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European governments have already taken major steps to put pressure on Iran, such as an oil embargo, to get it to comply with international demands that it abandon enrichment of uranium, believed to be part of programme to build nuclear weapons.
But experts say the current sanctions leave plenty of leeway for Iranian firms to operate in Europe, partly because European sanctions tend to pick specific targets rather than impose sweeping bans.
Transactions with the Iranian central bank, which settles most trade payments, are allowed if they are linked to legitimate trade, for example.
Targeting specific companies accused of financing Tehran's nuclear proliferation activities also means that firms can evade sanctions by spinning off new ones.
Britain is pushing for a ban on trade with Iran in any energy-related sector, which could help close such loopholes.
"The Iranians spin out new companies and the Europeans play catch-up. It would be more effective to have a blanket ban," said Mark Dubowitz, head of the non-profit Foundation for Defense of Democracies in the United States, which pushes for tough sanctions on Iran.
Diplomats said talks between the EU's 27 members are at a preliminary stage, meaning new proposals are expected. But discussions will likely be heated, with many capitals concerned about the impact of any new sanctions on economies battered by a three-year debt crisis.
"The debate should intensify in the coming week," one EU diplomat said. "There are various suggestions and nothing has been agreed."
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