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America’s useless Iran sanctions 11, March 2010

Posted by thegulfblog.com in American ME Relations, Iran.
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The NYT has an excellent in-depth article analysing America’s sanctions against Iran. The Iran Sanctions Act was established in 1996 to deter companies investing more than $20 million in Iran by threatening, for example, to ban them from tendering for US contracts. However, in its 14 years the act has not been used once.

Moreover, the act is being prodigiously flouted by companies based in the US and abroad. The NYT calculates that:

the federal government has awarded more than $107 billion in contract payments, grants and other benefits over the past decade to foreign and multinational American companies while they were doing business in Iran.

The majority of this money went – unsurprisingly – to developing Iran’s energy sector which is closely allied to the Iranian Revolutionary Guards.

The NYT identifies 74 companies doing business with Iran and the US of whom 49 have no plans to withdraw from Iran. The following examples are taken directly from the NYT article.

  • South Korea – Daelim Industrial: 2007 – $700 million contract to upgrade an Iranian oil refinery. 2009 – $111 million contract to build US military housing in South Korea. 2009 – $600 million deal announced to develop part of Iran’s South Pars field
  • France – Total: 1998 – President Clinton declines to prosecute them for dealing with Iran
  • UK/Holland – Royal Dutch Shell: 1999 – $800 million deal to develop two oil fields. Subsequently Shell has won around $11 billion worth of contracts from the US Military. Shell has recently announced that it is stopping gasoline sales to Iran though this will not affect its exploration there.
  • Japan – Inpex: $2 billion investment Iranian oil field. No sanctions at all
  • Brazil – Petrobras: $100 million invested in exploring Iran’s offshore fields. Received a $2 billion loan from US for development of oil field off the coast of Brazil
  • America – Honeywell: British subsidiary works on Arak refinery in Iran. Received nearly £13 billion worth of federal contracts since 2005
  • America – Ingersoll Rand: Various ‘minor’ subsidiaries working in Iran & still receives US contracts, though they have announced that they are now pulling out of Iran
  • America – Haliburton: Used subsidiaries to work in Iran whilst receiving huge US contracts

Hat tip: Abstract JK

New Iranian base on the Horn 5, January 2009

Posted by thegulfblog.com in Iran.
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Iran has signed an agreement with Eritrea to refurbish an oil refinery in the port town of Asseb in East African country. Iran has used this opportunity, it has been reported, to move troops, submarines and warships to Asseb. There are several implications of this.

Firstly, it shows that Iran is playing a shrewd game by seeking to diversify its dependency on refined oil products and by planning ahead regarding the potential strengthening of US sanctions. Secondly, it highlights how difficult it is to isolate Iran. Never mind the typical sanction breaking from the French, Russians or Chinese, but there are, it seems, vastly more actors to keep in mind. Thirdly, Iran now has some kind of naval force at another choke point in one of the world’s busiest shipping lanes. They obviously have numerous bases (including a new one as reported in Jask) by the Straits of Hormuz, but now they are poised near the Horn. Whilst the strength of the Iranian forces is not known, this merely adds to an already complex situation by creating another potential front for Iran and its potential retaliatory options. Fourthly, it increases the areas in which the US and Iranian Navy are in close proximity. Such a state of affairs is not ordinarily such a worrisome thing (though i do seem to remember an issue or two with some Revolutionary Guard speedboats…) but were some kind of conflagration to occur, then another theatre of proximity and hostility is only to be bemoaned.

In short, overall this highlights (to me, at least) the Gordian difficulties of boxing in and chastising Iran punitively. Iran is a rational, resourceful and intelligent state which can and will find ways to frustrate heavy-handed, blanket policies which don’t take into account political realities and have unrealistic expectations.