Ratcheting up the pressure on Iran Saturday, leaders of the Group of Eight major economies expressed solidarity in their approach to cracking down on Tehran’s nuclear development program, agreeing to act together to lower oil prices in the coming months if necessary.
During a Saturday energy session of the summit at the rustic presidential retreat in Camp David in Maryland, President Obama, as well as leaders from the United States, Germany, France, Canada, Italy, Britain, Russia and Japan, penned a joint message to Iran designed to demonstrate their commitment to oil sanctions against Tehran.
In a written communique, the countries acknowledged the risk of continued disruptions of oil supplies on the global market to economic recovery and pledged to monitor changes closely, suggesting the G-8 would seek to tap oil reserves if warranted in response to a European embargo of Iranian crude oil set to take place over the summer.
“There have been increasing disruptions in the supply of oil to the global market over the past several months, which pose a substantial risk to global economic growth. In response, major producers have increased their output while drawing prudently on excess capacity,” they wrote. “Looking ahead to the likelihood of further disruptions in oil sales and the expected increased demand over the coming months, we are monitoring the situation closely and stand ready to call upon the International Energy Agency to take appropriate action to ensure that the market is fully and timely supplied.”
The Camp David summit is taking place ahead of the NATO summit Sunday and Monday, and just days before the next round of Iran talks to be held in Baghdad. Western countries have long suspected that Iran’s nuclear program is geared toward creating a nuclear bomb rather than boosting the country’s energy efficiency, but Tehran rejects the accusations. The head of the United Nation’s nuclear division plans to fly to Iran on Sunday to negotiate on allowing inspectors better access to the nuclear sites.
Even though the statement doesn’t mention releasing strategic oil reserves, an Obama administration official confirmed the intent during a press conference with reporters at Camp David Saturday afternoon.
“Well, that’s what the IEA does,” said Michael Froman, deputy assistant to the president for international economic affairs.
“We don’t expect to completely resolve the problems with Iran’s nuclear program, but they should fully expect that oil embargo to go into place,” he added.
Before the G-8 countries would consider easing sanctions, Iran would have to prove that it is taking steps to make its nuclear program and its intent more transparent to the world, Mr. Froman added.
Earlier in the day, during a two-hour session on the eurozone crisis, the leaders uniformly backed keeping Greece in the eurozone and vowed to take the necessary steps to protect their economies against financial turmoil amid the continent’s worsening debt crisis.
The global recovery shows some promise but “significant headwinds persist,” they said in a joint statement.
“Against this backdrop, we commit to take all necessary steps to strengthen and reinvigorate our economics and combat financial stresses, recognizing that the right measures are not the same for each of us.”
With Greece’s upcoming election, G-8 leaders fear that a political stalemate in the tiny island country could force it to leave Europe’s monetary union, a move which could have ripple effects on global markets.
Mr. Obama, in light blue shirt sleeves and dark slacks, opened the morning session by pledging to forge a path for economic recovery in Europe together.
“All of us are absolutely committed to making sure that both growth and stability, and fiscal consolidation are part of an overall package in order to achieve the kind of prosperity for our citizens we all are looking for,” he said.