Post #6: U.S. Enriches Companies Defying Its Policy on Iran

Click here for a link to the March 6th, 2010, New York Times Article, "U.S. Enriches Companies Defying Its Policy on Iran." Despite Washington's efforts to discourage investment in Iran, the United States has awarded billions of dollars in grants, contract payments, and various benefits to American companies who have done business in Iran. This includes the $15 billion given to companies who ignored American law through investments bolstering the development of Iran's gas and oil reserves. With the current nuclear crisis, the Obama administration is currently trying to pass more United Nations sanctions against Iran. Its seems as if both the Bush and Obama administration sent conflicting messages when it comes to making economic deals with Iran, by rewarding companies whose monetary interests oppose American security goals. Most of these companies are in the oil or automobile industries, linked to the Islamic Revolutionary Guards Corps, Obama's focus in his proposed sanctions. The companies making business deals with Iran have reaped a variety of benefits, including close to $4.5 billion in loans from the Export-Import Bank, which underwrites the export of American service and goods, and over $500 million in grants for research. Recently, many companies have chosen to pull out of Iran due to pressures by the United States, anti-terrorism campaigns by shareholders, and the obstacles involved with doing business with the Iranian government. Some, however, including 49 of the 74 companies identified by The New York Times staff, continue to do business with Iran. The United States' most powerful tool in cracking down is the Iran Sanctions Act, which punishes foreign companies which invest over $20 million in a year to develop Iranian gas and oil fields. Due to fear of angering American allies, however, this law has never been enforced. In addition, nineteen states have rules preventing or discouraging pension funds from investing in companies which perform business in Iran. Representative Ron Klein, a democrat from Florida and a member of United Against Nuclear Iran, is trying to make legislation federal and claims that "we need to send a strong message to corporations that we’re not going to continue to allow them to economically enable the Iranian government to continue to do what they have been doing." The Iran Sanctions Act currently stands as the United State's "unused tool." This law enables the president to enact a series of punishments against offending companies, but is difficult to enforce. John R. Bolton, the secretary of state and United Nations ambassador during the Bush administration, claims that failing to enforce the law sent a "signal to the Iranians that we're not serious" and ruined the credibility of the government when it later threatened action. As of late, 50 lawmakers from both parties convinced Obama and the State Department to begin a preliminary investigation of a list of companies that had violated the law by making deals with Iran. Many competing interests seem to be at hand. For example, among the list of companies is the Brazilian energy conglomerate Petrobras, which received a Export-Import loan of $2 billion last year for the development of an oil reserve. Despite American requests, Petrobras had previously invested millions in the exploration of Iran's oil prospects. At the same time, the Export-Import Bank loan could promote American job creation and develop oil sources outside the Middle East. Last year, the Obama administration received correspondence from Petrobras confirming its end of work in Iran. Ten days later, however, Mahmoud Ahmadinejad visited Brazil and created a partnership involving the share of technical expertise on energy projects. This visit upset American officials who claimed that it lent international legitimacy to the Iranian president and undercut efforts to pressure Iran in reguards to its nuclear program. Due to Brazil's rotating seat on the Security Council, the partnership has complicated the American actions at the United Nations. Last week, Luiz Inacio Lula da Silva, the president of Brazil, confirmed his opposition to the sanctions proposal by warning that "it is not prudent to push Iran against a wall." Despite questions of national security, Iran presents opportunities for profits. Auto companies, such as Mazda, and aviation and aerospace companies have made billions through federal contracts in Iran through loopholes. As it stands, companies can invest in Iran through foreign subsidiaries controlled by non-Americans. Senator Bryon L. Dorgan, a democrat from North Dakota tried to close this loophole, but was unable to overcome business opposition. William A. Reinsch, president of the National Foreign Trade Council, strongly opposed Mr. Dorgan's bill to end this loophole. While Reinsch argues that ending trade with Iran will result in replacement by foreign competitors, and claims that "its those workers who will pay the price," Hans Sandlberg, vice president of Atlas Copco, a Swedish company says its sales of construction and mining equipment to Iran are stunted by American business, but would gladly choose amiable American relations over trade with Iran. This article is important because it involves the legitimacy of both Iran and its president and the balance between economic advancement and national security.

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