Publication: Monitor Volume: 4 Issue: 98

Russia was among the countries to benefit this week from a decision by the Clinton administration to waive sanctions against three foreign companies involved in a major gas deal with Iran. The three companies–Total of France, Gazprom of Russia, and Petronas of Malaysia–last year signed a $2 billion deal to develop Iran’s enormous South Pars gas field in the Persian Gulf. (See the Monitor, October 2, 1997) The United States objected to the deal, and the Clinton Administration was left with a difficult choice of whether to level sanctions against the three companies on the basis of the 1996 Iran-Libya act. The act mandates sanctions against foreign companies doing business with those two countries, and generated considerable criticism in Europe. The act also permits the Secretary of State to waive the sanctions if that is deemed in the U.S. national interest.

In exchange for waiving the sanctions against the three companies involved in the Iranian gas deal, the United States received from the European Union and Russia a pledge to tighten control over the export of weapons technology to Iran. The U.S. waiver, meanwhile, will reportedly extend to all European companies, but will not automatically cover companies from Russia. That decision is said to reflect continuing U.S. concerns over Russia’s ability to control its military defense exports.

The decision by the Clinton administration has already provoked some criticism by U.S. lawmakers, who say the waivers are likely to open the way for more foreign investment in Iran. Secretary of State Madeleine Albright argued, however, that the imposition of U.S. sanctions would not in any case have stopped the Iranian gas deal. It was more important, she said, to have European and Russian cooperation on other key international issues, including on Kosovo and the Asian financial crisis. Albright also argued that sanctions would likely have provoked retaliatory measures against U.S. firms. (The New York Times, The Washington Post, May 19)