Some naive opponents of the war think oil is the only factor driving us to war on Iraq. Here is an example of how the Israeli lobby can override oil interests.
wrmea.com
U.S. Slowly Changes Sanctions Policy
By Colin MacKinnon
Will they or won’t they? Will the Iranians go ahead with a reported
offer to buy grain from the U.S.? Could be—such sales are legal
now. At the end of July, the Treasury Department published new
regulations that allow American companies to sell food and medicine
to Iran, Libya, and Sudan.
While Sudan and Libya are unlikely customers for large food or
pharmaceutical sales, Iran is something else. Last fall Niki Trading
Company, a U.S. firm with Iranian connections whose CEO is an
American trade lobbyist named Richard Bliss (one meaning of the
Persian word niki is “bliss”), claimed it had an offer from Iran to buy
up to $500 million of American grain. At the time, under an executive
order signed by President Bill Clinton, U.S. merchants could sell
nothing whatsoever, not an orange, not a frozen chicken, to the
Islamic Republic.
Partly in response to the reported Iranian interest in U.S. grain, partly
for other reasons, the Clinton administration changed its sanctions
policy last April and four months later the regulations came out.
How come?
Conoco and ILSA
Here’s some history. Despite intense, sometimes violent U.S.-Iranian
political conflict after the Iranian revolution, American firms were
doing important business with Iran well into the 1990s. American oil
companies, for example, were buying the majority of Iranian oil for
sale on international markets (they just couldn’t import it into the
U.S.). Continental Grain and Archer Daniels Midland had grain
contracts with Iran. Other U.S. firms sold Iran all sorts of products
from auto parts to air conditioners.
But all that stopped in the spring of 1995, when the U.S. oil firm
Conoco won an attention-getting $600 million contract to develop
Iran’s Sirri Island oil field in the Persian Gulf, a contract widely seen
at the time as an Iranian political gesture to the Americans.
Probably for that very reason, the American Israel Public Affairs
Committee (AIPAC) and its friends in the media and on the Hill made
a great pother over the Conoco deal. So much so that a month after
it was announced, President Clinton signed an executive order
cutting off all U.S. business with Iran. The order applied retroactively
to the Conoco contract.
When Conoco pulled out, the French oil company Total, along with
Malaysia’s Petronas, got the Sirri Island contract.
AIPAC and its friends made a great pother
over the Conoco deal.
It was the usual story. When the U.S. decides to cut itself out of a
market, there’s never any shortage of foreign suppliers to rush in and
take the business. The U.S. loses hundreds of millions of dollars in
sales and thousands of domestic jobs and gets the reputation for
being an unreliable supplier.
Food and medical sanctions are particularly noxious since, as is
glaringly true in the case of Iraq, they tend to punish innocent victims
in the sanctioned countries rather than the offending leaderships and
do little to change the behavior of those leaderships.
A shining light among AIPAC’s legislative allies at the time of the
Conoco hullaballoo was the then-senator from New York, Alfonse
D’Amato. D’Amato, not satisfied with sanctions that applied merely to
U.S. firms, sponsored AIPAC-written legislation requiring the
government to punish firms of any foreign country, friend or foe, that
invested in the Iranian oil sector.
In 1996 D’Amato’s bill, with references to Libya thrown in at the last
minute, became the Iran-Libya Sanctions Act, ILSA for short, and
was signed into law.
Under ILSA, the U.S. could forbid offending firms to do business with
the U.S. government and forbid U.S. banks to lend to such firms.
ILSA set out four other economic punishments, making six in all, at
least two of which have to be applied to an offending company.
Europeans Defy ILSA
As predicted, ILSA’s passage touched off a nasty row with European
governments, which took then and take now a dim view of other
countries interfering with their national firms’ business dealings. The
EU threatened to retaliate with legal action.
The administration was saved from a confrontation with the EU over
Total’s Sirri Island deal since ILSA did not apply retroactively. But
other deals, some of them immense, came along.
In 1997 Bow Valley Energy of Canada signed a $200 million contract
to develop an offshore oil field. In September of the same year a
consortium consisting of Total, Petronas, and the Russian firm
Gazprom announced a mammoth $2 billion investment in Iran’s
South Pars offshore gas field. The South Pars deal was clearly in
violation of ILSA and way too big to ignore. What was the Clinton
administration to do?
After taking over half a year to “study” the issue, the administration
announced in May of 1998 that it was granting a “sanctions waiver” to
the South Pars consortium.
A spokesman for the U.S. government, who had the task of
explaining why, said that such waivers would apply only to
companies from the European Union and gave reporters to
understand that this one had been issued only in return for
particularly helpful European cooperation on matters of deep concern
to U.S. national security.
In fact, the EU considered ILSA “unacceptable,” had denounced its
passage, and had barred European countries from complying with it.
If the U.S. had gone ahead with sanctioning the South Pars
consortium, the EU would have made good on a threat to haul the
U.S. before the World Trade Organization, where the Americans, as
they knew full well, would have lost. Hence the waiver.
Issuing the “waiver” put the administration in the absurd position of
“waiving” European and other firms to do business with Iran, at the
same time forbidding U.S. firms to do the same. Such are the fruits
of the D’Amato bill.
Signs of Change
Signs and portents, beyond the administration’s change in policy and
the defeat of Senator D’Amato in his 1998 Senate race, have begun
to appear that indicate the U.S. predilection for giving away business
to foreign competitors may be weakening. Last winter 32 farm state
congressmen, prodded by their constituents, signed a letter to the
president calling on the administration to allow the Iranian grain sale
to go forward, though only as a one-time exemption to the Clinton
executive order (which had been renewed in 1997).
Going further, Sen. Richard Lugar (R-IN) has been calling for an
across-the-board change in sanctions policy that would allow sales
of food and medicine to all sanctioned countries unless there is
some clear reason connected with national security not to allow
them.
At least six bills, two of them sponsored by Lugar, are now before the
House and Senate that would weaken current economic sanctions
on foreign countries. In May the Senate Agriculture, Nutrition and
Forestry Committee voted out Lugar’s Agriculture Trade Freedom
Act (S. 566), the first sanctions reform legislation in Congress this
year. The bill would exempt the sale of agricultural products and
livestock from any economic sanctions the U.S. might impose on a
foreign country. The president could deny the exemption—that is,
forbid the sale of food to a sanctioned country—for reasons of
foreign policy or national security. The bill would apply to all
sanctions, those already in place and those to come.
Lugar has also introduced The Sanctions Policy Reform Act of 1999
(S. 757), which would require the administration to study the
economic impact of proposed sanctions, review sanctions actually in
effect to see if they were working, and kill any after two years unless
they were renewed. Thirty-seven other senators are co-sponsoring
S. 757.
In March of this year, just after the administration announced its new
policy allowing food and medical sales, a consortium consisting of
the French oil company Elf Aquitaine, the Italian firm ENI, and the
National Iranian Oil Company announced a $998 million agreement
to redevelop an older Iranian oil field. There has been no talk of
sanctions. Doubtless the administration will find some deep national
security reason for waiving them on this project as on the South Pars
deal.
But will the Iranians buy U.S. grain? Mr. Bliss declined to return a call,
but a spokesperson for Niki says that so far, a month after Treasury
issued its regulations, the Iranians have not gone ahead with any
deals.
They may not do so, at least in the near term. Parliamentary
elections are to be held in Iran in March 2000. It may well be that in
the run-up to the elections the current reformist government of Iran
will be disinclined to make a major commercial deal with the U.S. It
would put off such a deal in order to minimize a reaction from the
religious conservatives and others on the right, who have money and
institutional power, though little popular support, and who might use
the issue as a stick to beat the reformers.
As domestic politics in the U.S. first prevented sales to Iran and now
allows certain kinds, so domestic politics in Iran, which once allowed
all sorts of deals with the U.S., may now be preventing them, even
the most innocuous. In international trade, timing is all. |
