EU mulls new sanctions on Iran as leaders scramble to avert ‘wider war’

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Good morning. A scoop to start: Enrico Letta, the man tasked by EU leaders with assessing the health of the bloc’s single market, told the Financial Times his conclusions to be delivered this week would be stark: the single market was “fake”, and without deeper integration Europe would not “have any economic security”. Read our exclusive interview.

Today, I parse Europe’s role in the spiralling Israel-Iran crisis, and our Berlin bureau chief reports on German chancellor Olaf Scholz’s trip to China.

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Peace pleas

EU capitals are discussing imposing new economic sanctions against Iran while using all the diplomatic pressure channels they have with Tehran, as part of a global effort to avoid a direct confrontation between the Islamic Republic and Israel.

Context: Iran fired 300 missiles and drones at Israel early yesterday morning, its first-ever direct strike on the country after years of shadow conflict. That drastically raises the risk of a full-blown regional war in the Middle East. Tehran’s attack was in response to a suspected Israeli strike on its consulate in Syria, and followed clashes between Israel and Iranian proxies linked to the war in Gaza.

Through a surge of crisis diplomacy that culminated in an emergency video meeting of G7 leaders yesterday, European capitals agreed three focus areas: condemning Iran and expressing solidarity with Israel; drawing up plans for potential sanctions; and using whatever leverage they still have over Tehran to plead for a cooling of tensions.

EU officials have had “an enormous amount of contact” with Iranian counterparts in recent days, according to people familiar with the calls, in a bid to “put guardrails” on the hostilities. Those included a conversation between EU chief diplomat Josep Borrell and Iranian foreign minister Hossein Amir-Abdollahian, where Tehran was urged “not to escalate further”.

EU foreign ministers are scheduled to have an emergency video meeting of their own tomorrow, which should give Brussels an opportunity to assess possibilities for sanctions.

Some G7 leaders proposed designating the Islamic Revolutionary Guard Corps defence force as a terrorist organisation, a proposal that the EU has long mulled but consistently failed to find consensus on. Ursula von der Leyen, European Commission president, said sanctions on Iran’s “drone and missile programmes” were being considered.

Much also depends on Israel’s response. The country’s war cabinet met yesterday evening to discuss how to proceed, with the US leading the G7 effort to convince Prime Minister Benjamin Netanyahu to not take military action that Washington fears could precipitate a “wider war”.

“All parties must exercise restraint. We will continue all our efforts to work towards de-escalation,” said EU Council president Charles Michel after the G7 call, adding that the topic would be discussed at an EU leaders’ summit this week.

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Packed agenda

German Chancellor Olaf Scholz is in China to discuss Beijing’s controversial support for Russia in the war against Ukraine and the state of the Sino-German economic relationship.

But Iran’s attack on Israel has been keeping the German leader busy from afar, writes Guy Chazan.

Context: The EU has been trying to reduce its dependency on China, one of its most important trading partners. The German economy is particularly entangled with China’s, as businesses rely on products and materials from China and have heavily invested in the Chinese market.

Scholz’s trip aims to bolster Germany’s relationship with its biggest trading partner and resolve increasing tensions over Chinese trade practices.

But Scholz will also ask China to reconsider its staunch support for Russia in the war against Ukraine.

Ahead of the trip, a senior official said Germany was concerned about China supplying Russia with dual-use technologies that were helping its war effort. China was “siding with the aggressor, and that raises fundamental questions about Chinese foreign policy”, the official said.

Scholz will also try to persuade President Xi Jinping, whom he is meeting tomorrow, to exert his influence on Russian President Vladimir Putin to explore ways of ending the war.

“The hope is that China will become more engaged in resolving this conflict,” said another official. “China is walking this narrow path between closeness and distance to Russia.”

But Iran could end up dominating the trip. Scholz, who spoke to G7 leaders from his hotel room yesterday, said that “in these difficult hours, Germany will stand closely at Israel’s side”.

German officials also hope that Scholz will be able to persuade Xi to influence Iran and prevent an escalation of the conflict in the Middle East. 

What to watch today

1. France, Germany and the EU host an international humanitarian conference for Sudan in Paris.

2. Informal meeting of EU energy ministers.

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