Two-faced policy

3/12/2010

A Friday editorial identified Ingersoll Rand and ConocoPhillips as companies that do business with Iran. Ingersoll Rand says it has stopped accepting orders through non-U.S. subsidiaries "for all products, components, and parts where the subsidiary knows that the item would be shipped to Iran, effective immediately."

ConocoPhillips says it "does not have any operations, assets, or investments in Iran, either directly or indirectly via our subsidiaries." ConocoPhillips says it is an equity investor in the Russian company Lukoil, but "is not involved in Lukoil's business activities nor does it control or direct the business of Lukoil."

WHILE the U.S. government pushes other countries to impose stronger economic sanctions on Iran, the New York Times reports, Washington has provided more than $107.4 billion in payments to companies doing business there.

Apart from America's allies, other countries that President Obama and Secretary of State Hillary Clinton are trying to influence on Iran include a reluctant China, a skeptical Russia, and most recently, during Mrs. Clinton's just completed Latin American trip, Brazil. President Luiz Inacio Lula da Silva precluded her pitch to him on Iran by announcing at the beginning of her visit that he did not favor such sanctions.

Some 60 U.S.-based companies that do business with Iran got U.S. government contracts, grants, loans, or loan guarantees between 2000 and 2009. They include Honeywell, the biggest beneficiary; ConocoPhillips, Ingersoll Rand, and Dresser-Rand.

Most of the business was with Iran's oil and gas industry, but other areas included automobile manufacturing and distribution, obtaining platinum for the U.S. Mint, and even building housing for the U.S. Army.

The U.S. Export-Import Bank, a federal body, provided loans and loan guarantees to some companies that do business in Iran.

Some actions are in direct violation of the Iran Sanctions Act, passed in 1996 but generally not enforced. Iran's oil and gas industry is considered to be controlled by the Islamic Revolutionary Guards Corps, whose role was recently deemed by Mrs. Clinton to be leading toward military rule in Iran.

What does this glaring contradiction in U.S. policy mean? Those who favor a continuing American commercial role in Iran - despite the U.S. sanctions already in place - argue that if American companies weren't there, their rivals would be.

Iran's top five European trading partners are Germany, Italy, the Netherlands, Spain and France. The argument is that loss of U.S. trade and investment in Iran would cost American jobs.

In the eyes of the world, the U.S. government role in these companies' trade and investment turns America's campaign for stronger sanctions against Iran into hypocrisy. It presents the Obama Administration with a difficult choice - either enforcing the Iran Sanctions Act against many companies or abandoning its sanctions campaign.

The Times report, unfortunately, shows Washington speaking out of both sides of its mouth.