10 October 1997
The Sacramento Bee

Who's Isolating Whom? A Wrongheaded U.S. Sanctions Law Faces A Test

Sooner or later, a U.S. law enacted last year to punish foreign companies making major investments in Iran's energy sector was bound to be challenged. Not surprisingly, the first challenger is France, a prickly ally that often objects -- in this case, justifiably -- to what it sees as American bullying of European allies over their relations with third parties.

Total, the world's seventh-largest energy company, has signed a $2 billion deal with the National Iranian Oil Co. to develop an offshore natural gas field in the Persian Gulf. Total has strong backing from the French government, which owns a small share of the company, and its partners are the largest energy companies in Russia and Malaysia. And by selling its interest in a U.S. energy company just before the deal was announced, Total reduced to a modest level its stake in the U.S. economy and thus its vulnerability to retaliation. Obviously the timing was calculated in Paris for maximum effect in challenging U.S. policy.

The Iran-Libya Sanctions Act of 1996, motivated by a desire to isolate those two countries because of their support of terrorism, allows President Clinton to choose two among a list of six sanctions, ranging from a waiver in some circumstances to barring a firm from doing business in this country. He has not said which he will choose, but there are signs that he may opt for the least punitive measure. That would anger many in Congress who want to punish Iran, no matter what the cost in relations with U.S. allies, but it would serve larger U.S. interests. (So would taking a more conciliatory approach toward Europe over another sore point, a U.S. law that threatens to punish foreign firms doing business in Cuba.)

The deal comes at an awkward time, just as Tehran and Washington had been sending signals of a mutual desire to thaw their frosty relations. The administration, for example, did not object to plans for a Central Asian oil pipeline through Iran -- perhaps because U.S. firms, which have been applying pressure on the White House, want to assure themselves a major share of the coming energy bonanza in the countries around the Caspian Sea, which Iran also borders.

Now this country looks more isolated than those it seeks to isolate. The president would have done better, last year, to veto the bill, even in the face of a certain congressional override, on the ground that disputes with allies on foreign policy issues are best handled diplomatically, not with a ham-handed law that tries to force them to adopt U.S. policies, however justified those may be with respect to America's relations with rogue regimes.

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