Posts Tagged ‘European Union’

Portugal: Biggest strike in 20 years cripples a nation

November 25, 2010 Leave a comment

Published Date: 25 November 2010
Public sector workers in Portugal yesterday began a nationwide strike that is expected to cause the biggest disruption in more than 20 years.

The day-long walkout aims to shut down most public services as trade unions fight the government’s austerity measures.

Portugal is under severe pressure to cut a high level of national debt which is undermining its economy and fuelling market concerns that it may need a financial rescue.

The government intends to introduce pay cuts for public employees next year, as well as tax hikes, to help pay off the debt.

Opposition to the measures has united the country’s two largest union federations, representing 1.5 million workers, in their first joint strike since 1988.

As the country’s two biggest unions stopped trains and buses, grounded planes and halted services from healthcare to banking, the country’s economic woes continued.

“It is a bigger strike than the one in 1988,” said Joao Proenca, the head of the UGT union which is traditionally close to the ruling Socialists.

Manuel Carvalho da Silva, head of the country’s biggest CGTP union, said over three million people took part.

“This strike offers an unequivocal sign that the government and the political forces must interpret,” Mr Carvalho da Silva said. “The way out of the crisis cannot be through sacrifices made by the workers.”

Prime Minister Jose Socrates has repeatedly ruled out the need for a bail-out, pledging to stay the course to cut the budget deficit through tough wage reductions for civil servants, tax hikes and major cutbacks to public services.

“What’s coming for the new generation is very sad. I don’t see a solution for them aside from emigrating to other countries where they may have new opportunities,” said Madalena Costa, 66, a retired school teacher as she passed a train station emptied by the strike.

Others were angered by the protest, saying the country could not afford the stoppage, the first general strike.

“This strike is completely absurd,” said Pedro Silva, 36, a biology teacher at a private school, who had to take a taxi to work.

“The Portuguese have to understand that there is no money and if there is no money people have to work to get it.”

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  • Last Updated: 24 November 2010 11:41 PM
  • Source: The Scotsman
  • Location: Edinburgh



Ireland Unveils 4 Year Budget Details, Riots Imminent

November 25, 2010 Leave a comment

Assorted international currency notes.

Assorted Currency Notes

A bunch of completely irrelevant numbers released by Ireland. At best these will achieve nothing but will kick the can down a few more months. At worst violent rioting will be a daily occurrence in Dublin within a week.

From RTE:

* The Government strategy aims to make savings of €15bn over the next four years, with a €10bn cut in public expenditure and a €5bn increase in taxes. (riots)

* It said that 40% of the measures (€6bn) will be frontloaded in the Budget, which will be delivered on 7 December.

* More than 24,000 jobs will be cut in the public sector over the four-year period.(riots)

* The public sector pay bill will be reduced by €1.2bn and pay for new entrants will be reduced by 10%. While public services retirees face significant cuts in their pensions. (riots)

* Ireland will raise VAT rate to 22% in 2013, and 23% in 2014 (riots)

* Ireland may tap pension reserve fund for infrastructure plan (kiss that retirement money goodbye

* It says the numbers of people paying tax must increase, but that an income tax system where more than 45% of tax units pay no income tax is not sustainable (riots)

* Ireland promises to maintain a 12.5% company tax rate (this will be revised soon courtesy of Olli Rehn and the European overlords)

* And the funnitest thing you will see today: the government expects to grow at just under 3% for the next 4 years.(laughter)

As Portugal is currently gripped in its biggest general strike in history over precisely the same issue (austerity budget), sit back, and enjoy the Dublin riots to cause Waddell and Reed to sell some ES soon to quite soon.


Irish application for IMF/EU rescue package approved

November 21, 2010 Leave a comment

Brian Cowen, the Taoiseach of Ireland.

Brian Cowen, the Taoiseach of Ireland.


Sun, Nov 21, 2010

Taoiseach Brian Cowen tonight confirmed the European Union has agreed to Government request for financial aid package from the European Union and the International Monetary Fund.

European finance ministers held an emergency conference call tonight to consider a Cabinet request for aid, during which the application was approved.

Speaking at a press conference in Government Buildings in Dublin with Minister for Finance Brian Lenihan tonight, Mr Cowen said the rescue package, which will run for three years, will be tied to a restructuring of the banks and a deficit reduction plan.

The amount of funding being applied for will be decided during the negotiations, the Taoiseach said. Earlier today, Mr Lenihan said the figure would be in the “tens of billions” but would be less than €100 billion.

Mr Cowen also said Ireland’s 12.5 per cent corporation tax rate did not form part of the negotiations.

“A central element of the programme will also be to support further deep restructuring and the restoration of the long term viability and financial health of the Irish banking system,” Mr Cowen said.

The loan will be arranged through the IMF and the European Financial Stability Facility, a €440 million fund that can be accessed by EU member states in financial difficulty. Mr Lenihan said the UK and Sweden have also offered to help fund the package.

The Taoiseach said the Government will publish its four-year recovery plan for the economy early next week.  The 160-page document charts how the State will reduce its outgoings by €15 billion between now and the end of 2014.

In Brussels, EU economic and monetary affairs commissioner Olli Rehn said the finance ministers welcomed the Government’s request for aid. “Providing assistance to Ireland is warranted to safeguard the financial stability in Europe,” he said.

Mr Rehn said a team of European Commission, European Central Bank and IMF experts in Ireland would prepare the details of the assistance package by the end of the month, adding it would be a three-year loan programme. “The programme under preparation will address both the fiscal challenges of the Irish economy and the potential future capital needs of the banking sector in a decisive manner,” Mr Rehn said.

In a statement tonight, Central Bank Governor Patrick Honohan said tonight’s announcements allow Ireland’s course of economic and financial policy to be set on a more secure path. “We can be reassured that the Irish banking system retains the support, not only of the Central Bank of Ireland, but of the European Institutions,” he said.

Labour Party finance spokeswoman said Joan Burton described the agreement as “the final epitaph for a Fianna Fáil Government that has plunged the country into the financial abyss and that has consistently and deliberately lied to the Irish people”.

The Cabinet met this afternoon after Mr Lenihan said he would seek its approval for a financial bailout. Following several days of negotiations with IMF, EU and ECB officials in Dublin, Mr Lenihan said he would recommend the State applies for the bailout to ensure Irish banks had enough  “firepower” to function.

He dismissed pressure on Dublin from other euro zone countries to raise low business taxes that have attracted many multinational companies to Ireland, saying changes to the 12.5 per cent corporation tax rate were off the agenda and would hamper growth.

In an interview on RTÉ Radio’s News at One, Mr Lenihan declined to be drawn on the exact size of the loan but he indicated it would be in the tens of billions. He also said it would not be a “three figure sum”.

The Minister said the interest rate charged on the loan had yet to be agreed but would be significantly lower than the rate currently available to the Government on international bond markets.

Mr Lenihan admitted for the first time the banks had become too big a problem for the country to resolve on its own. “The key issue all the time for the Government is to ensure that we do not have a collapse of the banking sector.”

He said Ireland may not fully draw down any funds it gets from the EU and IMF, which would simply serve as “a powerful demonstration of firepower behind the banks”.

Experts estimated Ireland may need €45-€90 billion, depending on whether it needs help only for its banks or to cover general Government spending too. The main concern for EU policymakers is Ireland’s problems spreading to other euro zone members with large budget deficits like Spain and Portugal, threatening a systemic crisis.

In May, the EU and IMF launched a €110 billion rescue package, the first of a euro zone country, aimed at pulling Greece back from the brink of bankruptcy. In return, Athens promised harsh austerity measures which brought large numbers of Greeks onto the streets in protest.

Yesterday, French president Nicolas Sarkozy predicted Ireland would raise its corporate tax rate but said he did not anticipate an increase would be made a condition of the international bailout. “It’s obvious that when confronted with a situation like this, there are two levers to use: spending and revenues,” Mr Sarkozy said.

German chancellor Angela Merkel declined to say whether she believed the tax was in jeopardy if the Government tapped an international bailout fund. “Every country that’s in need of this mechanism can use it. Everything beyond that is the decision of each individual country,” she said.

Meanwhile, Sweden said it would consider a bilateral loan to Ireland if one was requested, prime minister Fredrik Reinfeldt said. On the question of Ireland’s low corporation tax, Mr Reinfeldt said: “It’s a decision for the Irish people and government to take.”

Additional reporting: Agencies

© 2010


Irish resisting EU bail-out pressure

November 15, 2010 Leave a comment

15 November 2010 Last updated at 12:20 ET

Unemployed worker protests in Dublin One worker, who has recently been made redundant, took to the streets in Dublin


The Irish Republic has insisted it does not need European Union assistance amid speculation it is under pressure to use an EU bail-out fund.

Dublin said it was in contact with “international colleagues”.

But it dismissed reports that it may approach the European Financial Stability Fund (EFSF) for up to 80bn euros (£68bn; $110bn) as “fiction”.

Meanwhile, Portugal has called on the Republic to act for the good of the eurozone, as well as its own interests.

The EU can only offer a bail-out if Dublin requests it – but there are fears that if this did not happen there would be greater contagion elsewhere.

However, a succession of Irish government ministers said there had been no suggestion of turning to Europe for help.

“The argument that Ireland is about to go banging on the door of the International Monetary Fund or needs to take an EU bail-out is simply wrong, but if it gets more legs, it could be very, very dangerous,” European Affairs Minister Dick Roche told Irish radio.

‘Vision’A spokesman for Economic and Monetary Affairs Commissioner Olli Rehn said that pressure on Dublin to take a bail-out was not coming from the European Commissioner, but from “another player”.

Continue reading the main story

“Start Quote

A bail-out would be a humiliation for a country that just a short while ago was the Celtic Tiger. Some see these days as critical for Irish fiscal independence”

End Quote

image of Gavin Hewitt Gavin Hewitt BBC Europe editor

Last week, market anxiety spread to other heavily indebted eurozone nations, including Portugal and Spain, driving up their borrowing costs.

And Portugal’s Finance Minister Teixeira dos Santos told the Financial Times there was now a high risk that Portugal would have to seek foreign financial aid.

“The risk is high because we are not facing only a national or country problem,” he told the FT. “It is the problems of Greece, Portugal and Ireland. This is not a problem of only this country.”

Earlier, Mr Santos told the AFP newsagency he believed Ireland had “the vision to take the right decision”.

“I want to believe they will decide to do what is most appropriate together for Ireland and the euro,” he said.

The yield on Irish bonds – essentially IOUs sold by the government to fund state spending – were trading lower on Monday, suggesting a slight easing of concerns.

The yield on the bonds has soared in recent weeks, indicating that investors believed there was an increased risk of the Republic defaulting on its debt.

‘Concerns’ Continue reading the main story

What went wrong in the Irish Republic

The 1990s were good for Ireland’s economy, with low unemployment, high economic growth and strong exports creating the Celtic Tiger economy, with lots of multi-national companies setting up to take advantage of low tax rates.
At the beginning of 1999, Ireland adopted the euro as its currency, which meant its interest rates were set by the European Central Bank and suddenly borrowing money became much cheaper.
Cheap and easy lending and rising immigration fuelled a construction and house price boom. The government began to rely more on property-related taxes while the banks borrowed from abroad to fund the housing boom.
All this left Ireland ill-equipped to deal with the credit crunch. The construction sector was hit hard, house prices collapsed, the banks had a desperate funding crisis and the government was receiving much too little tax revenue.
The economy has shrunk and the government has bailed out the banks. A series of cost-cutting budgets have cut spending, benefits and public sector wages and raised taxes. But there are still doubts about future government funding.
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Ireland’s difficulties will be discussed by EU finance ministers in Brussels on Tuesday.

However, the BBC’s Europe editor Gavin Hewitt said that high-level talks had already begun, involving European Commission President Jose Manuel Barroso and his economy commissioner Olli Rehn.

“Some EU officials believe it would be better for the Republic to accept a bail-out package now rather than to allow uncertainty to continue,” Gavin Hewitt said.

Brussels fears that any delay risks repeating the Greek crisis that earlier this year threatened the entire eurozone, he added.

A commission spokesman confirmed that it regarded the Irish finance position as serious, but denied that the government was being put under pressure to accept help.

“Yes, we are in close contact with the Irish authorities, yes there are concerns in the euro area about the financial stability of the euro area as a whole, once again,” said Amadeu Tardio.

“But to say that there are strong pressures to push Ireland to any kind of scheme of this kind is an exaggeration,” he added.

Bank plan

Continue reading the main story

“Start Quote

There would not be a banking system in Ireland – and therefore not an economy in any conventional sense – if it weren’t for the generosity of the European Central Bank in providing loans to Irish banks that the markets won’t provide”

End Quote

image of Robert Peston Robert Peston Business editor, BBC News

Some reports suggest that the Irish Republic could seek help for its banking sector alone, rather than asking for help at a government level.

This, say observers, would save them the embarrassment of being rescued by the EU and avoid greater involvement by Brussels in economic decisions.

The Irish Republic’s trade and business minister Batt O’Keefe said the Republic must show it could “stand alone”.

“It’s been a very hard-won sovereignty for this country and this government is not going to give over that sovereignty to anyone.”

However the EFSF cannot be used to lend directly to banks, said European Central Bank vice president Vitor Constancio.

“The facility lends to governments and then the governments of course may use the money to that purpose in similar lines that exist for Greece,” he said.

“The same could be done for Ireland.”

The Irish government has all but nationalised the country’s banking system, which had lent recklessly to property developers at a cost of 45bn euros.

‘Stand alone’The government has consistently stated its determination to restore stability to the public finances and stressed that it was “fully funded” until 2011.

Meanwhile concerns persist about the state of the Greek economy, which received an EU bail-out worth up to 110bn euros.

European and IMF officials will be in the country this week to decide whether to release the final tranche of the money.

But over the weekend, Greek Prime Minister George Papandreou signalled it may have to ask for permission to delay its repayments.

The scale of the problems still facing Greece were further underlined by the latest official European figures which showed that its budget deficit in 2009 was markedly higher than previously stated.

Cuts impactSince 2008, the Irish Republic has suffered a dramatic collapse of its property market.

House values have fallen between 50% and 60% and bad debts – mainly in the form of loans to developers – have built up in the country’s main banks, bringing them to the verge of collapse.

The country has promised the EU it will bring its underlying deficit down from 12% of economic output to 3% by 2014.

Its current deficit is an unprecedented 32% of gross domestic product, if the cost of bad debts in the Irish banking system is included.

The Irish government, which has a flimsy majority in parliament, is expected to publish another draconian budget on 7 December.

This will impose spending cuts or tax rises totalling 6bn euros to bring the deficit down to between 9.5-9.75% next year.

Investors fear the budget cuts are likely to worsen the country’s already deep recession, leading to further losses to the government via falling tax revenues and higher benefit payments.

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    Ireland Goes Bust, Irish Bank Run

    November 13, 2010 1 comment

    Economics / Credit Crisis 2010 Nov 12, 2010 – 02:35 AM

    By: Mike_Whitney


    Best Financial Markets Analysis ArticleThere was a bank run in Ireland on Wednesday. LCH Clearnet, a London based clearinghouse, surprised the markets by announcing it would increase margin requirements on Irish debt by 15 percent. That’s all it took to send investors fleeing for the exits. Yields on Irish bonds spiked sharply as banks tried to close positions or raise the capital needed to meet the new requirements. The Irish 10-year bond soared to 8.9 percent by day’s end, more than 6 percentage points higher than “risk free” German sovereign debt. The ECB will have to intervene. Ireland is on its way to default.

    This is what a 21st century bank run looks like. Terms suddenly change in the repo market, where banks get their funding, and the whole system begins to teeter. It’s a structural problem in the so-called shadow banking system for which there’s no remedy. Conventional banks exchange bonds with shadow banks for short-term loans agreeing to repurchase (repo) them at a later date. But when investors get nervous about the solvency of the bank, the collateral gets a haircut which makes it more expensive to fund operations. That sends bond yields skyrocketing increasing the liklihood of default. In this case, the debt-overhang from a burst development bubble is bearing down on the Irish government threatening to bankrupt the country. Ireland is in dire straights. Here’s an excerpt from an article in this week’s Irish Times which sums it up:

    “Until September, Ireland had the legal option of terminating the bank guarantee on the grounds that three of the guaranteed banks had withheld material information about their solvency, in direct breach of the 1971 Central Bank Act. The way would then have been open to pass legislation along the lines of the UK’s Bank Resolution Regime, to turn the roughly €75 billion of outstanding bank debt into shares in those banks, and so end the banking crisis at a stroke.

    With the €55 billion repaid, the possibility of resolving the bank crisis by sharing costs with the bondholders is now water under the bridge. Instead of the unpleasant showdown with the European Central Bank that a bank resolution would have entailed, everyone is a winner. Or everyone who matters, at least.” (“If you thought the bank bailout was bad, wait until the mortgage defaults hit home”, Morgan Kelley, Irish Times)

    So, the Irish government could have let the bankers and bondholders suffer the losses, but decided to bail them out and pass the debts along to the taxpayers instead. Sound familiar? Only, in this case, the obligations exceed the country’s ability to pay. Austerity measures alone will not fix the problem. Eventually, the debt will have to be restructured and the losses written down. Here’s another clip from Kelly’s article:

    “As a taxpayer, what does a bailout bill of €70 billion mean? It means that every cent of income tax that you pay for the next two to three years will go to repay Anglo’s (bank) losses, every cent for the following two years will go on AIB, and every cent for the next year and a half on the others. In other words, the Irish State is insolvent: its liabilities far exceed any realistic means of repaying them….

    Two things have delayed Ireland’s funeral. First, in anticipation of being booted out of bond markets, the Government built up a large pile of cash a few months ago, so that it can keep going until the New Year before it runs out of money. Although insolvent, Ireland is still liquid, for now.

    Secondly, not wanting another Greek-style mess, the ECB has intervened to fund the Irish banks. Not only have Irish banks had to repay their maturing bonds, but they have been hemorrhaging funds in the inter-bank market, and the ECB has quietly stepped in with emergency funding to keep them going until it can make up its mind what to do.”

    Ireland has enough cash to get through the middle of next year, but then what? The bad news has rekindled fears of contagion among the PIIGS. Greece is a basketcase and Portugal’s bond yields have spiked in recent weeks. Portugal’s 10-year bond hit 7.33% by Wednesday’s close. The euro plunged to $1.37 even though the Fed is trying to weaken the dollar by pumping another $600 billion into the financial system. Troubles on the periphery are escalating quickly dragging the 16-nation union into another crisis. This is from the Wall Street Journal:

    “For a decade, Ireland was the EU’s superstar. A skilled work force, high productivity and low corporate taxes drew foreign investment. The Irish, once the poor of Europe, became richer than everyone but the Luxemburgers. Fatefully, they put their newfound wealth in property.

    As the European Central Bank held interest rates low, Ireland saw easy credit for construction loans and mortgages. Developers turned docklands into office towers and sheep pastures into subdivisions. In 2006, builders put up 93,419 homes, three times the rate a decade earlier….

    The party ended in 2008, when the property bubble popped and the global economy tipped into recession…by September, Irish banks were struggling to borrow quick cash for daily expenses. The government thought they faced a classic liquidity squeeze. Ireland—whose hands-off regulator had assigned just three examiners to two major banks—didn’t recognize the deeper problem: Banks had made too many bad loans, whose defaults would leave the lenders insolvent.” (“Ireland’s Fate Tied to Doomed Banks”, Charles Forelle and David Enrich, Wall Street Journal)

    The Irish government hurriedly put together a new agency, the National Asset Management Agency (NAMA), to buy to toxic bank loans at steep discounts., but the banks books were in much worse condition than anyone realized, more than €70 billion in bad loans altogether. By absorbing the debts, the government is condemning its people to a decade of grinding poverty and a deficit that’s 32% of GDP, a record for any country in the EU.

    On Thursday, at the G-20 conference in Seoul, European Commission President José Manuel Barroso, said that he was following developments in Ireland closely and that he would be ready to act if necessary. The EU has set up a €440bn bail-out fund (The European Financial Stability Fund) that can be activated in the event of an emergency, although critics say that the fund is more aspirational than a reality. The crisis in Ireland will test whether the countries that made commitments to the fund will keep-up their end of the bargain or not. If they refuse, the EU project will begin to splinter and break apart.

    Ireland will surely need a bailout, although not just yet. For a while the ECB can maintain the illusion of solvency by funneling liquidity to banks via its emergency facilities. That way, bondholders in Germany and France get their pound of flesh before the ship begins to take on water. All the risk-takers and speculators will be “made whole” again before the full-force before the debts are shifted onto Irish workers. Here’s how Kelly sums it up:

    “Ireland faced a painful choice between imposing a resolution on banks that were too big to save or becoming insolvent, and, for whatever reason, chose the latter. Sovereign nations get to make policy choices, and we are no longer a sovereign nation in any meaningful sense of that term.”

    By Mike Whitney


    Mike is a well respected freelance writer living in Washington state, interested in politics and economics from a libertarian perspective.

    © 2010 Copyright Mike Whitney – All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

    Mike Whitney Archive

    © 2005-2010 – The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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    Herbs, Supplements To Go In EU – US Is Next

    October 29, 2010 Leave a comment

    herbal supplementsIn less than a year, virtually all medicinal herbs will be illegal in the European Union.

    In their take-no-prisoners strategy to wipe out every penny of competition and gain complete control of the health of the people, Big Pharma and Agribusiness have scored a major win in Europe. Similar, potentially devastating battles are also underway in the U.S.

    How can this be happening?

    The secret weapon used by drug companies is trade law. According to Gaia Health:

    “Rather than treating food and traditional medicines as human rights issues, they have been treated as trade issues. That makes the desires of large corporations the focus of food and herbal law, rather than the needs and desires of people.

    It’s this twisting that has resulted in the FDA‘s making outrageously absurd statements, such as claiming that Cheerios and walnuts quite literally become drugs simply because of health claims made for them.”

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    E.U. rules let Iran import, export oil, creating possible split from U.S. policy

    October 28, 2010 1 comment

    European Union

    Image by Henrique Oscar Loeffler via Flickr

    By Thomas Erdbrink and Glenn Kessler
    Washington Post Foreign Service
    Thursday, October 28, 2010; 12:25 AM

    TEHRAN – The United States and Europe have worked cooperatively on Iran policy since President Obama took office, but a small crack might have begun to open over sanctions that are beginning to pinch ordinary Iranians.

    The European Union issued regulations this week that went well beyond a U.N. Security Council resolution passed in June, outlining tough restrictions on the sale of equipment and technology to the Iranian oil and gas industry, as well as on investment in those sectors. But the regulations – unlike legislation passed by the U.S. Congress – allow for the import and export of oil and gas to the Islamic republic.

    “If you want to send a tanker filled with refined petrol to Iran, and you have proved that you are not carrying any other goods that we deem illegal, Europe has no problem,” said a European official who specializes in sanction policies and spoke on the condition of anonymity because of the sensitivity of the subject. “We don’t want any negative effect on the Iranian population or to deprive them of energy, so we do not follow U.S. measures that go beyond United Nations sanctions.”

    The E.U. will also permit financial transactions needed to import of oil and gas to Iran. The United States, by contrast, penalizes companies if they sell gasoline to Iran, and has increased pressure on international oil companies and refineries to cancel their contracts with the country.

    The practical effect of the European action might be minimal because European oil giants might still refuse to supply Iran with fuel for fear of appearing to thwart U.S. sanctions.

    U.S. officials said Wednesday that they were broadly pleased with the European regulations, which they said could devastate Iran’s oil and gas industry. “We are going at the supply, while they are going at the back end,” said a senior administration official who handles the Iran portfolio. “We have had the kind of cooperation and coordination with the Europeans that has been unprecedented.”

    The U.S. official said he had never heard any concerns raised by his European interlocutors about the effect of the sanctions on ordinary Iranians. “The regulations turned out to be pretty solid,” he said. “At each stage, when they have faced a choice between going soft or going heavy, they have gone heavy.”

    U.S. officials have in the past said that if the increased pressure is hurting ordinary Iranians, they should blame their leaders for the Islamic republic’s increasing isolation.

    But E.U. officials said Wednesday that they specifically allowed fuel sales to ease the burden on average Iranians.

    According to June statistics, Iran needs to import 4.7 million gallons of refined petroleum each day because of the country’s low refining capacity. After U.S. sanctions were implemented in July, Iranian leaders announced that they had started an emergency plan to increase local production by mixing oil with high-octane products.

    At several European airports, planes belonging to Iran’s national carrier, Iran Air, are being refused refueling services by representatives of major oil companies. According to the European Union, there is no legal basis for denying the airline services.

    Iran Air has been able to refuel at only three European airports since a Sept. 30 agreement among the State Department and European oil firms Total of France, Statoil of Norway, Eni of Italy and Royal Dutch Shell of Britain and the Netherlands.

    They pledged to end their investments in Iran and avoid new activity in the country’s energy sector. In turn, U.S. officials said, the companies would be protected from possible U.S. penalties for doing business with Iran.

    “We have complained to the U.S. about the extraterritorial effects of their measures on European companies,” the European official said. “If those companies submit to U.S. wishes, it is their decision, but we are against these policies. This is a major issue for us.”

    There have been complaints in the European parliament over U.S. pressure on E.U. companies regarding Iran.

    “If Europe accepts U.S. interference through pressure on its businesses, it is giving up independence,” said Marietje Schaake, an influential parliament member who represents a liberal party. “The influence of U.S. interference beyond our own sanctions harms the E.U.’s credibility as a global player.

    Kessler reported from Washington.

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