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Turkmenistan : U.S. Questions Gas Pipeline Via Iran

Washington, 16 October 1997 (RFE/RL) - The United States has called into question statements by the Turkmen government about a proposal to export gas to Turkey via a pipeline going across northern Iran.

State Department spokesman James Rubin said Wednesday that the United States has not given the go-ahead for the project being negotiated by Shell, the Dutch-British energy conglomerate.

"We have given no approval for any pipeline across Iran," Rubin said.

That contradicts statements made in Washington last week by Turkmen Foreign Minister Boris Shikhmuradov.

He told reporters after talks at the State Department with Deputy Secretary of State Strobe Talbott and Under Secretary of State for Economic Affairs Stuart Eizenstat that positive signals had been given -- or as he put it "we received a greenish light."

Shikhmuradov added "we would like this greenish signal to become really green."

But Wednesday, if anything, the light turned a warning yellow when Rubin said emphatically that "there has been no green, greenish, green-tinted, green-shaded, green-of-any-kind light."

He acknowledged that the U.S. is not explicitly opposed to the project, saying "the U.S. did indicate last July that Turkey's gas plans involving the purchase of gas from Turkmenistan do not appear to constitute sanctionable activity under the law."

But Rubin said the project would be carefully scrutinized, adding that if it is found to be in violation. the U.S. will take action. "This project is no exception," he said.

The reason the U.S. is involving itself in the business of other countries and enterprises in deals in which it has no direct stake is a controversial domestic law that went into effect last year.

Called the Iran-Libya Sanctions Act, it mandates punitive measures against any foreign firm investing more than $20 million a year in the energy sectors of those countries.

The law is intended to economically isolate governments that sponsor international terrorism but it is proving to be a major headache for Washington policymakers.

U.S. officials are actively promoting development of the vast oil and gas reserves in the Caspian Sea basin, especially projects in which major American companies have interests.

And senior State Department and White House officials have said they want to see Central Asian countries become strong market economies with democratic sovereign governments.

In practical terms, that means moving away from the old centralized Soviet lines that still bind Turkmenistan and other Central Asians to Russia -- and developing economic alternatives.

But the sanctions law and other U.S. anti-terrorist legislation have formed the underpinnings of U.S. policy toward Iran for nearly 20 years and constrain Washington officials from acknowledging that country as an attractive economic partner for Central Asian nations.

Rubin said Wednesday that the U.S. is pleased Turkey is looking to Turkmenistan to supply its energy needs. "We regard Turkey's decision to purchase gas from Turkmenistan rather than Iran as a positive development," he said.

And he stressed "our strong preference is that Caspian petroleum resources reach Western markets by non-Iranian routes."

However, the U.S. is now confronted with three separate deals for pipelines to carry oil and gas from the former Soviet republics through Iran.

There is the proposed purchase of Turkmen gas by Turkey in which Shell would build a pipeline across northern Iran at a cost of $2.5 billion.

Another project, even more controversial, was announced last month by the French company Total which wants to invest $2 billion to develop Iran's offshore South Pars gas fields with Russia's Gazprom company as a third party to the deal. The U.S. has sharply criticized France over the venture but conspicuously refrained from being nasty about Russia. Asked about possible sanctions against Gazprom, U.S. officials repeat that no exceptions will be made but say they are not sure economic sanctions would be triggered under the law and that they are studying the matter.

U.S. representatives are currently discussing the issue with European governments to try and avoid a confrontation.

Rubin said the two pipeline projects are very different because "the Total deal, unlike the Shell deal, involves the development of Iranian resources," and that "there's a difference between purchasing gas from Turkmenistan and purchasing gas from Iran."

A third project that has aroused relatively little comment in Washington so far is an oil agreement between China and Kazakhstan. Signed last month, it provides for development of Kazakh oil reserves at the cost of $9.5 billion and transporting the oil to western China, as well as south through Iran to the Persian Gulf. Kazakh officials have said the pipeline across Iran is a priority.

Washington could take a long time studying these various pipeline proposals while it works out a way to balance competing and conflicting policy interests without breaking U.S. law.