LONDON -- The European Union on Monday increased economic and diplomatic pressure on Iran by ratcheting up sanctions put in place against the country’s nuclear program.

“Despite six U.N. Security Council Resolutions calling for Iran to cease enrichment-related activities, Iran continues to choose the wrong path. It is enriching uranium on a scale that has no plausible civilian justification,” British Foreign Secretary William Hague said at a meeting of foreign ministers from the 27 EU countries in Luxembourg.

At the same meeting, EU foreign policy chief Catherine Ashton stressed the path to a negotiated diplomatic solution remains open.

“We have always said sanctions are not an end in themselves, but are there to apply pressure on the Iranian authorities to meet their international obligations,” Ashton said.

Tough measures
In addition to current bans on oil and gasoline imports from Iran, Monday’s package of measures addressed what the EU called its “serious and deepening concerns over Iran’s nuclear program,” by targeting Tehran’s funding of such schemes.

All transactions between European and Iranian banks will now be prohibited, unless they have been explicitly authorized by national authorities.

The import of natural gas from Iran into the EU will be banned, along with associated activities, such as transport and insurance.

EU member states also decided to stop supporting trade with Iran by ending short-term export credits, guarantees or insurance.

These new restrictions come amid growing concern among world powers of Iran’s lack of engagement in its protracted negotiations with the United States, China, Russia, Britain, France and Germany in their on-and-off talks, which have dragged on for years with little sign of progress.

Iran says ready 'to offer an exchange' on nuke issue

World powers accuse Iran of covertly using its uranium enrichment program to produce nuclear weapons. Tehran insists the research and development is to generate electricity and produce medical isotopes.

The ongoing negotiations have limped from meeting to meeting, with the world powers’ frustrations punctuated by occasional concessions by Iran and assertions of its willingness to engage with the international partners. Recently, Iran suggested it would halt its enrichment program in exchange for fuel for a research reactor.

Despite the protracted dialogue, diplomats hope that a negotiated settlement can be reached, with international sanctions providing an incentive for Tehran to engage more meaningfully.

Western intel: 'Small signs of wavering' on Iran nuke policy

Ashton told reporters in Luxembourg that she met recently with her Iranian counterpart, Saeed jalili, and “had left him in no illusion about our desire to make progress.”

Staggering economy
Although the EU says sanctions are not aimed at the Iranian people, the existing sanctions, backed by numerous U.N. resolutions dating back to 2006, began to bite this summer.

Hyperinflation in Iran is pushing up prices daily and the dramatic slide in the value of the rial against the U.S. dollar led to unrest in Tehran earlier this month, when angry currency traders clashed with security forces.

These new sanctions appear likely to add to Iran’s economic turmoil, according to analysts.

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Despite the tightening sanctions, U.S. exports to Iran rose by nearly one-third in the first eight months of 2012, according to data released by the U.S. Census Bureau.

The jump, to $199.5 million, was due chiefly to an increase in grain sales and hides a sharp drop in the value of exports of humanitarian goods, such as medicinal and pharmaceutical products, which fell to $14.9 million from $26.7 million in the same period in 2011.

Reuters contributed to this report.

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Handout / Reuters

Demonstrators protest against Syria's President Bashar al-Assad after Friday prayers in Habeet, near Idlib, Friday

Updated 1:30 p.m. ET: Major Western and Arab powers meeting in Geneva on Saturday adopted a watered-down version of special envoy Kofi Annan's Syria peace plan that leaves open whether President Bashar al-Assad can be part of the transition government.

"It is for the people of Syria to come to a political agreement." Annan said. "I will doubt that the Syrians who have fought so hard to have independence ... will select people with blood on their hands to lead them," he said.

U.S. Secretary of State Hillary Clinton said the deal in Geneva "paves the way" for a post-Assad unity government. Assad should hear "loudly and clearly" that his days are numbered, she said. "It is now incumbent on Russia and China to show Assad the writing on the wall," Clinton said.

Russia had refused to back a provision that would call for Assad to step down, insisting that outsiders cannot order a political solution for Syria.

Russian Foreign Minister Sergei Lavrov underscored the point that the plan does not require Assad's ouster, saying there is "no attempt in the document to impose on the Syrian people any type of transitional process."

Lavrov warned that there is an attempt to provoke a spiral of violence and incite sectarian hatred in Syria.

A transitional governing body could include members of the current government and opposition and would be formed by mutual consent, Reuters reported. The pact calls for constitutional reform and free and fair elections, Reuters reported.

Annan said the Syria action group nations did not set a time for its next meeting.

On Friday, Syrian troops shelled a suburb of Damascus, killing an estimated 125 civilians and 60 soldiers, Syrian human rights activists said. The uprising in Syria since March of last year has killed some 14,000 people. 

Syria on Saturday retook control of the restive Damascus suburb of Douma, where fleeing residents said most civilians had cleared out.

Syria retakes Damascus suburb

Foreign ministers from Western powers and Arab countries attended the meeting convened by Annan to try to forge a common strategy to end the 16 month-old conflict in Syria but differences remained over the fate of Assad.

Clinton held talks on Friday night in St. Petersburg with Lavrov but failed to resolve differences, Reuters said.

Russia, Assad's main ally, insists that any transition plan must not be imposed on Syria by foreign powers.

French Foreign Minister Laurent Fabius, arriving for the talks, told Reuters that it was “absolutely essential that the violence stops and that a political transition can begin.”

“Kofi Annan made reasonable propositions and I hope that they will be upheld and that's the point of today's discussions,” he added.

Syria rebels: Assad forces bombard towns as 170 tanks mass near city

Hopes have centered on persuading Russia — Syria's most important ally, protector and arms supplier — to agree to a plan that would end the four-decade rule of the Assad family dynasty.

But the Russians want Syria alone to be the master of its fate, at a time when Assad's regime and the opposition are increasingly bitterly polarized.

"Ultimately, we want to stop the bloodshed in Syria. If that comes through political dialogue, we are willing to do that," said Khalid Saleh, a spokesman for the Syrian National Council, a coalition of Syrian opposition groups based in Istanbul, Turkey. "We are not willing to negotiate (with) Mr. Assad and those who have murdered Syrians. We are not going to negotiate unless they leave Syria."

Turkey sends military convoys toward Syrian border

International tensions also heightened last week after Syria shot down a Turkish warplane, leading to Turkey setting up anti-aircraft guns on its border with its neighbor. 

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