EU tries to fend off unilateral US laws on Iran

The European Union is trying to fend off moves by the US Congress to punish foreign firms that do business in Iran, diplomats say.

EU tries to fend off unilateral US laws on Iran
The European Union is trying to fend off moves by the US Congress to punish foreign firms that do business in Iran, diplomats say.

The main European powers say they are willing to join Washington in seeking tougher sanctions against Tehran at the United Nations.

But Brussels will fight any attempt to apply US law unilaterally to punish European firms that invest in or trade with Iran, if necessary at the World Trade Organisation, the diplomats said, speaking on condition of anonymity.

The EU is particularly alarmed at a bill passed by the House of Representatives that would end a presidential waiver sparing European companies from US sanctions on firms that invest more than $20 million in the Iranian oil and gas sector.

The waiver was enacted in 1998 ending a transatlantic row over efforts to apply US legislation extra-territorially.

European officials say new EU investment in the Islamic republic is already dwindling because of the political risk and lack of finance for major projects, and exports to Iran are falling as governments and banks cut back trade credits.

The 27 EU countries exported goods worth 12.99 billion euros ($18.06 billion) to Tehran in 2005, 11.27 billion euros last year and 4.66 billion euros in the first half of this year, according to the EU statistics office Eurostat.

The biggest exporters were Germany, Italy and France. But in each case, the volume of trade is declining, the figures show.

The daily Le Monde reported on Thursday the Paris government had told French companies working in Iran they should postpone new investments in the country. It cited a liquified natural gas project involving French energy major Total TOTF.PA that is currently frozen.

The concern in Brussels is that in the run-up to the 2008 US presidential and congressional elections, politicians will be vying to propose harsher measures against Iran, at the risk of riding roughshod over European and Japanese allies.

If European companies are pressured to divest from Iran without a U.N. resolution, Russian and Chinese firms will simply take their place, business lobbyists say.

Other bills passed by the House call on the US government to publicly list companies with more than $20 million invested in Iran's energy sector, and to offer legal protection to fund managers who pull money out of firms doing business there.

The Bush administration has opposed the measures but EU officials fear it may not have much influence in its final months in office to restrain a Democrat-controlled Congress, in which such legislation has broad bipartisan support.

Total's investment in Iran's giant South Pars gas field was at the heart of the mid-1990s transatlantic battle.

The Congressional Research Service recently reported more than $100 billion in energy investments in Iran since 1999 by foreign firms such as Total, Royal Dutch Shell Plc RDSa.L, Italy's ENI ENI.MI and Japan's Inpex Holdings Inc. 1605.T.

EU diplomats said the Congressional moves could harm transatlantic cooperation between the United States and Europe.

Reuters
Last Mod: 14 Eylül 2007, 16:59
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