of any response the Government have received from Russia? The Government and the EU have rightly made it clear that we have no quarrel with the Iranian people. Before the Arab spring, we had the green movement in Iran, in which we saw huge numbers on the streets of Tehran and other Iranian cities seeking reform. Although this protest was barbarically repressed, it showed the considerable public alienation in Iran from the regime. In that light, what assessment have the Government made of the state of public opinion in Iran and of divisions in the political elite? What weight do the Government give to the threat by Iran to attempt to close the Strait of Hormuz? Do the Government intend to participate in any international naval task force to keep the strait open? What agreement have the Government obtained from other P5 countries for such action as well as from those in the Gulf? What reaction has there been from other countries in the Gulf to the threat to the Strait of Hormuz? Given the defence cuts, can the Government guarantee that vessels could be made available for such operational activity?

The policy position as set out yesterday by the former Leader of your Lordships' House, my noble friend Lady Ashton, in her capacity as the EU's high representative on foreign affairs, is undeniably correct. However, there is no doubt either that the crisis in the Gulf could further weaken worldwide economic growth, so can the Minister outline the reaction from the main oil-consuming countries in Asia, which have a high dependence on Iranian oil, to the policy of a ban on crude oil imports from Iran and-this is almost as important-the export of refined products back to Iran? Given the disproportionate effect that these necessary sanctions will have on the vulnerable economies of southern Europe, will the Minister indicate what measures are being taken to protect them?

Finally, in the event of a crisis in the Gulf having a material impact on the world economy, what indications have the Government had from the Chancellor of the Exchequer that in such circumstances contingency plans are in place to deal with any economic effects? The position in the region, the attitude being struck by Iran and the economic impact of any implementation of the threat by Iran to close the Strait of Hormuz are unquestionably serious. Your Lordships' House and we on these Benches look forward to the Government continuing to keep this House fully informed.

4:13 pm
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Lord Howell of Guildford (Conservative)

My Lords, that was a formidable list of questions. I will seek to answer them all as best I can. If I leave any out, I know that the noble Baroness will understand and we can correspond later.

The first question on which she rightly focused is how much international and global support there is for this programme. Clearly, if embargoes are undermined by other countries continuing to trade, this weakens the situation. We must be realistic. The agreements are with the list of countries that I read out and with the EU in a very united form. However, the big consumers of Iranian oil tend to be in Asia, particularly China and Japan. How much support can we expect from them? The Japanese have indicated that on a phased basis they would be able certainly not to increase any imports from Iran and possibly to run them down. Chinese Premier Wen Jiabao has indicated-indeed, within my hearing in Abu Dhabi last week-his country's strong opposition to Iran acquiring nuclear weapons.

From that it ought to follow that China will be realistic about not increasing and maybe reducing its imports of oil from Iran. Statistics indicate that China has already run down its imports to some extent, and we will have to see how that develops, but very clear messages have been conveyed to the People's Republic of China that as a responsible world power and a member of the WTO-and in its own view and those of others, a burgeoning superpower-it has to behave in a constructive and responsible way, in line with its own wishes to prevent Iran becoming a nuclear power.

Other countries involved are big customers of Iran, including India, from which I do not think there have been any indications so far on this matter. There are also smaller customers such as Sri Lanka. However, the big customers are the two countries I have mentioned, and their reaction has been as I outlined in my previous few comments.

The Russian position has been shifting, but I am not sure that I can comment on the detailed proposals made on 18 January to which the noble Baroness referred. I shall certainly examine that further, but if pressure is going to be effective in bringing Iran back to the negotiating table, the full support of the Russians is clearly also required. We are working on that as hard as we can.

Public opinion in Iran is very hard to assess. We all read reports of great differences of view in high circles in Iran between the mullahs and Mr Ahmadinejad, but it is hard to assess these things. My own judgment, which I think is shared, is that generally Iran feels that it has a right to develop a nuclear capability and will press ahead. It will take a lot of pressure, which is now being mounted, to bring Iran back to the negotiating table to discuss how its actions can be confined to civil nuclear power, in accordance with the IEA regulations rather than in defiance of them.

The noble Baroness asked about our defence capability. HMS "Argyll", as my right honourable friend said, moved to the area at the weekend. The naval presence in the Gulf has been continuous for a long time and is contributing to security. Your Lordships can rest assured that all necessary contributions to the forces, which include a major American force and French ships, will be entirely what is required to meet the situation-the situation being the threat from Iranian Ministers that they would attempt, if they could, to block the Strait of Hormuz. That would be an illegal act blocking an international trade round, and will be prevented and resisted.

Oil-consuming countries face problems because some have been fairly reliant on Iranian oil. That is less so in Europe, as I have indicated, although Greece has a heavy reliance, and it is for that reason in particular that this embargo on oil is being phased in over a number of months up to 1 July, rather than being brought in instantaneously. Iran therefore has these problems. Italy is importing Iranian oil as a repayment for previous exports, and that too will have to be phased in. Japan will also need a phasing-in operation, although it is not exactly clear at what pace that will happen.

The noble Baroness mentioned contingency plans. We certainly have contingency plans, both at the financial level and in relation to the flow of oil and other energy supplies. Indeed, there are contingency plans in relation to the whole physical matter of closing the Strait of Hormuz. Should that be attempted, I believe it would be frustrated; but if it were to be attempted, there are other means of getting oil out of the Gulf area. There are the pipelines west to the Red Sea from Yanbu, and coming on stream-I do not think it is yet fully technically commissioned, but it is nearly ready-is the Fujairah pipeline, which crosses the corner of United Arab Emirates and bypasses the strait altogether. That can carry 1.9 million to 2.1 million barrels a day. So there are ways of moving oil-not at the volume that is going through the strait at present, which is about 17 per cent of the world's daily oil supplies, but many contingencies can be developed, and we are certainly participating in them at this stage.

4:20 pm
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Baroness Falkner of Margravine (Liberal Democrat)

My Lords, does my noble friend agree that Iran is not currently in breach of its NPT obligations in seeking to enrich uranium up to 20 per cent? Does he therefore accept that a return to negotiations, including the offer on the table of Iran maintaining a civil nuclear capability under a heavy IAEA inspection regime to ensure that no weaponisation occurs, is what we should be aiming for? Does he agree with US Defense Secretary Leon Panetta's comments last month that an Israeli attack could consume the Middle East in a confrontation and a conflict that we would surely regret? What discussions are we having with the Israeli Government to the effect that any action they might take will embroil them and the rest of the region in a wider conflagration that they may deeply regret?

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Lord Howell of Guildford (Conservative)

To answer my noble friend's last question first, it has been the constant position of Her Majesty's Government that we would like Israel to come out fully and join the non-proliferation treaty if, as is widely alleged, it has nuclear weapons. We have not been given any firm facts on that, but it is an important aspect. As to Israeli action, that is constantly debated. Again, we have not been hesitant in making clear that action by Israel against Iran would lead to very dangerous developments. We take a very strong view that that is not the way forward and is at all costs to be avoided. That is the position vis--vis Israel.

My noble friend is absolutely right that one of Iran's claimed excuses, shall we say, for pushing ahead-one of its reasons for defying IAEA resolutions and UN resolutions, as it has-is that it should have nuclear weapons because it says that Israel has a nuclear weapon. That reality must be faced. My noble friend is not entirely right in saying that Iran is not in defiance of resolutions; it is; it has broken resolutions in the past. I hope that I did not misinterpret what she said on that. This is the problem: we have a regime in Tehran that cannot be trusted and has been declaring that it was co-operating and collaborating with NPT and IAEA resolutions when it was not, as has been revealed by various alarming discoveries along the way.

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Lord Gilbert (Labour)

My Lords, should we not all calm down a little about this? The Iranians think that they have total justification for possessing nuclear weapons. For the life of me, I cannot see any case against their having a nuclear weapon. Who on earth are they going to use it against? If anyone says Israel, you cannot imagine a more suicidal act for a country to perform than to launch a nuclear weapon against Israel. That would mean the total incineration of Iran. We ought to realise that with the Iranians we are dealing with people who deal in braggadocio, who say things they do not mean that sound great on television for local consumption. We should calm down-let them get on with it and waste their money.

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Lord Howell of Guildford (Conservative)

The noble Lord is pointing to what one would regard as a certain reality: people should not behave in a suicidal fashion. One hopes that he is right. Similarly, one hopes that what might be called black swan events and catastrophes do not suddenly develop, almost accidentally, out of the situation. The fact remains that it is very dangerous. The proliferation of nuclear weapons would not stop at Iran if it goes full tilt in that direction. There have been indications from a leading Saudi spokesman in the past few days that, should this kind of development occur, Saudi Arabia would have to consider its position on nuclear weapons, and proliferation would proceed. The noble Lord says that proliferation does not matter because somehow mutually assured destruction and mutual deterrents will prevail. He could be right but he could be disastrously wrong.

Noble Lords:

My Lords-

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Lord Wallace of Saltaire (Liberal Democrat)

My Lords, the noble Baroness, Lady Afshar, has been trying to get in, and we can then come to the Conservative Benches.

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Baroness Afshar (Crossbench)

I declare an interest as someone who was born in Iran and still works very closely with Iranian academics. My worry is that in Iran views are very divided about nuclear weapons, but the moment there is a threat of sanctions and a threat against Iran, it is likely that even among those who are absolutely opposed-I work with the resistance movement-a great many would back the Government. The fear of Israel is very real, and the idea that there is one law for Israel and one for Iran is absolutely understood by Iranians. The idea that Britain will bring its Army or Navy will be seen as armed defence of Israel. That would undermine any negotiations on the table. It would be very much better if negotiations were conducted perhaps a bit more quietly and with less threat. As an academic, I know that we are suffering enormously because brilliant Iranian students who want to do postgraduate work in this country cannot do so. As someone who came to this country as a student I can tell you that sometimes we turn good.

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Lord Howell of Guildford (Conservative)

The noble Baroness speaks with a lot of experience and understanding in her analysis of the psychology of the Iranian policy-makers and the Iranian Government, which, as she rightly said, is a divided house in itself. All kinds of internal conflicts are going on inside Iran. As to the question of getting back to negotiation, that is something that we all want. The aim of this policy, as my right honourable friend in the other place has made clear this afternoon, is to bring Iran back to the negotiating table, and to do so in ways that will then lead to a sensible discussion of its nuclear programme and recognising its rights, if conducted properly and in accordance with NPT and IAEA resolutions and requirements, to have civil nuclear power. That is recognised, but negotiation there must be. Bringing Iran back to the table is the task. So far, doing that by saying, "Please come back", and through the normal diplomatic niceties has proved totally inadequate. That is why we have come to the point when the pressure must be increased and the Iranians must be brought back to the table. Any suggestion that instead they will grow more violent and take action to close international waterways must be totally rejected and opposed.

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The Marquess of Lothian (Conservative)

My Lords, will my noble friend tell the House what active consideration is being given by the Government to the proposal made this week by Prince Turki al-Faisal of Saudi Arabia that the international community should pursue the concept of a totally nuclear-weapon-free zone, properly policed, that would include both Iran and Israel?

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Lord Howell of Guildford (Conservative)

This is an idea, an aim and an ambition that the Government fully share. The idea of a WMD or nuclear-weapon-free zone in the Middle East is one to which we certainly subscribe, and this must be a longer-term aim. How we get from here to there is, of course, the problem. Prince Turki al-Faisal is an extremely wise and perceptive commentator and certainly I read very closely everything he had to say on the matter. That would be the ideal. How we would get from here to there would certainly include how we deal with the situation not only in Iran but also in Israel.

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Lord Luce (Crossbench)

My Lords, I fully support these robust sanctions. Will the Minister not agree that there seems to be an ineluctable slide towards conflict, which could erupt from an incident of any kind? Iran is a very important country with a remarkable history. Is there not a very strong case for telling the Iranians that we should resume negotiations not only on nuclear issues but on much broader matters of mutual concern in the region, and on bilateral relations?

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Lord Howell of Guildford (Conservative)

This kind of approach would be very good, if we could get Iran to recognise that it must conform to the IAEA requirements and if we could have some trust and reassurance that it is not moving surreptitiously to the full weaponisation of its nuclear programme. If that assurance was there and if Iran was prepared to talk, we could certainly develop closer relations with what, after all, is a very great country that deserves respect-although it forfeits it by some of its actions-for its history and prominence in the region, and we could move in that direction. However, to get Iran even to come to the table on that basis has so far proved impossible.

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Baroness Symons of Vernham Dean (Labour)

My Lords, I regret to say that I very much agreed with the Minister when he rightly said that whichever part of the Iranian Government one looks at believes that Iran has the right to develop nuclear weapons. The problem with that is that it does not stop with the conflict with Israel; it drips into the conflict right across the Gulf, including, as he said, Saudi Arabia. Perhaps I may ask him about the short-term issue of access to oil. Can he tell us anything about Saudi Arabia's undertaking to make up the shortfall in any Iranian crude, and whether its undertaking to try to hold the international price at $100 a barrel has been dealt with officially by Her Majesty's Government and that of Saudi Arabia?

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Lord Howell of Guildford (Conservative)

We cannot yet to talk in terms of undertakings, but there have been indications. Obviously it is up to Saudi Arabia and other major oil producers in the region, such as Kuwait and the United Arab Emirates, to undertake to make up the shortfall. The indications are that this will be possible but we are not yet at the stage where I can say that undertakings have been officially agreed; they have not.

There is also a problem of matching the quality of oil concerned. As the noble Baroness knows, although the Iranian oil that Greece, for instance, has been heavily reliant on is slightly sour, the make-up oil from Saudi Arabia would be considerably sourer and would carry a much heavier sulphur content as well, so there would be difficulties for refiners. The usual complexities that arise when one moves oil flows around inside the oil market would occur, of the kind that I have just described. Therefore, I cannot say that there is a neat package of additional oil supplies ready to come into place. One has to realise that the Iranian oil does not necessarily disappear; it will not stop being produced and will probably continue to enter the market, although one imagines at a certain discount in relation to the major customers such as China.

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Lord Kerr of Kinlochard (Crossbench)

My Lords, the effect of sanctions may be to cause opinion in Iran to coalesce behind the Government, the risk to which noble Lords' attention has been drawn by an expert. Will the Government do everything they can as imaginatively as possible to make clear that we have no quarrel with the Iranian people and that the quarrel is purely with the regime? Will the Government also urge their European partners to avoid unnecessary irritants in relations with Turkey, a country which has enormous experience of peaceful coexistence with Iran and a country whose expertise and experience is extremely important to us at this difficult time?

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Lord Howell of Guildford (Conservative)

I give a most emphatic yes to both those propositions. Indeed, in relation to the second one, it is very important that we work very closely with Turkey, which has indicated very clearly that the idea of Iran becoming a fully weaponised nuclear power is extremely unwelcome to it and that it will combine with the necessary actions and strategies to prevent that. At present, the main strategy is pressure through sanctions, but there are other tracks of diplomacy to develop as well. One can pursue more than one track in these matters, but this is the one that we are now engaged on, which we hope will bring results.

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Lord Cormack (Conservative)

My Lords, I endorse very strongly what the noble Lord, Lord Luce, said. Looking at the practicalities of the immediate threat, can my noble friend assure the House that there are adequate minesweeping capacities should the Strait of Hormuz be blocked by the Iranians?

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Lord Howell of Guildford (Conservative)

My noble friend asks for assurances. I can give him assurances that all the necessary deployments and efforts will be made to achieve that. We are advised that it can be assured that any mines that are planted, for instance, by night or surreptitiously, will be very swiftly removed. There is the conviction that there can be no sustained blocking of the Strait of Hormuz and that any attempt to do so will be defeated. That is what I can tell my noble friend. To go beyond that to say that everything is perfect, nothing will be challenged and that there will be no difficulties would, of course, sound incredible, and I do not intend to give that assurance.

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Lord Kilclooney (Crossbench)

My Lords, the Minister said that there are no firm facts that Israel has nuclear armaments. Are there any firm facts that Iran has nuclear armaments? Has the European Union applied any sanctions against Israel? If not, why not?

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Lord Howell of Guildford (Conservative)

The noble Lord is raising the broader issue that we have touched on in these discussions and in many debates about the position of Israel and the position of Iran. On the second point, we are pretty sure that Iran is still short of achieving nuclear weapons, but we are also fairly well advised by the IAEA and other bodies that it is on the path to doing so. As far as the Israeli situation is concerned, I was stating the official position. Obviously, it is common talk that Israel possesses these weapons, but it has not officially asserted or confirmed that it does. Therefore, in terms of international facts-and I must use my words carefully-it cannot be asserted without question that it has nuclear weapons. That is the unsatisfactory position at present, and it is one from which we would all like to move. Of course, in the longer term, a middle-eastern nuclear-free zone would take us in that direction, but how we get there is the issue before us now and before all diplomats in the free world.

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Lord Clinton-Davis (Labour)

Is it not obvious, as the Minister said, that doing nothing and saying nothing is not an option at the moment? Is it not vital that Britain's voice must be heard and that the Government are doing exactly that? Is there any indication of the Iranian Government acceding to the reasonable international pressure which is being employed at present? If not, is there any possibility of that in the future?

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Lord Howell of Guildford (Conservative)

We clearly hope so. That is the aim of the policy. At the moment it does not look like that. It may be in the next few days that, as has happened in the more distant past, the Iranian authorities will come forward and say, "Yes, let's return to the negotiating table". They may add all sorts of impossible conditions and qualifications that make that difficult, or they may see sense and, in the interests of the Iranian people-with whom we have certainly have no quarrel; I should have made that clear in answer to the noble Lord, Lord Kerr-they will begin discussions in a sensible, calm way on how we prevent the whole nuclear proliferation pattern running away into a horror story in the future for the Middle East.

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Lord West of Spithead (Labour)

My Lords, there is a very detailed calculation going on at the moment in the United States and elsewhere about the difference between the very bad impact of Iran having nuclear weapons, and about proliferation and so on, the impact of attacks on her nuclear system and what it is believed will be the short-term effects of these. Does the Minister agree that that is a very dangerous calculation, because the one absolute certainty is that when you embark on war, you have no idea where that will lead?

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Lord Howell of Guildford (Conservative)

The noble Lord is absolutely right. As Prince Turki, who we have already mentioned, said the other day, wars lead to more wars. Once we were in a pattern of violence and conflict-which might be reached by accident, which is a very terrifying prospect-there is no telling where the consequences would go. I think Prince Turki said that one consequence would be retaliation not just against the western powers but the entire Gulf state community and indeed all those who were deemed to have had any association with those who had done the attacking. Who knows where the consequences would lead? What we do know is that if we get to the point of violence, this policy will have failed and a new one will be required. That is something we are determined to avoid.