Ignoring bans in Mideast oil deals

Companies given exemptions to anti-terrorism laws

February 21, 2000|By Jay Hancock | Jay Hancock,SUN NATIONAL STAFF

WASHINGTON -- On the dusty plains of northeastern Syria, U.S. oil giant Conoco is tapping valuable natural gas fields and building a 155-mile pipeline toward the Mediterranean. It is doing so even though the U.S. Antiterrorism Act of 1996 outlawed dealings between Americans and Syria and other terrorism-sponsoring states.

In the water off Iran, French energy concern TotalFina is developing the huge, South Pars gas field -- in spite of a second 1996 U.S. law, the Iran-Libya Sanctions Act, which threatens companies operating in those countries with economic penalties from the United States.

Across the Middle East, at least a dozen U.S. and foreign oil companies are dealing with governments in direct defiance of U.S. anti-terrorism laws. But the Clinton administration has never penalized these businesses.

The anti-terror laws have been fought by lobbyists for American oil companies and by France and other European nations unhappy with U.S. attempts to strong-arm their corporations. And the oil companies and the Europeans have gotten much of what they wanted, sometimes with the help of the U.S. State Department.

Four years ago President Clinton called the Iran-Libya law a move toward "zero tolerance" for terrorism. The Antiterrorism Act, Clinton said, provided "the tools to fight the murder of innocent civilians to achieve a political end."

But in case after case, Clinton's administration has exempted individual oil companies from sanctions under the laws, created loopholes for entire terrorism-sponsoring countries, such as Syria, or avoided decisions on sanctions through months of review.

Administration officials insist that they've obtained significant concessions from Europe on fighting terrorism in exchange for withholding sanctions on European companies. And they justify U.S. investment in Syria as helpful in drawing that country into the Middle East peace process.

But the lack of action has upset some Republicans, who view sanctions as necessary weapons against terrorism, and the pro-Israel lobby, which favors economic pressure against Iran, Libya and other enemies of Israel.

New York Republican Benjamin A. Gilman, chairman of the House International Relations Committee, charges the Clinton administration with "essentially creating a blanket waiver" for oil companies investing in Iran or Libya.

Iran, in particular, he said, "remains a major terrorist threat around the world and a source of instability for our allies throughout the Middle East."

The Clinton administration will come under new pressure to pull its punches on sanctions this year as Libya opens its doors to international oil investment and Western corporations queue up to tap that nation's brimming oil fields.

"There's a sense that there are big finds yet to be made" in Libya, said Marvin Zonis, a business professor at the University of Chicago and consultant to international corporations. "Therefore there's tremendous excitement, not just by European firms but by American firms."

Libya's surrender last year of two suspects in the 1988 bombing of Pan Am Flight 103, which killed 270 people, including 189 Americans, has improved ties with Europe, although relations with the United States are still chilly.

Commercial flights to Tripoli have been packed with French, Italian and British oil executives eager for a piece of a huge block of Libyan drilling rights about to be sold. If the executives sign contracts, many of their companies will be subject to U.S. penalties under the Iran-Libya sanctions law unless they receive waivers from the State Department.

But if TotalFina's experience in Iran is any indication, none will suffer sanctions.

The Iran-Libya Act requires the United States to sanction foreign businesses investing more than $20 million a year in Iran's or Libya's petroleum industries, although it allows waivers "in the national interest." Possible penalties include a U.S. import embargo on a company's products, a prohibition on loans of more than $10 million from American banks and a ban on sales of the company's products to U.S. government agencies.

At least four large Iranian petro-projects, together worth more than $4 billion, have been awarded in the past four years to non-Iranian companies. Recipients include France's TotalFina and Elf Aquitaine, Agip of Italy, Bow Valley Energy of Canada, Gazprom of Russia, Petronas of Malaysia and Royal Dutch Shell of the Netherlands.

But the United States has not moved against any of them.

After France protested against U.S. threats to penalize TotalFina's $2 billion project in the Persian Gulf, the State Department studied the problem for eight months and finally waived sanctions on the project in 1998. The other three deals remain under review, two for a year. Administration officials point out that the law sets no deadline to complete the analysis.

Some critics feel the State Department has become an accomplice in the attempt to defy the law.

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