Israel Lobby Joins US Economic War On Iran.

The most influential pro-Israel lobby group in the US, the American Israel Public Affairs Committee (AIPAC), on March 12 warned state pension funds that they would face a campaign to sell billions of dollars invested in companies with ties to Iran. The nationwide divestment campaign was one of the main messages delivered at AIPAC's annual convention in Washington, which also called for tightening sanctions against Iran at the UN.

Speaking to some 6,000 delegates, AIPAC Executive Director Howard Kohr singled out for special mention California's state pension fund, CalPERS, which he said had more than $1 bn invested in foreign firms developing Iran's energy sector. He said: "If the largest state pension funds in this country were to divest from companies with ties to Iran, it would have a crippling effect on Iran's economy". AIPAC would work with other Jewish organisations this year to support divestment efforts in 10 states. He said: "Stiff sanctions and targeted divestments - these will be the focus as we work to keep the pressure on Iran". Records for 2006 show that CalPERS held over $468m in stock in Total, the French energy company, one of the foreign concerns which has invested most heavily in Iran. The California fund had over $330m of stock in ENI, the Italian energy group also active in Iran.

The concept and practice of "terror-free" investing is gathering momentum in the US, among public and private funds. Several states have already instructed their pension funds not to invest in countries on the State Department's list of terror sponsors, namely Iran, Syria, Sudan, Cuba and North Korea. AIPAC said experts involved in the Sudan-Darfur divestment campaign, which is having a considerable public impact, were also aiding its effort.

AIPAC's pulling power was demonstrated on March 12 by the line-up of speakers, led by US Vice-President Dick Cheney, and Israel's Foreign Minister Tzipi Livni. Both drew strong applause for tough words aimed at Iran.

Talk of sanctions and divestment drew less enthusiastic applause. But the FT on March 13 reported several delegates as saying "privately afterwards that sanctions were the only option, given the little appetite for launching a war with Iran after the debacle in Iraq". Because of existing US sanctions, few US companies have business ties with Iran, except in the food sector and through foreign subsidiaries.

The US drive to hurt the Iranian economy, including the relatively small private sector, rests on the belief that the business community and wider population will direct their economic grievances at the government of Ahmadi-Nejad. In parallel with the UN process, the US Treasury has held roadshows in Europe and the Middle East in an effort to cajole state and private investors to stay clear of Iran. US officials say they are pleased with the results.

US Treasury Under-Secretary Stuart Levey recently told audiences in the Middle East that US economic pressure had "sparked a debate inside Iran about the wisdom of Ahmadi-Nejad's policies". Levey spoke of growing US concern over Iran's IRGC and its backing of Lebanon's Hizbullah. He said IRGC's control and influence in the Iranian economy was "growing exponentially", noting that associated firms had been awarded government contracts, including management of Tehran's airport and building the capital's metro.

Levey said some banks - including UBS, HSBC, Standard Chartered and Commerzbank - had halted or cut off exposure to Iranian businesses. He warned a Dubai audience of the risk to their reputation, saying: "You should worry too and be especially cautious when it comes to doing business with Iran".

The Financial Times on March 12 quoted Judith Lee, sanctions expert at the law firm Gibson, Dunn & Crutcher, as saying US officials were trying to increase the pressure, even raising the possibility of imposing US sanctions on non-US entities which invested in Iran's energy sector - as Congress has sought since 1996. But the FT said Ms Lee did not see allies lining up to comply and said there would be a backlash if the US tried to apply such extra-territorial measures.

Despite the Bush administration's desire to squeeze Iran, it has reacted cautiously to legislation proposed by Tom Lantos, Democratic chairman of the US House Foreign Relations Committee, which would end the administration's ability to waive sanctions against foreign companies investing more than $20m/year in Iran's oil and gas.

Lantos expected the bill to be passed overwhelmingly by the House, despite objections from the State Department.

Qatar Voices GCC Fears Of US Military Action: Qatari Foreign Minister Shaikh Hamad bin Jassem bin Jabr al-Thani on March 14 warned against a military solution to Iran's nuclear crisis, cautioning that all sides stood to lose from the use of force. The warning came amid rising anxiety in the financially booming six Arab Gulf Co-operation Council (GCC) states over the impact of US-Iranian tensions.

Until now, the GCC has been insulated from the Middle East's political turbulence, with most states enjoying unprecedented economic expansion and unveiling huge domestic investment programmes.

Qatari officials on March 14 told a London conference the gas-rich emirate's plans called for $130 bn of domestic and foreign investment over the next six years, with $65 bn of that going into the energy sector.

Military confrontation between the US and Iran risks dragging GCC states into the turmoil, as Tehran has indicated it would retaliate against US interests in the region.

Speaking at the London conference, Sheikh Hamad said the Middle East could not afford the outbreak of another war, adding: "It's important for all of us to try and find a way to solve the problem through the [UN] Security Council (UNSC) because no one will win if other means are used" - in reference to the Iran dispute. "We have to think that even a victor in wars has to sit at the table to negotiate victory and defeat, so it's best to sit at the table from the beginning".

Although the region is always lurching from crisis to crisis, Sheikh Hamad said: "What we're facing now is a little bit different". He cited the Iran dispute and the Shi'ite-Sunni conflict in Iraq, which he described as the "most dangerous clash".

Qatar, a base for the US Central Command (CentCom), has sought to balance its national interests by maintaining good relations with Tehran. This has sometimes frustrated a US administration trying to build an Arab alliance against Iran.

The US says it wants a diplomatic solution to the Iranian nuclear crisis and is now pushing for tougher action at the UNSC. But the recent dispatch of a second aircraft carrier to the Gulf and intensified US pressure on Iran over its alleged support for militias in Iraq has fuelled concerns that Washington is preparing for military action.

On March 14, Iran's chief security and nuclear official Ali Larijani said Tehran would respond militarily if the US struck its nuclear facilities.