Europeans keep doing business with Iran

From a January 6, 2008 Jpost article:

Austrian Foreign Minister Ursula Plassnik was here this week on her third visit in her current post. The visit was no doubt a friendly one. As our Foreign Ministry gushed, it was “a symbol of the improvement in relations between the two countries in recent years.”

Yet there is a major fly in the ointment. Austria, according to diplomats, is among the “weakest links” in the international campaign to sanction Teheran. The major item on Foreign Minister Tzipi Livni’s agenda with Plassnik was a €22 billion deal between Austria’s state-owned gas company OMV and Iran that was signed last April.

As a sign of how far off the reservation this deal is, another weak link, Germany, has criticized Austria. German Chancellor Andrea Merkel reportedly chastised Austria for setting a bad precedent by seeking to develop Iran’s oil sector.

Coming from Germany, however, this is close to the pot calling the kettle black. Germany is Iran’s largest European trading partner and has been the most resistant to tightening sanctions among the pivotal EU-3 – the UK, France and Germany.

On the one hand, Merkel wrote in Handelsblatt on December 27, “It remains in the vital interest of the entire international community to prevent a nuclear-armed Iran, if necessary by intensifying sanctions.” But the German Ambassador to Iran told Iranian Press TV that the “German Embassy is trying to… improve economic ties between the private sectors of the two countries.” Further, the ambassador admitted that German exports to Iran have not been affected by UN sanctions because they pass through the Dubai free-trade zone.

Berlin’s criticism of Vienna could equally be levelled at itself. As Yves Pallade, director of the Foreign Affairs Network of B’nai B’rith Europe, put it, “If the special relationship with Israel… counts for anything, this is the time for the Federal Republic to set an example… by enacting comprehensive and if need be even unilateral sanctions and slashing all export credit guarantees.”

Germany is hardly alone in Europe. In January 2007, Shell, a Dutch company, joined with Repsol, from Spain, in signing a preliminary deal to develop Iran’s South Pars oil field. The project would allow Iran to liquefy 8 million tons of natural gas a year and, according to Iran, is valued at $10b.

In the same month last year, the Norwegian company Statoil began talks with China’s National Petroleum Corp on a $3.6b. Iranian natural gas project.

All such deals put these companies at risk of being sanctioned by the US under the Iran Sanctions Act of 1996 (ISA), which could apply to any company investing over $20 million directly into Iran’s oil sector in any given year.

Given France’s recent leadership on the Iran sanctions issue, it is ironic that the firm that arguably has violated ISA most consistently is Total, France’s oil company. In 1997 and 1999, after ISA became law, Total signed multi-billion dollar deals with Iran. Indeed, in each of the years since 1996, Total has made investments in Iran (excluding South Pars) in excess of $20m. Further, the company has reported to US regulators that it expects to invest significantly more than $20m. per year in Iran in the foreseeable future.

As critical as such investments are for Iran, they are minuscule in relation to European economies. A full 40 percent of Iran’s trade is with Europe, while only 1% of Europe’s trade is with Iran. Even Total, as of 2006, reported that its operations in Iran produced only 1% of its total worldwide production.

Iran, and the radical Islamist movement it spearheads, pose the greatest totalitarian threat to international peace and security since the defeats of Soviet communism and Nazi fascism. As in the 1930s, we are at the point when the threat is growing, but can still be stopped by imposing draconian diplomatic and economic sanctions, without military force.

Europe’s foot-dragging on sanctions is leading inevitably to military action, war, a nuclear Iran, or some combination of the exact scenarios that European leaders claim they want to avoid. The refusal to impose small economic costs now will result in a major economic costs – both through rising terrorism and oil prices – to European economies later, not to mention growing loss of life, freedom and security in the world.

Though Europe is acting blindly to its own self-interest, let alone Israel’s, our government should make clear that any nation that fails to take minimal effective steps to confront the Iranian threat cannot be considered a friend of the Jewish state.

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