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Oil for the 21st Century

Washington is going King Canute one better in trying to hold back the tide of world oil demand from the shores of Persia.

Already the Clinton administration's campaign to prevent other nations from substantially investing in Iranian petroleum development is beginning to leak. And more snubs to the US-declared boycott are likely.

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World energy demand will rise an estimated 2.6 percent next year. That's driven by growth in China and the Asian tigers, economic recovery in Europe and Japan, renewed growth in emerging markets such as Mexico, and slow but steady expansion in the US.

Even the return of limited exports of Iraqi oil next month will not much slow the need for more oil and gas from Iran and the former Soviet republics to its northeast.

So European governments and firms are challenging Washington's boycott. Last week Turkey signed a $23 billion natural gas deal with Iran. Then, shortly after Turkey's new Islamist prime minister visited Malaysia, that country's national oil company took a 30 percent stake in an Iranian oil field being developed by Total, the French oil firm.

This potential collision of the US with traditional allies and friends is dangerous for two reasons:

1. Curbing Iran's support for terrorist groups - the rationale for Washington's threat - is undercut as Tehran sees allies flout the boycott.

2. Longtime allies America and Turkey are marching in different directions. And that may affect other problem areas: Cyprus, the Mideast, and pipelines bringing oil to Europe.

To deal with the first problem, the US will have to persuade, not bludgeon, Iran to halt support for terrorists. That means dialogue with Iran, in part through European allies.

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The second problem requires Western attention to many details. For instance, helping to raise living standards of the Turkish community in Cyprus before that divided island nation joins the European Union. Turkish Cypriot incomes are less than a quarter those of Greek Cypriots - not ideal for creating a Swiss-style cantonal state.

Washington will also need to be sure it keeps Turkey's new split government fully informed on Mideast and Balkan policies.

For years, the West felt it could rely on Turkey to out-compete Iran for influence in the oil-rich Islamic states of the old USSR. Now it must deal with the reality that both Turkey and Iran may be conduits for the flow of oil from that region to Europe and Pacific Asia. And that becomes increasingly important for world growth and trade in the next century.

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