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Europe: France And EU Seek U.S. Compromise On Iran

Prague, 1 October 1997 (RFE/RL) - In precipitating a showdown with the U.S. over French investments in Iran with the signature of a huge natural-gas deal three days ago, Paris was counting on explicit support from the European Union and implicit backing from the rest of the international community.

The French Government, its officials say candidly, is hoping to isolate Washington and force it into a compromise that would lift the threat of U.S. sanctions against nations doing large-scale business with Teheran.

The officials say that so far reactions to the deal have gone as they hoped. On Sunday, the French oil company Total announced a $2 billion contract for exploration of Iran's South Pars offshore gas field along with partners Gazprom from Russia and Petronas of Malaysia -- the largest single investment in Iran since the 1979 revolution. Yesterday, EU Foreign Trade Commissioner Leon Brittan in effect warned the U.S. not to interfere in the deal, saying that any obstruction would seriously hurt trans-Atlantic relations. Brittan said that the Iran-Libya Sanctions Act passed by the U.S. Senate last year was "contrary to international law" because it sought to impose Washington's trade restrictions on other countries.

The U.S. legislation gives President Bill Clinton the right to impose, or not to impose, sanctions on any foreign company investing more than $20 million in either Iran's or Libya's energy sectors. Washington holds that both countries sponsor international terrorism. On Monday, U.S. officials said that the French-led natural-gas deal would inevitably trigger sanctions under the existing law. To which no less an official than French Prime Minister Lionel Jospin replied: "American laws apply in the U.S., not in France. Personally, I rejoice (in the deal)." Officials at Total, once owned by the state but now a largely private company, said publicly that the contract with Teheran had prior French Government approval.

French defiance and the EU's full backing of Paris' stance was matched by what one French official called "significant silence" from the U.S.' traditional allies, Britain and Germany. Nor was there any official reaction from Japan, a country interested in potential energy supplies from Iran. The three nations' silence, say French officials, points up how little support the U.S. has over the issue.

The EU has long ignored U.S. appeals to isolate Iran, carrying on what it has called a "critical dialogue" -- a phrase coined by the German Government -- with Teheran for the past five years. This policy allows for high-level meetings with Iranian officials as well as economic investment, while simultaneously urging Teheran to improve its human-rights record. Currently, the dialogue is in suspension because Iran has refused to let German and Danish ambassadors return to Teheran this Spring. All EU diplomats were recalled in the wake of a German court ruling that Iran's leaders had ordered the killings of four dissidents in Berlin.

The EU-U.S. standoff over what the Europeans call "illegal American extra-territorial legislation" comes only two weeks before a negotiating deadline to settle differences over another U.S. law that punishes foreign companies for trading with Cuba. Five months ago, both sides agreed on October 15 as a deadline for settling the dispute over the trade-with-Cuba law, known as the Helms-Burton Act for its two Congressional sponsors. The EU promised to delay until that date the filing of complaint to the World Trade Organization (WTO) on Helms-Burton. Yesterday, EU Commission spokesman Nigel Gardiner said that now "both sides need a settlement and we are working for a deal by mid-October."

From Washington yesterday, there were hints of a compromise in the making over trade with Iran as well. State Department spokesman James Rubin said that the Clinton Administration is seeking what he called "greater concerted action" with European governments on how to deal effectively with Teheran. He noted that "any action in that regard" by the Europeans would have an effect on how Washington interprets the sanctions law. Rubin said that, at two meetings scheduled for next week and the end of the month, U.S. and EU officials would try to achieve what he termed "greater convergence" on Iran in order to avoid sanctions.

Seen from Paris, what all this indicates is that independence-minded France may be on its way toward winning a small victory in its endless skirmishing with the U.S. "We don't think the U.S. will risk a formal complaint to the WTO," said one French official. "We think, rather, that Washington will meet us half-way."