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Gulf-Times (Qatar): US bill seeks to ‘name and shame’ firms eyeing Iran

Published: Friday, 25 May, 2007, 12:49 PM Doha Time 
 
EXTRACT: Chairman of the House Foreign Affairs Committee, Tom Lantos, D-Calif, has also filed legislation that would force the Administration to enforce the Iran Sanctions Act, which penalises international firms such as Royal Dutch Shell, Statoil and Total that conduct business with Iran.

THE ARTICLE

WASHINGTON: The US House of Representatives Financial Services Committee on Wednesday passed a bill that would “name and shame” companies investing in Iran and allow public and private pension funds with hundreds of billions of dollars in assets to divest from such companies.

The bill is part of an ongoing attempt by federal lawmakers to tighten an economic stranglehold on Iran and force it to abandon its alleged nuclear weapons programme.

The approval comes as the International Atomic Energy Agency has said that uranium enrichment was at a more accelerated pace than previously thought, and many lawmakers fear international sanctions by the UN Security Council were far too weak to force Tehran to abandon its nuclear programme.

The Iran Sanctions Enabling Act 2007 wouldn’t mandate divestment, but allows pension divestment that sidesteps federal constitutional law that prohibits foreign policy actions at the state level.

The bill is cosponsored by a raft of key lawmakers, including Barney Frank, D-Mass, chairman of the financial services committee, and Brad Sherman, D-Calif, chairman of the House subcommittee on terrorism, non-proliferation and trade.

It would also highlight investments by the UN, the International Bank for Reconstruction and Development and the International Monetary Fund, all of which receive US federal funding.

Although the bill focuses on energy and related investments in Iran, it would require the government name any firm that is investing in Iran, and authorise funds’ divestment.

Sherman told Dow Jones Newswires on the sidelines of the committee markup hearing that the bill was expected to come to the floor for a vote in June. He also said Frank had been discussing the legislation with leaders on the other side of the Capitol, and “the bill is likely to pass the Senate in its present form.”

“It is important for the Iranian regime to understand…that pursuing a nuclear weapon goes hand in hand with increasing isolation,” Sherman said in his introduction of the bill. “Now is the time for us to use our financial markets to get that message across,” he said.

Both the administration and a coalition of industry groups, including the US Chamber of Commerce, the National Association of Manufacturers and the National Foreign Trade Council, have been fighting congressional bills that target Iran, warning that they could undermine international diplomatic efforts.

National Foreign Trade Council president Bill Reinsch has said many companies fear the reputational risks linked to the bill, and that “multilateral action and a unified US foreign policy – not multiple state sanctions or divestment laws – are best suited to address the concerns.”

Reinsch said state action – more than a dozen state governments are mandating public pension fund divestment out of Iran – is unconstitutional, pointing to a 2000 Supreme Court ruling that found a Massachusetts law prohibiting procurement contracts to firms operating in Burma violated constitutional law, that only the federal government can conduct foreign policy.

Frank said the bill countered industry group concerns by explicitly outlining federal foreign policy on Iran, and empowering the states to act, should they choose.

“This bill doesn’t mandate that anybody does anything. It recognises the right for state governments and private citizens to act,” he said. “All it does is allow Americans to put conditions on their money,” he said.

The industry groups said in a recent letter to lawmakers that “extraterritorial extension of sanctions will re-ignite economic, diplomatic and legal conflicts with our allies that will frustrate rather than promote multilateral action against Iran.”

“The history of similar efforts demonstrates clearly that such a unilateral effort will provoke a negative response from our allies that will divert attention from developing an effective economic and diplomatic multilateral response to Iran,” they said.

The legislation is only one of several bills the House and Senate are pushing forward to target Iran through the companies that invest in the country.

A Foreign Affairs Committee aide said that legislation that would close a loophole that allows foreign subsidiaries of US companies to invest more than $20mn in Iran could be introduced on the floor of the House as soon as next month.

Victor Comras, a retired diplomat and terrorism-financing consultant, told the Senate commerce panel in late April that around 35 subsidiaries of different US companies were known to be operating in Iran, including oil services firm Smith International Inc, General Electric Co’s Canadian, Italian and French subsidiaries, and a Swiss-owned Caterpillar dealership in Tehran. According to its website, Schlumberger also has a well services unit in Tehran.

Chairman of the House Foreign Affairs Committee, Tom Lantos, D-Calif, has also filed legislation that would force the Administration to enforce the Iran Sanctions Act, which penalises international firms such as Royal Dutch Shell, Statoil and Total that conduct business with Iran.

So far, the administration has used its waiver authority to not enforce the sanctions, saying that it would undermine an international coalition of diplomatic efforts.

Many of the foreign companies investing in Iran are energy companies, and as Iran receives its largest revenue from oil and gas production, they see business interactions there as helping to fund support of the current regime.

An amendment tacked on to the “name and shame” bill cut the provision that directed the Treasury Department to maintain the list of companies with investments in Iran, allowing the Administration to designate which department would be responsible for the list. A committee aide said, however, by the time the measure hits the floor, a specific department would be named. – Dow Jones Newswires
 

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