Share this story
Close X
Switch to Desktop Site

Iran's Trade With 'Great Satan' Booms

US Senate holds hearings today on law to impose complete ban on Iran-US trade

FRIDAY prayers at Tehran University may still kick off with a ritual shout of ''Death to America,'' but the Iranian government is trading with the ''Great Satan.''

Both Tehran and Washington are sending mixed messages.

About these ads

Despite sanctions and President Clinton's much-publicized order Tuesday to quash a $1 billion Conoco Inc. deal to develop Persian Gulf oil fields for Iran, the United States has emerged as Iran's biggest trading partner.

Going through foreign subsidiaries, US companies did some $4 billion in business with Iran last year, surpassing Iran's trade with Germany.

Three US oil companies -- Exxon, Texaco, and Mobil -- bought $3.5 billion worth of Iranian crude, equivalent to one quarter of Iran's oil exports, mostly for resale to customers in Latin America and Asia. Exxon is expected to be Iran's biggest single customer in 1995.

American consumer products such as computer hardware, music equipment, soft drinks, and cigarettes are also reaching Iranian markets, Iranian entrepreneurs say.

The Conoco deal would have been the first major US capital investment in Iran since the two nations cut diplomatic ties in 1980. A Dutch subsidiary of the Houston-based Conoco struck a deal last week with the National Iranian Oil Company to develop two oil fields in the Persian Gulf.

While practicing a policy of ''economic engagement'' in China and North Korea, the Clinton administration seeks to limit Iran's access to foreign capital and technology.

''We need to send a clear and unequivocal message to Iran: There cannot be normal relations until Iran's unacceptable behavior changes,'' White House Press Secretary Mike McCurry said.

About these ads

The US government imposed an embargo on the import of Iranian oil in 1987 and further banned the export of high-technology equipment. But US firms are not prohibited from trading with Iran. US policy is aimed at punishing Iran for sponsoring terrorism, trying to undermine the Middle East peace process, and developing biological, chemical, and nuclear weapons.

''Iran is a unique case because we do believe Iran is in a crash program to develop nuclear weapons,'' says a senior State Department official. The official says the US has evidence that Iran is actively recruiting technical experts and shopping for technology on the world market that can be used to reprocess spent uranium into weapons-grade material.

''What is pretty clear is that they are determined to acquire a nuclear weapons capability and are making purchases that are inconsistent with a peacetime nuclear program,'' says John Holum, director of the US Arms Control and Disarmament Agency.

The Clinton administration's move to kill the Conoco deal is based, in part, on trying to dissuade Russia from going ahead with a $1 billion deal to help Iran construct two nuclear reactors.

Although the reactors are intended only for electric-power generation, these officials say, collaboration with Russian experts will provide Iranian nuclear scientists with information that could be used later in a nuclear- weapons program. They say the profits from US oil purchases have helped Iran pay for such expertise and for terrorist operations abroad.

The Senate Banking Committee will hold hearings today on a bill introduced in January by Senator Alfonse D'Amato (R) of New York that would bar US companies and their foreign subsidiaries from doing business with Iran.

US non-oil trade with Iran is growing because of Iran's credit problems which have slashed imports from traditional sources. Since Tehran's central bank was forced to reschedule $10 billion in short-term external debt last year, Iranian letters of credit have rarely been accepted in Europe and the Far East. As a result, Iran's trade with Europe has dropped by as much as 40 percent.

Instead, Iranian entrepreneurs say they have turned to cash payments, made illicitly or through free trade zones, to buy consumer goods and raw materials. Unlike their European counterparts, American firms deal only in cash. So while direct bilateral trade has fallen since a 1992 peak of $750 million, indirect US exports to Iran are buoyant.

European diplomats in Tehran -- especially the Germans -- are furious at what they see as double standards in Washington (See Germany, Page 7). They say the US is pushing them to break ties with Tehran, while American firms are sneaking in to snap up scarce import trade. German diplomats in Tehran estimate indirect US exports to Iran reached $700 million in 1994.

''The American government put a lot of pressure on us to refuse export-credit insurance for Iran,'' says a German diplomat in Tehran. ''German exports to Iran dropped by 48 percent last year, so American companies are now No. 1 in terms of all trade with Iran.''

Tehran has long tried to enlist American companies to intercede with the White House. Iran's ambassador to the United Nations, Kamal Kharazi, says that the extent of US companies' involvement in Iran will eventually force Washington to adopt a less confrontational approach towards Iran.

''American companies are looking out for their own interests,'' Mr. Kharazi says. ''The eventual result will be a change in American policy towards Iran.''

While US products are abundant here, American companies on the ground in Iran are rare. The Atlanta-based Coca-Cola Company made a big splash in 1992 when it opened a licensed bottling plant (through a British subsidiary) in the eastern city of Mashhad. Pepsico, of Purchase, N.Y., arrived last year. Radical religious groups, seeing the brands as symbols of US influence, have campaigned unsuccessfully to outlaw US products.

*Staff writer George Moffett in Washington contributed to this report.

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.