By Arshad Mohammed and Andrew Quinn
WASHINGTON (Reuters) - The United States will spare Japan and 10 European Union nations from U.S. financial sanctions because they have significantly reduced purchases of Iranian crude oil, U.S. officials said on Tuesday.
The decision is a victory for the 11 countries, whose banks need not fear being possibly cut off from the U.S. financial system under new U.S. sanctions designed to pressure Iran over its nuclear program.
The EU nations, which had already decided to cease importing Iranian crude, include Belgium, Britain, the Czech Republic, France, Germany, Greece, Italy, the Netherlands, Poland and Spain, a senior U.S. State Department official told reporters.
The list did not, however, include China and India, Iran's top two crude oil importers, nor U.S. allies South Korea and Turkey, which are among the top 10 consumers of Iranian oil.
The official, who spoke on condition of anonymity, said that public data show Japan cut its imports of Iranian oil by 15 to 22 percent in the second half of last year, a period when it was recovering from an earthquake and subsequent nuclear disaster.
The official declined to say exactly what 12 other importers of Iranian crude oil would need to do to be exempted from the sanctions, but he noted that Japan had made its reductions during a period of relative "hardship."
Under the 2012 National Defense Authorization Act, President Barack Obama has the ability to impose financial sanctions on foreign banks that carry out financial transactions with Iran's central bank "for the purchase of petroleum or petroleum products from Iran" if several conditions are met.
However, the law gives Obama an explicit exemption under which he can choose not to apply sanctions if he determines that the country with primary jurisdiction over the bank has "significantly reduced" its volume of crude oil purchases.
The United States has gradually tightened sanctions because of Iran's failure to answer questions about its nuclear program, which Washington and its allies suspect is a cover to develop nuclear weapons. Iran says it is solely to generate power.
(Additional reporting by Susan Cornwell and Tim Gardner; Editing by David Brunnstrom)