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Europe: U.S. Not Rushing To Impose Iran Sanctions

Washington, 1 October 1997 (RFE/RL) -- The U.S. is moving to relax tensions with Europe over an energy deal with Iran by suggesting it might not need to impose unilateral sanctions against French, Russian or Malaysian investors in an Iranian natural gas field.

At the State Department, where the decision on sanctions is most likley to be taken, spokesman James Rubin told reporters that he does not know when the U.S. will make up its mind whether to invoke the economic penalties called for in the Iran-Libya Sanctions Act that was passed by the U.S. Senate in 1995.

The law enables the President to impose sanctions on any foreign company that invests more than $20 million in either Iran's or Libya's energy sectors. The U.S. believes those two nations support international terrorism and that they also want to raise money through energy sales to obtain weapons of mass destruction.

The threat of sanctions loomed Monday following the announcement that the French oil firm Total, Russia's Gazprom and Malaysia's Petronas had signed an agreement with Iran to develop a Persian Gulf natural gas field. The deal is said to be worth $2 billion.

When U.S. officials complained about the agreement on Monday and indicated that the sanctions law would have to be enforced, French government officials warned Washington not to interfere in a French company's commerce.

French Prime Minister Lionel Jospin said, "American laws apply in the United States, not in France."

European Union Trade Commissioner Leon Brittan said the French company was "legally fully entitled" to invest in Iran. Brittan said the U.S. legislation is "counterproductive" and created "tension between Europe and the United States, which makes it more difficult to work together to achieve shared political objectives in Iran. It plays into the hands of hard-liners in Teheran."

On Tuesday, Rubin said the U.S. might not have to impose sanctions at all.

"The objective of the legislation is not to impose sanctions. The objective of the legislation is to get other countries, in Europe in particular, to work with us on the subject of tightening up the pressure on Iran," said Rubin.

And Rubin said the U.S. has been having what he called intensified talks with European Union members and with Canada "aimed at seeking greater convergence in our policies towards Iran."

He said the delegates to those talks plan to meet one week from tomorrow in Brussels and again on October 28 in Ottawa, Canada. Rubin said, "in other words ... we're going to be talking with our allies about ways to ratchet up (increase) the pressure."

Rubin said the talks will be a factor in any decision-making "because the law itself specifies the option of waiving a sanction in the event that the governments themselves have agreed to tighten the pressure up."

The law gives the President several options to choose from should sanctions be imposed. These are:

The President may direct the U.S. Export-Import Bank not to approve any guarantee, insurance, or credit in connection with any goods or service to the sanctioned company.

The President may order the U.S. government not to issue any specific license or grant any permision to export goods or technology to the sanctioned company.

U.S. financial institutions may be barred from making loans or providing credits totaling more than 10 million dollars in 12 months to a sanctioned company, unless the loans or credits are to be used "in activities to relieve human suffering."

The U.S. government may not buy or contract to buy any goods or services from the sanctioned company.

The President may impose other sanctions to restrict imports related to the sanctioned company.

The law also provides possible penalties against a sanctioned financial institution.

And while the law has brought criticism from Europe, it also offers the President the choice of not imposing sanctions at all. The law gives the President 90 days to initiate talks with the governments of the countries involved. The President can forego sanctions for another 90 days after that if he decides that the foreign government is taking some action against the firm involved. The President can waive sanctions entirely if he demonstrates to the congress that imposing penalties would harm the national interest.