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Europe Resists U.S. Pressure Over Iranian Tanker

Julian Lee

(Bloomberg Opinion) -- Whatever your views on the rights and wrongs of detaining a tanker off the coast of Gibraltar for allegedly carrying Iranian crude oil to Syria, the decision of a Gibraltar judge to release the vessel shows that Europe’s policies toward Iran remain independent of the U.S.

It’s important to remember that British forces didn’t detain the ship because it was carrying Iranian crude, but because it was alleged to be taking crude — anybody’s crude — to Syria, which would violate European sanctions. The U.S. may want the tanker impounded to put further pressure on Iran, but the European Union has no sanctions against the Persian Gulf country’s oil exports.

Chief Justice Anthony Dudley was due to rule Thursday morning on whether the detention of the supertanker Grace 1 should be extended for another 30 days when the current order expires on Saturday. The decision was unexpectedly delayed when it emerged that the U.S. Department of Justice had filed a last-minute request Wednesday night “to seize the Grace 1 on a number of allegations which are now being considered,” the government of Gibraltar said in a statement.

 

But the Department of Justice backed off from that fight. The initial application was not followed up with a formal legal request, according to the judge. He decided that the detention of the Grace 1 should end immediately, having earlier released without charge four members of the ship’s crew who had been arrested after it was seized on July 4.

The Gibraltar government said that Iran had given its assurance that the Grace 1 won’t sail to a destination under European sanctions. That leaves it with few options in the Mediterranean region, where EU countries have been deterred by extraterritorial U.S. sanctions from buying Iranian crude. The only country thought still to be taking crude from Iran, other than Syria, is Turkey.

That promise may be less than it initially appears. The port facilities at Baniyas in Syria — where the ship was thought to be heading — cannot accommodate a vessel the size of the Grace 1. It is more likely that it will anchor somewhere in the eastern Mediterranean, probably with its transponder turned off to avoid publicly announcing its position, and offload its cargo into smaller tankers. Those ships will then make the final deliveries. And the crude may still end up in Syria without the Grace 1 going there itself.

The crew of the supertanker may need to move quickly, though. The Justice Department has requested that a new legal procedure be commenced for the detention of the Grace 1, the government of Gibraltar said in an emailed statement. That matter will be considered by Gibraltar’s Mutual Legal Assistance authorities, but it may not be successful.

There was nothing clandestine about the voyage of the Grace 1 except its destination. The ship was clearly signaling its destination as Kharg Island as it sailed up the Persian Gulf in early April. After it left the region in mid-May, it showed that its destination was the Mediterranean, as it proceeded its way around the southern tip of Africa. Its voyage was easy to follow on publicly available tanker-tracking websites.

The Grace 1 entered British Gibraltar Territorial Waters in the early hours of July 4 on a pre-arranged call to pick up provisions and spare parts, according to the International Harbour Masters Association. The previous day, when it must already have been known that the ship would enter the BGTW, the government of Gibraltar amended its Sanctions Regulations 2019, which were adopted in March. The amendment gave the chief minister the authority to designate a vessel as a “specified ship” — one subject to sanctions — by publishing a notice in the government gazette if “he has reasonable grounds to suspect” that the ship “has been, or is likely to be” involved in a breach of EU sanctions on Syria. Further, the amendment requires that any such specified ship “must be detained if it is in BGTW.”

Having accepted that the Grace 1 is not going to Syria, the government of Gibraltar determined that “there are no longer any reasonable grounds for the continued legal detention” of the ship. It would require another last-minute change to Gibraltar’s sanctions regulations to find a pretext to detain the ship for a second time. And this time, it would have to be one that specifically targets the cargo’s origin, not its destination.

European governments do not agree that ripping up the nuclear accord is the best way to deal with Iran’s alleged nuclear ambitions. That puts them in stark contrast to President Donald Trump, who did just that. And his Department of Justice isn’t going to let that difference stop it from trying to persuade Gibraltar to rearrest the ship.

So the race is on. Can the crew of the Grace 1 get back to the ship, haul up the anchors, and leave Gibraltar’s shores quickly enough to avoid being arrested again, for something other than sailing to Syria? Or will the government of Gibraltar, backed up by the U.K., allow them to do so at their leisure by standing firm to uphold European, rather than U.S., sanctions policies?

To contact the author of this story: Julian Lee at jlee1627@bloomberg.net

To contact the editor responsible for this story: Brooke Sample at bsample1@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Julian Lee is an oil strategist for Bloomberg. Previously he worked as a senior analyst at the Centre for Global Energy Studies.

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