The Bush administration faces a growing dilemma over the pressure it is placing on European companies to suspend investment in Iran, with some US lawmakers dissatisfied with the effort and European allies worried about its tactics.
The US Treasury and State Department have sent officials across Europe, stepping up pressure on international oil and gas companies in particular not to go ahead with investment plans in Iran. They are seeking to turn the economic screws on Tehran over its nuclear programme, which has already attracted limited United Nations sanctions.
Bush administration officials testifying about Iran on Wednesday at a congressional hearing were given a roasting by Brad Sherman, the Democratic chair of a House subcommittee on terrorism and non-proliferation.
Mr Sherman repeatedly cut short Paul Simons, a State Department official, for refusing to answer “yes or no” to the question whether any foreign company had invested more than $20m (€15m, £10m) in Iran’s oil and gas industries and would thus be open to unilateral US sanctions. He also ridiculed the administration for allowing imports of Iranian caviar and carpets, and letting the World Bank lend more than $1bn to Iran.
US officials have previously said they have spoken to the chief executives and senior financial officers of several big companies, including Royal Dutch Shell, Repsol of Spain, and companies from China and Malaysia to encourage them to stop investments.
John Bruton, the European Union ambassador to Washington, expressed concern on Thursday that Treasury officials touring Europe might be threatening European companies with application of extra-territorial US legislation. The EU would “question the wisdom” of the US seeking to impose such sanctions, either retroactively or in the future. The EU-US summit to be held in Washington on April 30 would include discussions on Iran policy, he told reporters.
Stuart Levey, US undersecretary for terrorism and financial intelligence, said in an interview in London that “a number” of non-financial companies had indicated their intentions to postpone investment decisions while others had said they would not take any such decisions for some time.
“I think that’s a good thing. They are obviously grappling with the issue of whether they want to invest in Iran under the circumstances and a lot of them are saying, ‘well no, not under the circumstances’. Perhaps they are hoping that the circumstances will change.” He declined to name the groups.
Mr Levey noted strong interest in Congress to take action against companies investing in Iran. But he said the administration believed such actions had “the tendency to drive wedges between the US and the third countries that we’re trying to work with to put pressure on Iran. We’re hoping to proceed in a different way.”
In a move some analysts saw as a sign of investment hesitation, Iran last week said it had extended by up to four months a deadline for Total, the French energy group, to decide whether to invest in the $10bn South Pars natural gas development. The original deadline expired at the end of March.
Shell and Repsol signed an agreement in January with Iran over a $4.3bn project that constitutes a later phase of the South Pars development. A final decision is not expected before the first quarter of next year. A Shell spokesman said the company was a year or more away from any investment decision on the project and current work in Iran was to establish its “engineering and economic feasibility”. Repsol was not available for comment.
