EU-Iran Talks Irk United States
N E W Y O R K, Aug. 7, 2002 -- It's one in the troika of President Bush's "axis of evil" and doing business with Tehran is forbidden for American companies, but U.S. allies are lining up to trade with a country Washington would prefer they ignored.
After years of wrangling, the European Union is in discussions that could create a cooperation agreement between some of the United States' cherished industrial allies and one its greatest enemies. So far, there has been little tension between the United States and the European Union, but if talks turn into trade agreements, officials say the relationship could be on the rocks.
The move by the European Union, which comes as the White House is floating ideas to topple Saddam Hussein's reign in neighboring Iraq, could signal a significant split between the United States and Europe regarding the Middle East.
Trade Talks
The talks are geared toward helping the sides reach a trade agreement. In 2001, the European Union informally imported about $6.5 billion in goods from Iran, most of which was oil, and exported about $7 billion in mostly industrial products.
The current EU-Iran talks are designed to establish a permanent trade agreement, but the EU proposal also requires Iran to make several political commitments that could delay a deal.
EU officials are asking that Iran ratify and implement several U.N. resolutions concerning terrorism and weapons proliferation. The European Union also hopes to encourage Iran to help seek peace between Israelis and Palestinians.
"We do not believe an agreement between EU and Iran can only be about economic and commercial aspects — it also has to cover political aspects: human rights, fights against terrorism, etc.," EU representative Javier Solana said in a statement. "Our relation is a two-way relation — it will not progress unless there is a clear reciprocity."
The United States reportedly lobbied against the EU-Iran discussions when they were on the table in June, but a U.S. State Department spokesman said last week that their office was confident the European Union wouldn't take action that could bring it into conflict with the United States.
"We still have grave concerns about Iran's behavior," spokesman Greg Sullivan said. "We've seen nothing to signify that the European Union would do something here that would provide [Iran] tangible benefit."
Bad Blood
Though relations between Iran and Europe have warmed during the reformist regime of President Mohammad Khatami, the United States largely has kept its distance. Poor diplomatic relations date back more than 20 years to when hostages were held in the United States embassy in Iran for 444 days starting in 1979.
So far, the United States' only action over the EU approach to Iran has been to remind European businesses of the Iran-Libya Sanctions Act, which punishes foreign companies that spend more than $40 million with Iran's oil industry.
Punishments could include a ban on imports from the company into the United States or a prohibition of loans by U.S. banks. The law was started by President Clinton and extended by President Bush, but has gone unenforced since it was created in 1996.
The United States maintains a ban on nearly all forms of trade with Iran. Individuals who break the law could face a $250,000 fine and up to 10 years in jail.
Based on the amount of European oil imports from Iran — France alone imported about $700 million worth in 2001 — the State Department said that several European businesses likely are in violation of the U.S. law and could face penalties including trade restrictions if the U.S. Justice Department took up the case.
"I think there's enough smoke there that it would probably suggest a fire," Sullivan said.
The Iran-Libya Sanctions Act was extended in 2001 for five more years, largely because of concerns that Iran is helping to fund the Palestinian militant groups Hamas and Hezbollah who have launched many terrorist attacks in Israel.
Waived Off
The European-American Business Council, a lobbying group for transatlantic corporations, has opposed the Iran-Libya Sanctions Act since it was signed into law. But council officials said the ILSA Act doesn't scare them too much because a provision gives President Bush the power to waive the law on a case-by-case basis, rendering it, in the council's opinion, largely ineffective.
Prior to Sept. 11, the White House waived ILSA's restrictions to allow Russia, Italy and Japan to develop oilfields in Iran. But in the "axis of evil" atmosphere, ILSA has become another weapon in Washington's arsenal. In one example, the White House in May scolded a tiny Canadian oil company for signing a deal that exceeded ILSA's legal limits.
Iran, Iraq and North Korea were accused of being part of an "axis of evil" by Bush.
The hard-line position against Iran is a tactic that the nonprofit International Crisis Group specifically discouraged in a report released Monday. The ICG, a think tank that examines international problems, described Iran as an unstable country in need of concentrated support from the international community.
"The complexity of Iran's domestic situation makes it difficult — but also imperative — that the international community exercises caution, properly fine-tunes its actions and anticipates their impact," ICG President Gareth Evans said.