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Iran-Libya Sanctions Extension Will Further Damage US Standing Globally.

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NICOSIA - There are clear indications that the US Congress is moving forward with legislation to extend the Iran-Libya Sanctions Act of 1996, which is due to expire in the beginning of August. So far these sanctions, which were aimed at stopping in the Iranian and Libyan hydrocarbons sectors, have failed to do much more than prevent American oil companies from competing for projects in these countries. Virtually all of Washington's European allies and Japan have ignored these sanctions, which were designed to penalise foreign companies doing business in either country.

According to diplomatic sources in the region consulted by APS, the extension of these sanctions will have no additional impact on either of Iran or Libya. Nor will they affect the approach of European and Japanese companies into these markets. Extending the sanctions will, the diplomats say, worsen the image of the US in the region at a time when the Bush administration's image is already very poor due to its perceived pro-Israel bias, its reluctance to intervene more strongly as a mediator in the ongoing crisis between the Palestinians and Israelis, and also its global policies ranging from environmental issues to the Nuclear Missile Defence (NMD) proposal.

Despite rumours earlier this year in Washington that the new Bush administration may allow the sanctions act to lapse, the legislation was introduced in the Congress on May 24. It is by no means certain, the sources say, that the legislation will be endorsed and that the sanctions will be extended. This is because the move reflects a battle between the pro-Israeli lobby and the US oil industry lobby. The latter has been arguing for the past few years that the law is bad for business and a political disaster. The former is opposed to any move that would benefit either Iran or Libya.

The introduction of the legislation puts the Bush administration in a very tricky situation. Bush has said in recent months that this is not the time to lift the penalties against Libya and Iran, but administration officials have quietly been discussing with Congress the idea of making the law more flexible when major US business interests are at stake. That reflects the clout of the energy industry in the administration, with the "power behind the throne" Vice President Dick Cheney being just one of the people with direct links to the oil companies.

However, the sources say, the oil industry's depth of influence with the administration may not be sufficient to stop the legislation being passed if the pro-Israel lobby marshals its full strength. They note that the White House Energy Task Force on May 17 issued a report calling on Bush to direct the Departments of State, Commerce and Treasury to begin a "comprehensive" review of sanctions, stressing that "energy security should be one of the factors considered". But the report stopped short of calling for an easing of investment and trade restrictions against energy-rich Iran, Libya and Iraq as the oil lobby has sought. The sanctions review section accounted for only two paragraphs of the task force's 163-page report, and did not refer to a specific country or type of sanction. Eventually, the passage of the legislation may be a close call, they sources point out, adding that apart from keeping US companies out of the hydrocarbon sectors of Iran and Libya, the two main negative implications for Washington will include the following:

- Limiting policy flexibility in the Middle East. With the regional situation in a state of flux, Washington is finding it is difficult to keep stable the pillars of its policy in the Middle East - the peace process and the sanctions regime against Iraq. In view of the explosion of violence between Israel and the Palestinians, reflecting the failures of the peace process, Baghdad has found it easier to challenge the US position on continuing with "smart sanctions". Iraqi Saddam Hussein has rejected the latest "smart sanctions" ideas put forward by Washington.

Simultaneously, the US is not getting much support from its traditional allies in the region. There is no enthusiasm at present in Saudi Arabia, Egypt, Jordan or any of Washington's lesser allies for a reshaping of sanctions against Iraq. This, ironically, leaves Iran as a possible partner in squeezing the Iraqi regime. But extending the Iran-Libya Sanctions Act would come in the way of any such understanding. There have been over the past four years, i.e. after Mohammed Khatami took over as president of Iran, moves to improve ties with Iran. The introduction of legislation in Congress may make things more difficult as it will strengthen the hardliners in Tehran who are determined to oust Khatami from the presidency during elections in early June. Moreover, it will jeopardise some moves already quietly taken by Tehran to help US efforts in squeezing Baghdad. For example, Iran has allowed the Iraqi National Congress (INC), politically and financially supported by the US, to open an office in Tehran to co-ordinate operations across the border. It has been reported that Iran will also permit the INC set up a radio transmitter to beam its message to the Iraqi people.

- Enhancing isolationist image globally. The 1996 Sanctions Act against has been firmly rejected by Washington's European allies, Russia and Japan - among others - as being "extra-territorial" as they impose financial penalties on foreign companies doing business with Iran and Libya. France and Russia, in particular, have been vehement in pointing out that the US does not have the right to impose its laws on non-US companies operating in foreign lands. They have proceeded with development projects in the Iranian hydrocarbons sector. If the act is extended by the Bush administration, the sources say, it will reinforce a growing consensus among continental EU states as well as other members of the international community that Bush is following an isolationist approach, also reflected in his rejection of the Kyoto protocol for the environment and his decision to push ahead with the NMD programme regardless of the fact that it amounts to a unilateral rejection of the Anti-Ballistic Missile Treaty.

The sources point out that the unpopularity of the Bush approach is one factor that led to the US being ejected on May 3 from the UN Human Rights Commission, for the first time since 1947. European states and Russia also point out that US sanctions on Iran and Libya do not reflect the changed realities in the region. Neither Libya nor Iran can at present be classified as states supporting terrorism. Libya is now actively encouraging foreign investment in a range of sectors and is considered among the hottest investment opportunities. Iran is gradually opening up to foreign participation in its hydrocarbons sector and it has become the most democratic state in the Middle East - a fact that is acknowledged by the US itself.

More importantly, the sources add, the sanctions have had little impact on either Iran's or Libya's attitude towards the Middle East peace process. They are not likely to change their position in the foreseeable future, given the situation in the region. The sources also point out that these realities are not lost on the Bush administration, which is more ambivalent about renewing the Sanctions Act in its current form than its public comments suggest. The end result, they say, may be a modification of the act to the extent that it allows US companies to resume their involvement in both countries, perhaps indirectly through their subsidiaries overseas.
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Publication:APS Diplomat News Service
Geographic Code:1USA
Date:May 28, 2001
Previous Article:Iraq Sanctions Link To Peace Process Resurfaces As The Palestinian Situation Worsens.
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