US set to renew sanctions on Iraq and Libya

May 23, 2001 02:00 AM

The US is set to renew its economic sanctions on Iran and Libya, perhaps for up to five years, despite the Bush administration's promise of a thorough review of US sanctions policy. The pre-emptive move by the US Congress will seriously complicate both the administration's effort to re-think US sanctions, and its desire to expand US access to new oil and gas supplies from the Caspian Sea region.
Representative Benjamin Gilman and Howard Berman introduced legislation to extend the Iran-Libya Sanctions Act (ILSA) for five years. The bill has more than 180 co-sponsors in the House, and could be pushed to a vote as early as next month, well in advance of the August 5 expiry of ILSA. On the Senate side, a companion bill has more than 60 co-sponsors, a solid majority.
ILSA allows for US sanctions against any foreign company that invests in the development of oil and gas resources in Iran or Libya. The bill has particularly angered the European Union, which says that the US has no right to punish foreign companies that are obeying the laws of their own countries. The White House in March extended for one year an executive order that similarly bars US companies from Iran.

The Bush administration had been expected to push for an easing of the Iran and Libya sanctions. US oil companies with close ties to top Bush officials, including Vice-President Dick Cheney and Commerce Secretary Don Evans, are eager to resume operations in oil-rich Iran.
Also, the administration immediately launched a review of sanctions policy, and has been working to ease the embargo on Iraq. But congressional proponents of the sanctions regime, backed by the powerful pro-Israel lobby, have moved aggressively to head off any debate over ILSA.
William Reinsch, president of the National Foreign Trade Council, a business group that opposes sanctions, admits it will be "an uphill battle" to block extension of ILSA. "The important thing will be what position the administration takes." But the administration has yet to take a position on ILSA renewal, leaving the issue to the congressional hard-liners. The State Department is understood to favour a shorter renewal of two years, and wants to broaden provisions allowing the president to waive the sanctions.

The US waived sanctions in 1998 against Total of France, Gazprom of Russia and Malaysia's Petronas, and reached agreement with the EU on co-operative approaches towards Iran. That agreement is expected to stand under the ILSA extension, which could blunt EU anger over the law remaining on the books. The US has been examining a number of other foreign oil industry investments in Iran, however, and will come under growing pressure either to issue further waivers or to invoke sanctions.

Source: The Financial Times
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