Former US Ambassador to the United Nations and well-known hawk John Bolton during an interview in Moscow on February 25, 2003.
Photo: Valery Melnikov
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The Evacuation of the Dollar
// US Congress Proposes Plan to De-Invest from Iran
On Wednesday the US Senate and House of Representatives took up legislation on de-investment from Iran. The legislation outlaws American investment in foreign companies that work with Tehran in the oil and natural gas industries and grants immunity from prosecution to American investment, trust, and pension funds that withdraw their assets from foreign firms operating in Iran. However, many experts believe that that the measure may come too late: some estimate that Tehran could have its own nuclear bomb within a year.
The legislation in the House was sponsored by the chairmen of the Finance and Foreign Affairs Committees, Barney Frank (D-MA) and Tom Lantos (D-CA). Its counterpart in the Senate was proposed by Democratic presidential candidate Barack Obama (D-IL). The bill obliges the US administration to publish an "exhaustive list" of companies whose volume of investment in the Iranian energy sector is greater than $20 million. Current legislation already forbids American companies from doing business in Tehran, so the majority of firms that are likely to end up on the new blacklist are foreign-owned.
State and local law enforcement agencies will be forbidden to invest monies in pension and other funds under their control in shares in any company included on the list. Assets from such funds that have already been invested in these companies must be withdrawn immediately. The authors of the legislation have included a clause that protects fund managers from criminal prosecution by investors complaining about possible profit losses.
If the legislation is passed, it will have serious negative repercussions both for foreign companies working with Iran and on Tehran itself. According to experts, foreign investment in Iran's energy sector since 1999 has totaled more than $100 billion. Key investors include the French company Total, Italy's ENI, Japan's Inpex, and Royal Dutch Shell. A significant portion of the assets of these global companies are in the hands of American investors, whose simultaneous departure would be a painful blow.
The new legislation is a logical continuation of the political pressure that Washington has been bringing to bear on foreign companies that have invested in the Iranian economy. In December 2006, when the plans of Chinese state-owned oil giant CNOOC to invest $1.6 billion in acquiring Iranian gas fields provoked Washington's ire, Center for Security Policy president Frank Gaffney told the New York Sun that "[President Bush] keeps waiving the sanctions on foreign firms…We have come up with an alternative approach. Americans investing in companies like CNOOC ought to divest from those companies if they are doing business with our enemies." The results of a CNN poll conducted at the time showed that 94% of American believe that companies doing business with governments known to be sponsors of terrorism should be removed from the listing of the New York Stock Exchange.
At the beginning of May, the news that Delhi is considering participating in the construction of an Iran-Pakistan-India (IPI) pipeline prompted many US lawmakers to write to Indian Prime Minister Manmohan Singh in protest. US Secretary of State Condoleezza Rice also spoke out against the plan, saying, "Our views concerning Iran are very well known by this time, and we have communicated to the Indian government our concerns about gas pipeline cooperation between Iran and India." The cost of the IPI project is estimated at $7.5 billion for the 3,000km-long pipeline. India stands to receive approximately 100 million cubic meters a day from the pipeline, and Pakistan would get around 60 million. The US has threatened the Indian government that continuing negotiations with Tehran could scupper the recent nuclear cooperation agreement between Delhi and Washington, according to which the US promised to help India build a nuclear power plant by supplying American technology and technical support.
In late April, Washington was also miffed to learn that the Austrian company OMV had signed an agreement with the Iranian national oil company on joint acquisition of the Pars gas field. OMV has also signed a contract with Tehran to buy 5 billion cubic meters of gas for resale in the EU.
The de-investment legislation will be a means not only to express displeasure with the actions of foreign companies trafficking with Iran but to punish them as well. "If [European companies] do not want to earn dollars, they can focus on the euro," said Representative Barney Frank, one of the co-sponsors of the House bill, in response to a question concerning why EU firms should submit to sanctions imposed by the US instead of the United Nations. "The law will effect companies around the world," said Representative Brad Sherman (D-CA), the chairman of the House Subcommittee on Terrorism, Nonproliferation, and Trade. Mr. Sherman has already voiced his support for the bill and has said that publicly publishing a list in the US of companies that invest in Iran should serve to scare off private American investors.
According to analysts, the majority enjoyed by the Democrats in the House will almost certainly guarantee trouble-free passage for the bill. Though the situation is not as cut and dried in the Senate, lawmakers are expected to vote on confirmation of the bill sometime in midsummer. Introducing the legislation, Representative Tom Lantos said that the law on de-investment will be followed by other congressional initiatives, since "sanctions are necessary to convince Tehran to give up its nuclear program." "Mr. Lantos wants to be certain that we are using all means in our power to convince Iran to give up on acquiring nuclear weapons, and he is not setting any deadlines on a peaceful way out [of the crisis]," said Lynn Bail, a spokeswoman for Mr. Lantos.
However, many experts believe that world can no longer spare the time to seek a peaceful resolution of the Iranian nuclear crisis. This week inspectors from the IAEA visited the nuclear research facility in Natanz, Iran, where they apparently confirmed the news that Tehran has embarked on the industrial-level enrichment of uranium. "The inspectors concluded that Iran has overcome the majority of its technical difficulties and has begun the enrichment of uranium at an accelerated rate," said IAEA director Mohamed ElBaradei. The widespread consensus is that Iran will now need less than a year to produce its first atomic bomb.
"Tehran is carrying out the enrichment of uranium, and they're not stopping. They're making progress, and our time is limited," said former John Bolton, the former American ambassador to the United Nations. According to Mr. Bolton, the EU needs to "get serious" about the potential threat posed by Iran and should admit that negotiations aimed at stopping the country's nuclear program have failed. He believes that the next step must be to impose more serious economic sanctions on Iran, followed by measures to overthrow its theocratic regime and physically destroy its nuclear facilities before Tehran arms itself with nuclear weapons.
US lawmakers apparently share this pessimistic outlook: on Wednesday the House of Representatives shot down legislation forbidding the use of force against Iran without the consent of Congress. The legislation was proposed by Representative Robert Andrews (D-NJ) as an amendment to a military spending bill for the 2008 fiscal year. Specifically, the amendment would have prohibited funds from being allocated from the budget for a possible military operation against Iran without the consent of Congress. Although only Congress can issue a declaration of war, the president, as the commander-in-chief according to the Constitution, has the authority to react using force to military threats or to repulse sudden attacks. Though Congress is in the hands of the Democrats, a significant majority of the legislators apparently believe that the situation concerning Iran is so hopeless that they are unwilling to tie President Bush's hands, and they have left him the right to take punitive action against Iran as he deems necessary.
Dmitry Sidorov (Washington)
All the Article in Russian as of May 18, 2007
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