01 October 1997
Star-Tribune, (Minneapolis-St. Paul, MN)
Editorial

U.S. companies lose out in anti-Iran embargo

DUBAI, UNITED ARAB EMIRATES -- The U.S. economic sanctions against Iran were meant to hurt the Iranians. Instead, the big losers have been U.S. companies that have been denied a share of Iran's oil wealth.

Since recovering from its ruinous 1980-88 war with Iraq, Iran has spent billions of dollars on imported goods for its 60 million people and awarded lucrative contracts to rebuild its oil industry and other strategic facilities destroyed in the war.

Openly, none of this money has gone to U.S. companies. European firms have claimed most of the Iranian market, while other rich pickings have gone to Japan, South Korea, China and Russia.

This week, the pattern was repeated in a big way. The French oil giant Total, which earlier took over a deal that the United States' Conoco was prevented from making, announced a $2 billion contract to develop Iran's offshore gas fields.

The new deal will be a first test of last year's U.S. Iran-Libya Sanctions Act, which would penalize countries investing more than $20 million in Iran, or $40 million in Libya.

Despite the U.S. threat to use its economic muscle, France and Europe are not buckling under.

"American laws apply in the United States, not in France," French Prime Minister Lionel Jospin said Monday. The European Union's trade chief, Leon Brittan, chimed in Tuesday to say Total was "legally fully entitled" to invest in Iran.

The European backing came despite a rough spot in Europe's relations with Iran. Most European ambassadors were pulled out of Tehran in April after a German court tied political killings in Berlin to Iran's leaders. But it's expected the break won't last long because the Europeans need Iran's rich market.

The United States imposed its sanctions because it regards Iran as the biggest sponsor of international terrorism and fears that it is trying to acquire nuclear weapons. It wanted to hurt Iran's economy to force a change in policy. Iran's clerical Muslim rulers deny the accusations. And if the sanctions are hurting, so far there is little evidence of it in the Iranian capital, Tehran.

New buses imported from Hungary sport giant ads for everything from Swiss-made watches to Japanese video cameras. The buses jostle through traffic with French, South Korean and Japanese cars all produced in Iran. And shops are filled with imported goods -- even smuggled U.S.-made IBM and Macintosh computers. The most obvious outcome of the U.S. embargo has been that other companies have profited where U.S. firms cannot.

In 1994, Coca-Cola became the only U.S. soft drink maker to open a plant in Iran, but it was forced to pull out when President Clinton tightened sanctions. A year later, Total took over a $600 million deal that Conoco couldn't make.

Giant Boeing Co. lost out, too. Three years ago, it wanted to sell Iran 16 Boeing 737-400s. But the $1 billion deal was blocked by the U.S. government.

It's estimated that Iran Air and smaller Iranian airlines will need up to 100 planes over the next five years because of growing air travel demands and aging fleets.

Boeing is aware of the potential. In April, it and 440 other U.S. companies established USA Engage, a coalition that is lobbying for lifting unilateral U.S. sanctions against Iran, Libya and Cuba.

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