Washington, DC - While all eyes were focused on the threat of anuclear arms race in South Asia, the Clinton administration quietlymade a decision that could have just as devastating consequences forU.S. national security and for our allies in the Middle East: liftingU.S. sanctions on investment in Iran.
With little fanfare, Secretary of State Madeleine Albrightannounced on May 18 that the administration would not penalize theFrench oil company, CFP-Total, for investing $2 billion in Iran's oilindustry, despite the requirements of the Iran-Libya Sanctions Act(ILSA), which was overwhelmingly approved by Congress and signed intolaw by President Clinton in August 1996.
The law requires the President to impose a series of penalties onforeign companies which aid Iran in rebuilding its aging oil and gasindustry. The logic for these sanctions is simple: since Iran earnsmore than 80% of its hard currency revenues from energy exports,curtailing its ability to export oil will reduce Iran's ability tofinance a large-scale military build-up or the massive investments itneeds in order to build ballistic missiles and nuclear weapons.
Iran is already close to producing a 1300-kilometer rangeballistic missile, the Shahab-3. According to commercial satellitephotographs published recently in Jane's Intellience Review, theIranians have prepared a launch site with underground storage bunkersin Western Iran for these missiles, that will allow them to reachtargets throughout the Persian Gulf and in Israel. With the expandedincome it will derive from a revitalized oil industry, Iran will beable to accelerate production of the longer-range Shahab-4, and asecond series of missiles designed to threaten New York. For as longas Iran is ruled by a regime aggressively pursuing such weapons whichconsiders terrorism as a legitimate instrument of foreign policy,sanctions are the single most effective means the United States hasfor constraining Tehran's bad behavior.
For nearly two years, just the threat of U.S. sanctions preventedforeign oil companies from investing in Iran. Even the French firm,Total, was hesitant to brave U.S. sanctions alone, and secured hardcommitments from Russia's Gazprom and from Petronas of Malaysia toparticipate in the $2 billion South Pars project before signing thecontract with Iran. Just for extra measure, Total sold off its U.S.assets, to prevent any U.S. retaliation. Total's behavior showed thatthe ILSA sanctions were a credible threat. And yet, theadministration has squandered this important tool.
The repercussions of the U.S. decision are already beginning to befelt. Iran has said it will announce a series of 20 oil and gasprojects to foreign bidders at a conference in London on July 1-3.,and the line of foreign oil companies lining up to bid is long.
Senator Alfonse D'Amato, who crafted ILSA, released a statementsaying the administration's action "will send a signal to others thatthey can do business as usual with Iran, at a time when Irancontinues to pursue weapons of mass destruction and continues tosponsor terrorist acts."
If anything, D'Amato's reaction was understated. Among the foreignoil companies that have already announced they were openingcommercial negotiations with Iran over future oil and gas venturesare Elf Aquitaine, Agip, Royal Dutch/Shell, British Petroleum,Monument Oil and Gas, Enterprise Oil, Lasmo, and British Gas. TheAustralian group, BHP, said it was opening an office in Tehran toexplore new oil and gas ventures, joining BP and Shell who announcedthey were opening Tehran offices earlier in the month.
Not to be outdone, France's Total said it intended to exploreadditional new contracts with Iran, while Shell has expressedinterest in building a 1,600 km pipeline to bring gas from Iran'sSouth Pars field in the Persian Gulf to Pakistan, in a consortiumwith British Gas, Petronas, and Gaz de France. Shell also confirmedon June 1 that it had held talks with the National Iranian OilCompany, NIOC, on investing an additional $2 billion to expand Iran'sNorth Pars natural gas field.
What we are seeing is the wholesale collapse of a carefullycrafted approach toward Iran, that had the support of the Clintonadministration and Congress. The Administration claims it hasreceived guarantees from the Europeans to support the U.S. incurtailing Iran's efforts to acquire nuclear weapons and the missilesneeded to launch them, but when asked to specify what theseguarantees means, has repeatedly been unable to provide anysignificant detail.
The Europeans sense that their long-held dream of cornering Iran'spotentially large market and excluding the Americans is at hand, andthey are ready to do anything to accomplish it- including transfermilitary production facilities, as France has been accused of doingrecently by an Iranian opposition group, the Organization of thePeople's Fedayeen Guerrillas.
U.S. oil companies are understandably angry, and have alreadybegun to lobby the administration to allow them to participate inIranian oil and gas development projects as well." The United Statesis now in the process of ceding the tremendous energy resources ofmuch of the Persian Gulf and Caspian basin to foreign companies --effectively withdrawing from one of the world's most plentiful energysupply sources," said Frank Kittredge, President of the NationalForeign Trade Council and Vice Chairman of USA*Engage, the officialspokesman for the oil industry lobby on the sanctions issue.
Assistant Secretary of State Martin Indyk has repeatedlydiminished the threat of Iran's revolutionary regime, saying it hasentered a "thermidor" period, meaning that realism has trumpedideology in the minds of Tehran's leaders when it comes totroublesome issues such as Iran's support for internationalterrorism, its nuclear weapons program, or its violent opposition tothe Middle East peace process.
But this is manifestly not true. In a May 10 editorial, whichexpressed "the policies of the United States government," the Voiceof America broadcast the State Department's assessment that Iranremains "the most active terrorist supporter" in the world, despitethe rise to power of "moderate" cleric Mohammad Khatami lastAugust.
President Khatami has stated his intention to liberalize Iraniansociety, but after more than a year in power he has done nothing tomoderate the behavior that threatens U.S. security interests in theregion. On the contrary, Mr. Khatami has gone out of his way toreinforce the Iranian regime's opposition to Israel by recentlygiving a hero's welcome to Hamas leader Sheikh Ahmad Yassin, anddeclaring Israel " the continuation of fascism." In earlier commentsto visiting Lebanese Hezbollah leaders, Khatami called Israel "thegreatest manifestation of international terrorism," and Israel'sleaders "a gang of racists." Moderate words, these are not.
Certainly, Mr. Khatami's overwhelming victory over the regime'shand-picked candidate for President last year was an event oftremendous political significance. But it was not a sign that theregime had changed; it was an expression of revolt by the Iranianpeople, who are fed up with a minority, clerical regime that has beenunable to restore Iran to its rightful place in the council ofnations, and has been unable to respond to the overwhelming thirstfor freedom and civil liberties of ordinary Iranians.
Lifting economic sanctions now will only shore up a dying regime,and discourage democratic change in Iran. Worse, it will provide theregime with the financial resources it needs to more vigorouslypursue its ballistic missile and nuclear weapons programs. With helpfrom Russia and China, Iran will have missiles capable of reachingU.S. forces stationed in Saudi Arabia, and of attacking Israel,within a year. Unchecked by sanctions, it will have nuclear warheadsto put on top of them soon thereafter. Taking the pressure off Iranat this juncture is not only foolish, it is a virtual guarantee thatthe nuclear genie will finally erupt in the Middle East. Do Mr.Clinton and Mr. Gore really want such a responsibility on theirhands?
Kenneth Timmerman is the Executive Director of the Foundationfor Democracy in Iran (FDI). FDI is a private, non-profit corporationregistered in the State of Maryland. FDI materials, including the FDINews Update, are available free-of-charge via the Internet athttp://www.iran.org/.