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Disarmament Diplomacy

Issue No. 19, October 1997

US-Europe Row over Iran-Total Deal

In late September, a serious row broke out between the United States and France over a $2 billion contract awarded by Iran to a consortium led by the French company Total (junior partners Petronas of Malaysia and Gazprom of Russia). The contract is for the development of the South Pars offshore gas field. The US position is that the contract violates a US law - the 1996 Iran-Libya Sanctions Act - aimed at economically isolating Iran in protest at its alleged attempts to acquire weapons of mass destruction; and that, consequently, the US would be entitled in imposing sanctions against the companies involved. This view was widely derided, not only in France but by the European Union (EU) as a whole, Russia, and other States.

The US stance was spelt out on 29 September by State Department spokesperson Christopher Bush:

"Our position on any investments in Iranian gas and oil fields is clear: such investments make more resources available for Iran to use in supporting terrorism and pursuing missiles and nuclear weapons. ...we will review all information closely and take whatever action is appropriate under the law..."

On 30 September, US Secretary of State Madeleine Albright, said that "it is of great concern to us that our friends and allies don't get it... It is, indeed, frustrating." The same day, EU Trade Commissioner Sir Leon Brittan insisted that Total was "fully entitled" to enter into the contract. Regarding the US legislation, Brittan said it was "contrary to international law," adding:

"It is also counter-productive in political terms since it creates tension between Europe and the United States, which makes it more difficult to work together to achieve shared political objectives in Iran. ... I therefore hope the US administration will reflect long and hard about the wisdom of taking any action against Total."

Brittan repeated this view after a meeting of the 15 EU Foreign Ministers in Luxembourg on 6 October: "The Americans are entitled to disagree with us. What they are not entitled to do is to impose their will." Brittan said the EU Foreign Ministers shared this view "100 percent." Luxembourg's Foreign Minister, Jacques Poos, said the EU stance was a "position of principle," while Austria's Foreign Minister, Wolfgang Schussel, observed: "The French firm acted fully in the framework of the law. We are not meddling in US affairs and we expect no meddling in European affairs."

On 30 September, French Prime Minister Lionel Jospin remarked sharply: "French companies freely decide on their investments, and that is the case of Total... Nobody accepts that the United States can pass a law on a global scale. American laws apply in the United States. They do not apply in France. Personally, I rejoice." On 1 October, French Foreign Ministry spokesperson Jacques Rummelhardt stated more placidly:

"Our attitude toward Iran...is well known - it is a policy of critical dialogue without complacency... Sanctions applicable to all countries on this planet can only be applied by the United Nations Security Council."

Russia was also quick to oppose the US stance. On 1 October, the Interfax news agency referred to remarks made that day by President Yeltsin to reporters in Moscow:

"B. Yeltsin stressed that Russia, France and Iran are independent States. He said others' attempts to dictate which documents to sign and which not to sign are impermissible..."

On 5 October, State Department spokesperson Elaine McDivet said that no decision had been made on sanctions, adding that "obviously we would prefer not to impose sanctions." On 6 October, speaking in Paris after meeting French Defence Minister Alain Richard, US Defense Secretary William Cohen defended the seriousness with which the US viewed the matter:

"We believe that transactions that substantially enhance Iran's ability to acquire the revenues necessary to acquire missile technology and weapons of mass destruction should not be in any way made easier."

On 9 October, Senator Sam Brownback (Republican - Kansas), the Chair of the Foreign Relations Committee's Subcommittee for Near Eastern and South Asian Affairs stated that if the Administration did "not sanction Total" then "foreign investment will pour into Iran's oil and gas fields and thus into the coffers which finance international terrorism and the development of a sustained nuclear capability."

US and EU officials discussed a range of trade issues, including the Total controversy, in Brussels from 14-15 October. Neither side backed down. Further talks were scheduled for later in the month.

Iran naturally took heart from the intensity of the exchanges. On 1 October, the pro-government Iran News newspaper observed in an editorial: "It is now clear that the United States stands to lose even more prestige for its irrational and hegemonic acts against the Islamic Republic, as Iran this time is not alone..." Another Iranian paper, Jomhuri Eslami, referred to France's "political intelligence, initiative and courage."

Reports: US vows to enforce Iran sanctions, Reuters, 29 September; State Department briefing, 29 September; EU warns US on Iran gas deal, Associated Press, 30 September; Albright criticises Iran gas deal, Associated Press, 1 October; France to continue dialogue with Iran, Reuters, 1 October; Russia slams US moves against Iran gas deal, Reuters, 1 October; US wrestles over French-Iran deal sanctions, Reuters, 2 October; Report - US delays sanctions on Iran gas deal, Reuters, 4 October; No decision on sanctions for Iran deal, Reuters, 5 October; Cohen knocks Iran-France oil deal, Associated Press, 6 October; EU nations back France in Iran deal, Associated Press, 6 October; France, US say ties unharmed by Iran deal, Reuters, 6 October; Text - Brownback stresses proliferation as major threat to US, United States Information Service, 9 October; EU, US argue on Cuba, Libya, Iran, Associated Press, 15 October.

© 1998 The Acronym Institute.

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