The EU embargo on Iranian oil, pushed stringently by the United States, was delayed for six months to let economically troubled countries such as Greece, Italy and Spain find alternative supplies. Some 500,000 barrels arrive in Europe every day from Iran. But the U.S. had been successful in pressuring EU countries to inflict more economic pain on themselves by cutting off one of their main oil suppliers.

These measures aren’t only harming the EU economies, they are impoverishing the Iranian people. Jobs are being lost because the oil sector is weakened and rampant inflation caused by sanctions targeted on the central bank have pushed the price of meat and milk up 50 percent.

“People are buying less because the prices have gone up,” Iranian-American scholar Haleh Esfandiari said. “That affects the shopkeepers. It’s a vicious cycle.” An Iranian interviewed on the subject said, “People are hungry and this is why crime has gone up.”

The move to cut off exports to the EU before the embargo sets in is an illustration of how poorly the sanctions program on Iran has worked. Instead of pressuring the Iranian government to conform to the wishes of the U.S. and its western allies, it has emboldened the regime.

Exactly how or even if these talks will take place, however, remains to be seen, as a series of mixed signals, veiled threats and high level demands have transformed the whole situation into a giant mess.

French President Sarkozy became the latest P5+1 leader to insist that “time is running out” before the West launches a war against Iran, but these threats (echoed by Britain and the US) appear to be mostly false, with French officials conceding earlier this week that the military option was considered “off the table.” Ashton is insisting the talks are just waiting for an Iranian response.

But the Iranian government has already expressed hope that the talks would resume “soon,” saying that they were waiting on Ashton to provide them with the exact date on venue of the potential talks. Since then there has been indications that both sides are leaning toward Istanbul for the talks, but Ashton seems to be pretending in her statement that these statements never happened.

Even then, exactly what the talks are liable to focus on is still a mystery, since the EU nations involved (France, Britain and Germany) are all insisting on a full halt of Iran’s civilian nuclear program, and Iran has already ruled that out.

The speculation came from French Foreign Minister Alain Juppe, who claimed the deal was virtually finalized and would be announced by the end of the month. EU diplomats familiar with the deal are denying that.

The diplomats, quoted anonymously by the German press, say that the deal is not close and that a number of key details surrounding the potential ban are still being discussed.

Rumors of the ban come as oil is near an eight-month high, with analysts projecting at least a 10 percent increase in the spot price of Brent North Sea Crude if Iran is cut off from the European market. Though the effort is aimed at harming Iran, it is expected they will be able to offload the addition supply to eastern Asian nations with little trouble.

Israeli officials have been railing, in particular in reference to Egypt, about how free elections in the Arab Spring nations are installing Islamist factions. A moderate Islamist bloc won the elections in Tunisia, and Egypt’s ongoing elections are seeing Islamist factions winning overwhelmingly.

The Democratic Peace Theory, that democracies don’t go to war with one another, is an old one and has been a popular talking point for proponents of regime change in recent decades. The theory’s validity, however, rests mostly on people insisting that one or both participants in wars between democracies (the 2006 Israeli invasion of Lebanon, for instance) aren’t “real democracies.”

On the other hand, there is no reason to expect Tunisia to attack Israel no matter what its government is composed of, and Egypt’s Islamist factions have given some lip-service to revising the existing peace treaty to more favorable terms, but neither seems to suggest dismantling it or starting a war.

A Foreign Ministry spokesman issued a statement on Lieberman’s behalf condemning the EU and complaining that the memo was written “behind our backs” and without having asked the Israeli government for permission first.

The document focused on a number of measures being pushed in Israel’s parliament limiting criticism of the government and efforts, which are being pushed by Lieberman’s party, to strip Arabs of citizenship if they do not swear a loyalty oath to Israel as a “Jewish” state.

The memo noted that the worst of the excesses in Israel’s far-right coalition have not yet been passed into law, or when they have the courts have severely limited them, but warned that the continuing efforts to push such legislation was harming Jewish-Arab relations inside the nation.

It is the second time in as many weeks that Lieberman has been furious at the European Union, angrily condemning them last week for criticizing the massive expansion of settlements in the occupied West Bank, and warning they are “irrelevant.”

The move would follow high profile recognitions by Brazil and Argentina last week, though the warning was watered down significantly, reportedly after Israeli demands that Britain move against the proposal as it was initially written.

A number of European officials have expressed annoyance at the collapse of the direct peace talks, with a collection of former top officials even suggesting the EU should adopt sanctions against Israel over the settlement expansions.

Israeli officials reacted with outraged both to the notion of sanctions and the notion of an independent Palestine, saying that they proved the European Union was inherently biased against Israel and that the collection of nation-states had “lost all credibility.”

Among the signatories were former Presidents of Germany and Ireland, a former Spanish Prime Minister, and the European Union’s former Foreign Minister Javier Solana. The letter underscored the illegality of the settlements under international law.

Israeli Foreign Ministry spokesman Yigal Palmor expressed outraged at the letter, calling it “strange” that Europe was so interested in the settlements issue and warned that the letter risked totally sidelining the European Union from the peace process.

Which doesn’t mean much at this point, as the talks were in essence confirmed dead last week when the US announced it had stopped trying to get Israel to agree to a settlement freeze. In the wake of the announcement the US approved a major increase a military funding to Israel.

The cable detailed a number of official positions of the Bush Administration, including the rationale behind the claim that terror suspects have no rights under the Geneva Conventions. It also includes a claim that torture and mistreatment of non-US citizens outside of the borders of the United States is not banned by American law, but that there is a “customary presidential practice” against doing so.

It also insists that extraordinary renditions are not being conducted explicitly for the purpose of getting the detainees tortured but rather for convenience sake. They rejected the allegation that “hundreds of people has been kidnapped from the European streets” as lacking evdence and said they trusted that European government would respect the “confidentiality” of such operations in general.

The cable concludes that the European officials met with “responded very positively” to the arguments made but that some remained concerned that if the truth about US renditions came out it would damage their governments.

A number of EU officials complained that the US was not consulting enough with the EU before issuing such warnings, adding that the warning was causing a growing sense of insecurity across the bloc. The warning cited a “non-specific threat” against a non-specific target by a non-specific group of attackers at an unspecified time.

But it wasn’t just about coordination for some officials. A number of European intelligence officials as well as a top Pakistani diplomat to Great Britain said they believed the warning was exaggerated by President Obama for political purposes.

Officials have insisted that the warning is based on a “growing body of information,” but given that officials still haven’t narrowed down the target beyond the continent and still haven’t narrowed down the attackers beyond “Europeans, Africans or Asians” there seems to be very little to be done with the warning except to endlessly speculate.

Yesterday officials insisted that they were not intending to discourage Americans from actually traveling to Europe, but simply warning that there was a growing possibility of a terror attack somewhere inside Europe at some point in time. Officials repeated today that they have no clear information on either timing or targets.

But officials from various nations have sought to downplay the possibility of the attack happening in their nation. Britain yesterday insisted the plot was restricted to France and Germany, while Germany downplayed the odds of it happening there and calling the warnings “alarmist.”

The entire speculation about the plot emerged last week, when officials said they had information that a “Mumbai-style” attack involving people from somewhere in Europe, Africa, South Asia or Central Asia might make place somewhere in Europe or North America at some point in time. With the suspects not being narrowed down beyond a good portion of the global population and the target not being narrowed down beyond a decent portion of the earth’s surface, the ability to speculate over the long-term seems endless.