Threatened with U.S. economic sanctions, Australia’s largest corporation has pledged not to participate in a project to build a gas pipeline from Iran to Pakistan.
The Australian venture would have flown in the face of legislation working its way through Congress that seeks to impose sanctions against foreign firms with substantial investments in Iran’s energy sector.
Iran has been desperately seeking $7 billion in foreign investment to bolster its declining oil industry to bail out its economy and to finance a nuclear buildup.
In a letter to the Melbourne-based Broken Hill Proprietary Co., Sen. Alfonse D’Amato (R-N.Y.), who chairs the Senate Banking Committee, wrote:
“Reports suggest that action on a potential deal between BHP and Iran on a gas pipeline to Pakistan is being rushed to be signed before the bill passes Congress in an effort to avoid sanctions.
“Please understand that there is growing support in Congress to add various provisions including one that would make the bill retroactive in order to cover these types of threats.”
Reports of the project initially surfaced in the magazine Australia-Israel Review.
Responding to D’Amato’s letter, BHP Chairman B.T. Loton denied his company was on the verge of striking a deal with Iran.
“We have no intention of taking any action to pre-empt your proposed legislation,” Loton wrote. “BHP is well aware of the substance of the legislation and will, of course, abide by U.S. law as applicable.”
Whether or not BHP backed off the deal as a result of the congressional pressure remains unclear.
But one congressional aide said, “If the deal wasn’t dead before, it is now,” adding that with “substantial resources in the U.S.,” the Australian company is “not going to put them at risk.”
BHP also joined some of America’s closest allies, including Great Britain, France and Germany, in expressing opposition to the legislation. They view it as unwarranted interference in the activities of foreign companies.
In December, the Senate approved the Iran Sanctions Act, which would deny sanctioned firms access to financing sponsored by the Export-Import Bank of the United States and to licenses for exports to the United States.
U.S. law already prohibits American firms from investing in Iran’s fuel industries.
The measure, which is supported by the White House, has 60 co-sponsors in the House of Representatives and is expected to pass in coming months.
Through the new policy, the administration and Congress hope to discourage companies like BHP from indirectly subsidizing Iran’s nuclear development by framing the issue in simple terms: Choose between trade with the United States or trade with Iran.
“A straight line links Iran’s oil income and its ability to sponsor terrorism, build weapons of mass destruction and acquire sophisticated armaments,” said Peter Tarnoff, undersecretary of state, in recent testimony before the Senate Banking Committee.
“Any government or private company that helps Iran to expand its oil (sector) must accept that it is indirectly contributing to this menace.”
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