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THE INDEX — December 11, 2009

Iran will likely suffer additional sanctions to be imposed early next year if they do not comply with the international community’s nuclear enrichment oversight. A draft statement from the European Union, meeting in Brussels on Friday, expresses "grave concern that Iran has so far done nothing to rebuild confidence of the international community in the exclusively peaceful nature of its nuclear program.” The statement, expected to be approved at the summit, adds that “Iran's persistent failure to meets its international obligations and Iran's apparent lack on interest in pursuing negotiations require a clear response, including through appropriate measures,” which is understood to mean supporting UN sanctions and possibly imposing its own, steps that officials say will be discussed at the next summit on January 21. The EU statement also addressed concerns that staffers of EU missions and EU citizens have been put on trial in Iran, and reminded Tehran that “any action against one EU member state is considered an action against the entire EU.” While the EU statement did not explicitly mention sanctions, U.S. Secretary of Defense Robert Gates, speaking in Iraq on Friday, allowed (in the first such instance by and U.S or EU official) that “I think you’re going to see some significant additional sanctions imposed by the international community, assuming that the Iranians don’t change course and agree to do the things that they signed up to do at the beginning of October.” President Barack Obama has indicated that the end of 2009 is his administration's internal deadline for Iranian cooperation. The United Nations P5+1 is expected to meet as early as next week for further discussions on Iran’s nuclear program.

Iraq’s second oil field auction since the 2003 U.S. invasion sold development rights to two fields on Friday, contracts that are expected to raise tens of millions of dollars per year. Iraq depends on oil revenue for 90 percent of its government budget and still requires heavy foreign investment to enhance this underdeveloped sector. The first auction in June was largely seen as unsuccessful, an only only one bid—out of six available fields—was accepted. Prime Minister Nouri al-Maliki, in opening remarks at the latest auction, called the recent violence in Iraq an aberration. “There is no security deterioration in Iraq, even if a security breach occurred,” he said, adding, “Iraq is on its way to removing all its obstacles.” But the 44 companies who participated on Friday (the first day of the two-day auction) were clearly aware that the Baghdad bombings on Tuesday that killed 112 only added further to a death toll—that has claimed more than 400 lives since August in Baghdad alone. The largest field, Majnoon, in southern Iraq, with proven reserves estimated at 12.6 billion barrels of oil was accepted by a partnership of Royal Dutch Shell and Petronas, the state-owned Malaysian firm. A consortium of China National Petroleum Company, Petronas, and the French firm Total won rights to the second field, Halfiya, also in southern Iraq, with an estimated 4.1 billion barrels. Several fields failed to attract suitors on Friday—all of them in areas of relatively high violence. U.S. combat forces have withdrawn from Iraqi cities and are scheduled to end combat operations in Iraq by August 31, 2010, and leave entirely by 2011. But in speaking to U.S. soldiers in Iraq on Friday, Defense Secretary Robert Gates admitted, "I wouldn't be a bit surprised to see agreements between ourselves and the Iraqis that continue a 'train, equip and advise' role beyond the end of 2011. They realize that they're probably not going to be ready." EU leaders in Brussels on Friday pledged $10.6 billion (7.2bn euros) to developing nations over the next three years to help finance the economic costs that are expected to initially come with decreases in greenhouse gas emissions. In announcing the agreement, Swedish Prime Minister Fredrik Reinfeldt noted contributions from all 27 member states, which he characterized as the EU upholding its “fair share” in addressing climate change. Some observer groups lamented, however, that the pledge is simply insufficient. "Any money that would flow from the developed to developing worlds would be welcome, but these numbers are very, very low," explained Bruno Tseliso Sekoli, chairman of the Least Developed Countries bloc. Other groups questioned whether the funds announced today actually constituted new aid at all. "Almost all of the money is likely to be simply a relabelling of existing aid commitments," said Anne-Catherine Claude of ActionAid. "Many EU members have a track record of repackaging or re-announcing existing aid commitments. This appears to be the case here too.” EU leaders also urged the International Monetary Fund to adopt the so-called Tobin tax (which would tax international currency transactions, thus effectively applying a levy on global banking institutions) to cover costs of the economic downturn. "Our taxpayers are now suffering the situation [caused by] some mistakes, to put it diplomatically, that were made by the financial sector," European Commission President Jose Manuel Barroso said. "[It is necessary] now that the financial sector also gives a contribution to the overall economy." The United States, however, has been less enthusiastic than European nations of agreeing to deep cuts in carbon emissions and climate change financing, and has ruled out any support for a Tobin tax.

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