US sanctions threat over Iran deals

By Andrew Beatty

Date: 27/01/05

A deal to end permanently Iran's nuclear enrichment programme could be held back by the threat of US sanctions on European firms, it has emerged.

Plans for European companies to help Iran build its civilian nuclear technology, as part of a wider political deal, could come unstuck over fears that the firms would face sanctions from the US government for involvement in Iran.

Officials say that European companies worry that they will be subject to US sanctions similar to those recently imposed on a number of East Asian companies.

Eight Chinese companies, as well as firms from Taiwan and North Korea, were barred from operating in the US for allegedly aiding Iran's weapons programmes. Their export licences have been suspended.

A permanent deal is likely to see the EU supply Iran with nuclear materials and would be coupled with a rigorous international inspection regime and an end to domestic uranium enrichment.

A temporary deal, agreed last year, has seen the EU engage in trade talks with Iran in return for a temporary suspension of nuclear activities.

But European companies continue to get tied up by diplomatic wrangling.

Recent comments from the head of British Petroleum, Lord Browne, that his company's engagement in Iran would offend Washington, have led Iranian authorities to say his remarks would not be forgotten. This prompted speculation that the company would be ruled out of future Iranian contracts.

Many EU nuclear technology companies have substantial operations in the US and are unlikely to take such a risk without assurances from Washington.

European officials say they will be looking for clarifications from the US administration on the fate awaiting EU companies involved in Iran.

Iran is likely to be on the agenda when George W. Bush, the US president, visits Brussels in late February.

His visit will come against a backdrop of increased sensitivity over how to deal with Iran's suspected nuclear weapons programme.

Privately senior EU diplomats admit that without the US on board there will be no "grand bargain" with Iran.

Recent comments from the White House hinting at the possibility of military strikes against Iran, coupled with a report in the New Yorker which claimed US special forces were already in the country identifying military targets, have done little to ease tensions.

The EU is keen to pursue negotiations with Iran both as a way to prevent Tehran from acquiring the means to create a nuclear weapon and as an example of what can be achieved by democratic means.

Article says that a deal to end permanently Iran's nuclear enrichment programme could be held back by the threat of US sanctions on European firms. Plans for European companies to help Iran build its civilian nuclear technology, as part of a wider political deal, could come unstuck over fears that the firms would face sanctions from the US government for involvement in Iran.