DNI-NEWS Digest - 18 May 1998 to 19 May 1998

There are 12 messages totalling 1093 lines in this issue.

Topics of the day:

1. AMNESTY INTERNATIONAL REPORTS THAT ZOLEYKHAH KADKHODA RELEASED 2. Caspian Oil Transit Not Covered by Sanctions Waiver 3. Khatami Calls for Wise, Freedom-Loving Politicians 4. Iranian Films an Alternative to Ignorance About Iran 5. Sanctions deal no quick benefit to Iran economy 6. U.S. promises more ILSA waivers for EU firms 7. ANALYSIS-EU-U.S. Iran deal brings truce, not peace 8. PRESS DIGEST - Iran - May 19 9. Clinton should allow US companies into Iran-Conoco 10. Tengizchevroil says no plans for Iran deals 11. Euro oilmen wary in Libya despite U.S. Iran waiver 12. FOCUS-Caspian doubts cloud energy euphoria on Iran

AMNESTY INTERNATIONAL REPORTS THAT ZOLEYKHAH KADKHODA RELEASED

Amnesty International Urgent Action Follow Up on Zoleykhah Kadkhoda Forwarded by CHAIR/IFIR.

U R G E N T A C T I O N F O L L O W U P

Urgent Action Network Amnesty International USA PO Box 1270 Nederland CO 80466-1270 Email: sharriso@aiusa.org http://www.amnesty-usa.org/urgact/
Phone: 303 440 0913
Fax:303 258 7881
---------------------------------------------------

15 May 1998
Further information on UA 282/97 issued 22 August 1997 and re-
issued 4 November 1997 - Death Penalty

IRAN
Zoleykhah Kadkhoda

The Iranian authorities has informed Amnesty International that the death sentence against Zoleykhah Kadkhoda has been lifted and that she was released on 26 November 1997.

No further action is required by the UA network. Thanks to all those who sent appeals on behalf of Zoleykhah Kadkhoda.


Caspian Oil Transit Not Covered by Sanctions Waiver

Focus-Caspian Doubts Cloud Energy Euphoria on Iran

Reuters
19-MAY-98
By William Maclean

LONDON, May 19 (Reuters) - Europeans tempered their delight at a U.S. sanctions waiver for non-American Iran investment with dismay on Tuesday over continuing U.S. grumbling about Tehran's links to Caspian oil and gas.

Western companies and analysts also pointed nervously to Congressional anger at Washington's conditional lifting of a threat to punish non-American companies for investing in Iranian energy.

But Monday's waiver announcement continued to fuel robust investor fascination with a country that owns the world's second largest gas reserves and pumps the third largest oil exports, they said.

``Economic pragmatism leaves little room for political policemen,'' said an approving Gundi Royle, oil analyst at Deutsche Securities in London.

``It is facing reality, which is a trans-national global industry.''

President Bill Clinton announced in London the decision not to penalise Total SA of France, Russia's Gazprom and Petronas Dagang Bhd of Malaysia.

The three firms' $2 billion contract to develop Iran's South Pars gas field fell under the 1996 U.S. Iran and Libya Sanctions Act (ILSA), which targets investments in those two countries' energy sectors.

Washington also promised more waivers for European Union companies so long as the EU cooperated with Washington on Iran policy. But there were no promises for Russia or other countries similar to those for EU firms.

All eyes are now on an Iranian tender next month for foreign investment in 20 oil and gas projects that Iran says holds the promise of finding billions of barrels of additional oil reserves.

Brian Constant, director general of Britain's Middle East Association, said there would be great excitement in the oil industry when companies obtained confirmation that the waiver was being applied.

``It's a toe in the door. It's very good news. And the American oil companies are bashing on the White House door to be allowed back in as well,'' Constant said.

``But what are the caveats? Remember he (Clinton) doesn't control Congress.''

New York Republican Sen. Alfonse D'Amato, author of the legislation, as expected blasted Clinton's move as a mistaken signal at a time when when Iran continued to sponsor terrorism. Iran denies it supports terrorism.

Another cloud appeared on the horizon when Washington disclosed the waiver promise did not cover firms from any country involved in projects for oil pipelines transiting Iran from the Caspian basin, a route to which the United States is strongly opposed.

U.S. officials said this proviso remained a bone of contention with European Union countries, especially Britain, Germany and the Netherlands.

A recent pipeline deal with Turkmenistan has consolidated Tehran's economic and strategic ties with the new Central Asian republics, burnishing its hopes to become a major transit route for gas supplies to Turkey and Europe.

Several large companies including Anglo-Dutch giant Royal Dutch/Shell have plans to send gas from the Caspian across Iran to markets elsewhere.

``We welcome in principle what's happened, but we are studying the details,'' was Shell's cautious response to the waiver promise.

Some oilmen in private were even more circumspect. They said it appeared any future waivers would be tied to specific projects, in effect giving Washington a veto on their busioness plans, and this perception would do little to calm corporate jitters about sanctions.

``We're not happy about it and you can bet a lot of other oil companies won't be happy about it either,'' one executive at a European major said.

``It's all about interpretation. I don't think Senator D'Amato will see the law as defunct. We're looking very closely at what it does mean to us.''

Analysts say questions remained over Washington's attitude to a Shell study for a possible $1.6 billion natural gas pipeline across Iran, Turkmenistan and Turkey.

But other analysts were more sanguine about ILSA in general and Shell's prospects in particular.

``The immediate winner is Total,'' said one. ``The longer term winner is probably Shell.''

One said Washington had shown signs that they would distinguish between oil and gas export routes, allowing Shell to go ahead with the gas pipelines, but keeping a ban on oil transport.

Tehran radio said American companies would be left behind in the drive to develop Iran's rich oil and gas resources because of continued sanctions.


Khatami Calls for Wise, Freedom-Loving Politicians

thr 030
president-book exhibition

khatami: men of thoughts, architects of dialog amongst civilizations

tehran, may 19, irna -- president mohammad khatami here tuesday called on all men of thoughts and letters to view politics from the point of view of culture and spirituality so to bring freedom to human beings.
the president made the remark in the inauguration ceremony of tehran's 11th international book fair.
he described the call as a ''new plan'', reminding that the cultural outlook of life should not ignore concepts of freedom, human rights and the rights of human beings to determine their own destiny. ''efforts should be made that our politicians be wise and freedom loving people,'' he added.
addressing publishers and scholars from 41 participating countries, the president stressed that human beings should be invited to peaceful coexistence and mutual respect based on science, religion, spirituality and culture.
he stated that a war among civilizations should give way to a dialog whose main architects are men of thoughts and scholars.
later, the president presented plaques of honor to exemplary publishers of the year 1376 (ended march 20).

ns/mr end
::irna 19/05/98 16:22


Iranian Films an Alternative to Ignorance About Iran

The Christian Science Monitor

BOSTON - TUESDAY, MAY 19, 1998

OPINION/ESSAYS

Cinema Vérité: Better Than CIA

Henry Precht

One Iranian film is worth a thousand intelligence reports. Or, to put it in Middle Eastern terms, two Iranian film festivals are a better bargain than the CIA and State Department.

For years now we've been instructed, on the basis of secret information, how terrible Iranians are. They support terrorism, threaten nuclear devastation, and oppose Arab-Israel peace. A while back, the United States cited Iran as a violator of human rights. That charge was dropped when it became just too embarrassing in the context of standard Middle Eastern behavior.

From Prime Minister Muhammad Mossadeq through the revolution to President Muhammad Khatami's landslide election last year, US intelligence agencies dealing in secretly acquired information have gotten it wrong in Iran. Not so strange, then, that Europeans and others don't agree with our assessments. Iran deeply hurt the American psyche 20 years ago. While the wound may be healing, residual bitterness, the efforts of special interests, and secret intelligence promote a policy of error.

An alternative to ignorance about one of the most influential Mid East nations: Take in an Iranian film.

Happily, there's an alternative to ignorance or despair about a country that is potentially one of the most influential in the Middle East: Take in an Iranian film. Despite the censorship or "guidance" of the Tehran religious authorities, the new wave of films depicts Iran as it truly is. In the past few months, thanks to the Sackler Gallery and FilmFestDC, Washingtonians could see a dozen of the best products of international prize-winning Iranian directors. The films are full of insights and as rich in design and color as Persian carpets.

In a sense, what is happening in Iranian cinema replicates the Italian experience after World War II. Decades of political repression, followed by a destructive war, give way to a period of lighter control permitting creative genius to experiment. Low-budget by necessity, often using amateur actors, the films tell stories that seem to evolve in the making. The grit and tinsel, crumbling plaster and marble facades, dust and dirt, dreams and sorrows of life in Tehran are laid out in Italian-style realism.

What do the films tell us about Iran that intelligence agencies missed? First, the Shah never had a chance of transforming Iran into a "Great Civilization" that would rival Germany. Second, the current rulers have hardly a prayer of forcing the country into a rigid theocracy. Iranian society, the films teach us, is organic, with its own rules and goals.

While there are disparities of wealth, education, ethnicity, and morality, overriding all is the sense of community and respect accorded to each member. Rituals of hospitality and courtesy have real meaning. There is dignity, gentleness, generosity, and a willingness to help or simply to let time pass that ease the burdens of deception, crime, brutality, and poverty.

Possibly there are Iranian terrorists or mad nuclear scientists, but they seem outside the norms of this society depicted in these films. Those who violate the standards of society - the bicycle thief in the bazaar or hard-line clerics after the Revolution - will find themselves pursued by bazaaris, or chased out as in Khatami's election.

To be sure, secular authority, modern institutions, and religion have their place in Iran. But they aren't all-controlling. A cab driver reports the theft of his car to the police and eventually the cops find it. In the meantime, he's relied on his own imagination and network of contacts in an effort to track it down. A father and son turn to modern medicine to save the paralyzed daughter, but they also pursue the solutions of folk remedies, magic, and religion - the latter does the job.

Neither politics nor ideology enters the lives of these characters. They aren't fanatics. They listen, reflect on what they've heard, and act with deliberation or short-lived emotion. A mother, against the objection of the family, insists irrationally that her son take a second wife. She's the only film Iranian I met I wouldn't want to negotiate with.

Religion is shown to exert a powerful force over the lives of these people, as may be expected in films that pass the censor. Yet, it's not the only operative influence. The family is the dominant structure; loyalty and love between its members are stronger than any other form of association. Children are central to the society - central characters in several films. Their perspicacity, unsullied wisdom, and determination to achieve the good point up the failings of the adult world. Bear in mind that children account for half the Iranian population. Their pushing at traditional structures will mean problems for future rulers as they do for the parents in the films.

In "Taste of Cherry," an old man tries to dissuade the hero from suicide by telling him a joke. A foolish Turk, the story goes, complains that he feels pain all over his body. Wherever he probes with his finger, he hurts. The doctor reports his body is fine, but his finger is broken. Perhaps there's a message here for Washington intelligence agencies: Iran may be all right; our probing mechanisms may be broken.

In the old days, Nixon, Kissinger, and company saw Iran as one man - the Shah; he was a good guy. Later we saw the country as another man - Ayatollah Ruhollah Khomeini; he was bad. Recently, policy analysis has improved 100 per cent. We now see Iran as two men - Ayatollah Ali Khamenei who is bad and President Khatami who is good.

The undiscovered secret of Iran is that it is in truth a land of 65 million men and women, good and bad. We need to pay attention to them. You could meet some on the screen of your neighborhood theater.

* Henry Precht, a retired diplomat who lives in Maryland, was country director for Iran in the State Department during the Iranian Revolution and hostage crisis.


Sanctions deal no quick benefit to Iran economy

DUBAI, May 19 (Reuters) - Iran, buffeted by low oil prices, a weak currency and high inflation, will see no early boost to its economy from a waiver of U.S. sanctions on foreign investors in its energy sector, economists said on Tuesday.

The impact of Monday's decision by U.S. President Bill Clinton not to penalise a French-led consortium for a $2 billion natural gas contract would most likely not be felt by the Iranian economy for two or three years, they said.

``Remember, we are talking about investments now which will reap fruit two or three years down the line. So there is unlikely to be any immediate change in the Iranian economic situation,'' a Western economist said by telephone from Tehran.

``But for the future, it will have a tremendous impact. This is part of the long-term solution.''

The sharp drop in global oil prices has slashed Iran's hard currency earnings, forcing President Mohammad Khatami's government to draft new economic plans based on a forecast oil price of $12 a barrel instead of $16.

Shortages in state funds have sharpened an economic slowdown caused partly by the government's efforts to fight inflation.

At the same time, the Iranian rial has fallen about 13 percent against the dollar since January on Tehran's illegal but highly active black market.

Clinton's sanctions decision, announced after weeks of intensive talks between the United States and the European Union, lifted the threat of U.S. economic measures hanging over France's Total SA, Russia's Gazprom and Malaysia's Petronas.

The three energy firms agreed last year to plough $2 billion into developing Iran's huge South Pars offshore gas field.

Iran possesses the world's second largest gas reserves after those of Russia and is the third largest oil exporter after Saudi Arabia and Norway. It relies on oil income for 80 percent of hard currency earnings and up to 40 percent of government revenue.

The potential for foreign investment -- held back by businesses nervous of triggering punitive U.S. sanctions on their American assets -- is huge.

Iran says studies show there is a chance of another 20 to 30 billion barrels of oil alone to be found in its territory including its offshore Gulf waters and the Caspian Sea.

Iranian economists hope the U.S.-EU deal will open up the flow of foreign investments into the country's energy sector and free trade zones.

``The move will encourage other companies to invest in Iran's oil and gas industry, which is precisely what we need,'' Tehran-based economist Fariborz Raisdana said by telephone.

``We are in dire need of foreign investment to improve the technology of our oil and gas fields. With a flow of foreign investment, this will help us in the long-run by improving our technology, thereby lowering our costs of production.

``This foreign investment could ease our budget problems slightly, too. Right now, much of our budget goes to capital formation in the oil and gas industry. If we can free up those resources for other use, the country will benefit.''

But in the short term Iran, in common with other major oil producers, desperately needs oil prices to rise.

Raisdana said the move would also yield psychological benefits and could boost foreign investment in fields other than energy, as well as increasing credits and loans from insurance agencies and foreign export credit agencies.

Mehdi Varzi, London-based oil analyst at Dresdner Kleinwort Benson, estimated that Iran needed $5 billion a year in investments to boost petroleum production capacity.

``There is a need for fundamental reform in the oil and gas sector,'' he said. ``It's not necessarily the sanctions that have prevented foreign investment. It is Iran's current laws, which do not offer the appropriate assurances to investors.''

Tehran radio hailed Monday's deal as a great victory for the Islamic republic and also for Europe.

It said American companies would be left behind in the drive to develop Iran's rich oil and gas resources because of continued U.S. sanctions against Tehran.

Iran's U.N. mission in New York said the United States should repeal the 1996 U.S. law which mandates the president to slap economic sanctions on foreign firms investing $20 million or more a year in the energy industries of Iran and Libya.

U.S. oil giants Conoco Inc and Mobil Corp said Clinton should follow up the waiver by allowing U.S. companies to invest in Iran on a limited basis and engaging Iran in dialogue.

Royal Dutch/Shell and British Petroleum Plc, which is setting up an office in Tehran, are also seeking involvement in Iran's energy industry.

British gas giant BG Plc and smaller energy firms including Monument Oil and Gas Plc, Enterprise Oil Plc, and LASMO Plc are looking at exploration openings in Iran.


U.S. promises more ILSA waivers for EU firms

U.S. promises more ILSA waivers for EU firms 05:00 p.m May 18, 1998 Eastern

By Patrick Worsnip

WASHINGTON, May 18 (Reuters) - The United States, after waiving sanctions on three foreign firms over an investment in Iran, on Monday promised more waivers for European Union companies so long as the EU cooperated with Washington on Iran policy.

President Bill Clinton, in London, announced the decision not to penalize Total SA of France, Russia's Gazprom and Petronas Dagang Bhd of Malaysia PETR.KL.

The three firms' $2 billion contract to develop Iran's South Pars gas field fell under the 1996 U.S. Iran and Libya Sanctions Act (ILSA), which targets investments in those two countries' energy sectors, Washington ruled.

But Secretary of State Madeleine Albright, in a statement explaining the waiver, cited as a key reason better cooperation with the European Union and Russia to prevent Iran developing weapons of mass destruction and sponsoring terrorism.

She added: ``In the light of (European states') essential cooperation, and as long as this heightened level of cooperation is maintained, we would expect that a review of our national interests in future ILSA cases involving Iran similar to South Pars, involving exploration and production of Iranian oil and gas, would result in like decisions with regard to waivers for EU companies.''

Albright said, however, the United States was not granting a country-wide waiver to ILSA.

New York Republican Sen. Alfonse D'Amato on Monday blasted the move to spare Total, Gazprom and Petronas as a mistake.

``It will send a signal to others that they can do business as usual with Iran, at a time when Iran continues to pursue weapons of mass destruction and continues to sponsor terrorist acts,'' D'Amato said in a statement.

Albright's statement contained no promises for Russia or other countries similar to those for EU firms.

A senior U.S. official, briefing reporters, said that while Russia had made great strides to combat arms proliferation to Iran, ``they still have a long way to go to have the kind of implementation that we are looking for.''

The official, who asked not to be identified, also said the waiver promise did not cover firms from any country involved in projects for oil pipelines transiting Iran from the Caspian basin, a route to which the United States is strongly opposed.

He said this proviso remained a bone of contention with EU countries, especially Britain, Germany and the Netherlands.

In New York, the president of the U.S. oil firm Conoco Inc, Archie Dunham, said American companies should now be allowed to invest up to $20 million a year in Iran, to reduce the competitive advantage of EU firms.

The U.S. official said Washington had no plans to change its own regulations, which ban any investment in Iran, and that while U.S. firms might suffer from this they had ``many other advantages'' from belonging to the world's strongest country.

Albright said the United States had decided to waive sanctions against the foreign firms after concluding that the measures would not stop the South Pars deal, but she also cited a range of U.S. foreign policy concerns. These included:

-- Hopes of Russian ratification of the START-2 strategic arms treaty;

-- Hopes of resolving differences with the EU over U.S. Helms-Burton legislation on investments in Cuba;

-- A desire for international cooperation on Iraq and former Yugoslavia;

-- A need for cooperation with European and Asian countries, including Malaysia, to address the Asian financial crisis and turmoil in Indonesia.

Albright said Russia had escaped sanctions partly because of a recent directive strengthening controls over exports of missile technology, including to Iran.

She described Malaysia as ``a force for moderation in Islamic circles'' and said Washington was concerned about the effect of sanctions on a major Malaysian company at a time when the country is suffering from the Asian crisis. ^REUTERS@


ANALYSIS-EU-U.S. Iran deal brings truce, not peace

ANALYSIS-EU-U.S. Iran deal brings truce, not peace 09:50 a.m. May 19, 1998 Eastern

By Paul Taylor, Diplomatic Editor

LONDON, May 19 (Reuters) - A U.S.-European Union agreement to avert a showdown over Iran sanctions looks more like a cease-fire than a settlement of transatlantic differences over the greater Middle East, experts say.

Washington and its European allies are co-operating more and arguing less in public on issues ranging from Caspian Basin energy resources to Iran, Iraq, Turkey and the Arab-Israeli peace process.

But experts caution that fresh trouble could flare soon if U.S. efforts to break the Israeli-Palestinian deadlock fail, or when pressure mounts again to lift U.N. economic sanctions on Iraq.

``For now, we've declared a truce. The sources of friction are still there but we have agreed in the meantime not to have the battle,'' said Philip Gordon, an expert on U.S. Middle East policy at the International Institute for Strategic Studies.

President Bill Clinton agreed on Monday to waive U.S. penalties on European firms investing in Iran's energy sector, removing a major source of aggravation in West-West relations and clearing the way for a potential wave of oil and gas deals with the Islamic republic.

In return, EU countries pledged to step up cooperation against terrorism and tighten controls to prevent Tehran acquiring weapons of mass destruction.

The European Union under pro-American Britain's presidency also accepted, at least temporarily, a ``best supporting actor'' role in the Arab-Israeli peace process rather than seeking equal status with the United States.

But French President Jacques Chirac served a reminder that Paris still harbours such ambitions by calling for an international Middle East peace conference in a joint appeal with Egyptian President Hosni Mubarak.

Although Chirac attended a Group of Eight summit in Britain at the weekend and met privately with Clinton, French officials acknowledged he had not specifically mentioned his initiative either to the U.S. president or to the British EU presidency.

``Dealing with the Europeans on the Middle East has been far easier with Britain in the chair. Things would not be the same if it were the French,'' a U.S. diplomat said.

Middle East analysts say Washington and London, through an intensive dialogue, do appear to have narrowed some long-standing U.S.-European divergences on how to deal with Iran, Israel and the Palestinians.

``We have the makings of a 'tough cop/soft cop' division of labour, with the Americans playing the tough cop on Iran and the Europeans playing the tough cop on Israel,'' said Rosemary Hollis, head of the Middle East programme at Britain's Royal Institute for International Affairs.

``It's actually working quite well. But on the substance of policies, they really are in disagreement,'' Hollis said.

The United States was not unhappy to see the Europeans applying economic and political pressure on the Israelis which domestic politics prevents the Clinton administration from doing, she said.

On example of such pressure is the European Commission's recommendation that the EU bar imports from Jewish settlements in the occupied territories from preferential trade access granted to Israeli goods.

Israeli Prime Minister Benjamin Netanyahu warned the EU on Tuesday that it would deny itself a role in Middle East peacemaking if it took that step.

Washington also sees advantages in the Europeans engaging politically and economically with the reformist Iranian government of President Mohammad Khatami, although U.S. oil companies were angry at being excluded from the action by the American economic boycott of Iran.

The United States and Europe share a desire to see a more democratic, internationally co-operative Iran emerge from the current power struggle between moderate Islamists and conservative hardliners.

But U.S. officials are still concerned by Iran's efforts to acquire nuclear and missile technology and believe Tehran is still involved in arming and funding radical Islamic guerrillas across the Middle East.

However there are two key areas on which Washington and most European allies differ significantly -- whether to lift sanctions on Iraq while President Saddam Hussein is still in power, even if it complies with U.N. arms inspections, and whether to call for a Palestinian state in the West Bank and Gaza Strip if Israel rejects it.

On both issues, events in the next few months could test the new-found transatlantic cooperation.

``If Iraq continues to comply with UNSCOM (arms inspectors) and sanctions continue to make the humanitarian situation worse, there could be a clash over lifting sanctions,'' Gordon said.

Secretary of State Madeleine Albright has made clear the United States wants sanctions to remain as long as Saddam is there.

On Arab-Israeli issues, Hollis said if Palestinian President Yasser Arafat carried out his threat to declare sovereignty unilaterally next May, when the deadline for a final status agreement set in the Oslo peace accord expires, there could be sharp transatlantic differences over whether to recognise a Palestinian state.

EU policy recognises the Palestinians' right to statehood while the United States has always avoided committing itself.

But when Clinton's wife Hillary this month advocated a Palestinian state, the White House rushed to say she was only expressing a personal view. ^REUTERS@


PRESS DIGEST - Iran - May 19

PRESS DIGEST - Iran - May 19 02:49 a.m. May 19, 1998 Eastern

TEHRAN, May 19 (Reuters) - These are some of the leading stories in Iranian newspapers on Tuesday. Reuters has not verified these stories and does not vouch for their accuracy.

TEHRAN TIMES

- Iran's foreign ministry spokesman condemned the United States for pressuring Pakistan to change the laws on offences against the prophet of Islam, calling it an affront to Moslem values.

IRAN DAILY

- ``It is not possible to have a society in which there is only one faction or point of view, and even if it is possible, it is not an ideal situation,'' President Mohammad Khatami said.

- The head of the judiciary said drug offenders in Iran would be segregated from other prisoners and kept in camps instead of jails.

IRAN NEWS

- Experts at the mines and metals ministry have acquired the technology to produce light aluminium, with production due to start soon.

HAMSHAHRI

- Tehran's 11th international book fair, in which 41 countries are participating, was due to open on Tuesday.

IRAN

- The Ilam cement factory in western Iran, with a production capacity of 600,000 tonnes a year, is due to become operational on May 24.

JOMHURI ESLAMI

- Iran will produce 250,000 vehicles in the year to March, up from 180,000 the previous year, an industry ministry official said.

SALAM

- Iran's production of pistachio nuts will increase to 200,000 tonnes in the year to March, up from 80,000 tonnes the previous year.

((Gulf newsroom, +971 4 607 1222, fax +971 4 626982, dubai.newsroom+reuters.com))


Clinton should allow US companies into Iran-Conoco

Clinton should allow US companies into Iran-Conoco 01:33 p.m May 18, 1998 Eastern

By Bernie Woodall

NEW YORK, May 18 (Reuters) - Conoco Inc's president and chief executive officer Archie W. Dunham said President Bill Clinton was right to waive U.S. sanctions on three foreign companies investing in Iran's natural gas fields, and said he should follow up the waiver by allowing U.S. companies to invest in Iran on a limited basis, Dunham added.

``I am pleased (Clinton) has deemed the imposition of the Iran-Libya Sanctions Act (ILSA) sanctions against other countries and companies to be unwise,'' Dunham said in a statement released by Conoco. ``I hope that he will now take the initiative to engage Iran, identify the steps that can be taken to close the gap that now separates us, and embark on a policy of incremental engagement.''

Speaking from a meeting of the European Economic Union in London, Clinton on Monday announced that he will waive punitive action from Washington against a $2 billion investment in Iran's Sirri natural gas fields by France's Total, Russia's Gazprom and Malaysia's Petronas. Further, Clinton said that companies from EU countries vying for similar investments in Iran will also achieve waivers from the ILSA.

ILSA calls for U.S. sanctions on foreign companies that invest at least $20 million a year in Iran or Libya. Iran is seen by Washington as one of the main supporters of terrorism in the world.

Dunham stopped short of saying that U.S. companies should be allowed to freely invest in Iran. For now, he's asking that Clinton allow U.S. companies to invest up to $20 million per year in Iran, the trigger for ILSA sanctions on foreign companies.

Conoco's CEO said that current U.S. policies give foreign companies a leg up on American companies.

``Our own foreign policy penalizes U.S. companies and provides advantages to foreign companies,'' Dunham's statement said.

Conoco spearheaded investment in the Sirri natural gas fields three years ago. Within 10 days of an announcement of Conoco's deal to develop the Sirri fields in March 1995, Clinton issued an order prohibiting U.S. companies from investing in Iran's energy sector.

When Conoco stepped away, Total stepped in.

Dunham's statement said the Conoco president wrote to Clinton earlier this year to express his views regarding ILSA.

``On May 7 of this year, I sent a letter to President Clinton requesting that he initiate specific actions related to sanctions against Iran,'' Dunham's statement said.

``I first called on the president not to impose sanctions on Total, Gazprom and Petronas as allowed under the Iran-Libya Sanctions Act. It was my feeling that implementing ILSA would be counterproductive in improving relations between the U.S. and our allies and it would drive a wedge between U.S. petroleum companies and their foreign partners.

``I also recommended that (Clinton) articulate a new viable long-term strategy to improve relations between the U.S. and Iran and to seek the cooperation of our allies in making the strategy a reality. Further, I suggested that he allow American companies to invest $20 million a year in Iran, the amount foreign companies are allowed to invest without triggering ILSA,'' Dunham said.

The Total-Gazprom-Petronas deal was announced last fall just as Iran began making steps of rapprochement toward Washington. Since, the Clinton Administration tried a difficult balancing act between signaling the warmer air from Tehran while not ignoring ILSA, an act passed overwhelmingly by Congress and signed into law by Clinton.

Dunham seems to be on the same page as the U.S. State Department, which has noticed the cooperative spirit from Tehran since the presidency of Mohammad Khatami. In January, in an interview with CNN to the American people, Khatami showed signs of thawing the chill between Tehran and Washington.

Last month, State Department officials, speaking anonymously, said the U.S. doesn't want to endanger the rapprochement by imposing punitive sanctions related to ILSA. REUTERS


Tengizchevroil says no plans for Iran deals

Tengizchevroil says no plans for Iran deals 12:09 p.m. May 19, 1998 Eastern

TENGIZ, Kazakhstan, May 19 (Reuters) - The Tengizchevroil venture developing a huge oilfield east of the Caspian Sea said on Tuesday it had no plans to do any business with Iran despite signs the United States might ease its sanctions policy.

``I don't think TCO wants to play the Iran game at this point,'' said Mike Elgie, a marketing executive with the venture, in which U.S. majors Chevron and Mobil have 45 percent and 25 percent respectively.

He was responding to the question of whether the venture, in which host-country Kazakhstan has 25 percent, might follow Mobil's example and ask for a permit from Washington for oil swaps with Iran.

Mobil applied in April for a permit which would allow it to swap crude from oil fields in newly producing regions that were once part of the Soviet Union for the equivalent amount from Iran.

Currently, the Iran-Libya Sanctions Act, passed in 1996, calls for U.S. sanctions on foreign companies that invest at least $20 million in Iran's or Libya's energy sectors.

But U.S. President Bill Clinton's announcement on Monday that Washington would waive unilateral sanctions on three foreign companies who plan to develop an Iranian natural gas field has raised hopes for a further softening of U.S. policy.

Elgie said regardless of the politics, Tengizchevroil had not looked into the viability of a pipeline through Iran.

``I don't think we've done the economics of that one at all,'' he told reporters.

Tehran has been trying to persuade Kazakhstan and fellow ex-Soviet republic Turkmenistan to consider exporting their fuel through a pipeline running south through its territory, saying it is cheaper than a cross-Caspian alternative.

The Kazakh government used small volumes of Tengiz crude to try to get a 1996 swap plan with Iran going, but Chevron has always insisted it had nothing to do with the swap.

Edward Chow, public affairs manager for Chevron Overseas Petroleum, said talks which Chevron undertook with Iran's national oil company before the sanctions threat was imposed and which focused on the possibility of doing small volumes of swaps had not got very far.

The Kazakh and Iranian presidents agreed at a summit meeting in the Kazakh commercial capital Almaty last week to press ahead with their two million tonne swap programme, which never got off the ground due to problems adapting Kazakh crude to Iranian refineries.

But they gave no details of who would carry out the swaps. REUTERS


Euro oilmen wary in Libya despite U.S. Iran waiver

Euro oilmen wary in Libya despite U.S. Iran waiver 12:23 p.m. May 19, 1998 Eastern

By Andrew Mitchell

LONDON, May 19 (Reuters) - Energy investors in Libya confess they are still in the dark on whether the U.S. decision to waive sanctions against foreign investors in an Iranian gas project puts them in the clear.

While overshadowed by high-profile exchanges on Iran, Libya has also been shackled by the Iran-Libya Sanctions Act (ILSA) threatening measures against firms investing in either country's energy sector.

President Bill Clinton's Monday announcement that Washington would not punish a Total-led group's $2 billion Iranian gas project has led some to conclude that ILSA looks headed for the dustbin, at least as far as Iran is concerned.

But a question mark remains against Libya.

U.S. Secretary of State Madeleine Albright pledged that other European firms could expect waivers for their Iran business provided the European Union cooperated with Washington on fighting alleged Iranian support for terrorism.

But she apparently made no mention of Libya.

``We don't yet know if there will be a waiver for Libya,'' said an official with Norway's Saga, one of the country's most recent explorers.

``All the discussion on ILSA has been linked to Iran and we just don't know how it will affect us.''

Saga signed a joint-venture deal late last year with France's Total and Spain's Repsol, and Austria's OMV for two exploration areas in Libya's Murzuq basin.

Saga is looking for further exploration opportunities and points out that in those projects annual outlay in early years will not exceed the $20 million level that triggers ILSA.

Italy's Ente Nazionale Idrocarburi Spa (ENI), Libya's biggest foreign energy investor, welcomed the U.S. waiver.

But it reiterated that chief executive Franco Bernabe has been one of the most vocal opponents of the United States for having a sanctions law at all.

ENI has always maintained that its main Libyan project, involving a $3.8 billion trans-Mediterranean gasline, is not affected by ILSA as the deal was signed just before President Clinton enacted the law.

Bernabe's criticisms of ILSA still hold good, a European oil executives said, noting Washington's unwillingness to grant a Europe-wide waiver means ``everything else remains sanctionable.''

Albright's assurances of equal treatment for foreign European Union investors in Iran with the Total-led group offer no guide to the Libyan side of the legislation, they complain.

``We feel exactly as we felt before,'' the executive said. ``It's easy to say that everyone will be excused, but when we actually see it happen that will mean something.''

Libya's oil industry has stagnated as two sets of sanctions make the OPEC member struggle to keep production at 1.40 million barrels per day.

The U.S, which also has a trade embargo with Libya, imposed ILSA in 1996 in response to Tripoli's failure to hand over two Libyans suspected of the 1988 Pan-Am bombing over Scotland.

The U.N. imposed separate sanctions against Libya six years ago, including a ban on importing oil industry equipment, again as a result of the Lockerbie bombing.

European oil companies, who have built up a dominant role in Libyan energy in the absence of U.S. firms, fear that U.S. Congressional elections later this year could trigger another U-turn on ILSA by the Clinton administration.

And political analysts say that the U.S. could find it convenient to keep up the pressure on Tripoli.

``The United States likes to have its bogeymen,'' said John Christie, a former British diplomat and publisher of the Gulf States newsletter.

``The U.S. has got much less to lose in its dealings with Libya than it has with Iran.''


FOCUS-Caspian doubts cloud energy euphoria on Iran

FOCUS-Caspian doubts cloud energy euphoria on Iran 08:40 a.m. May 19, 1998 Eastern

By William Maclean

LONDON, May 19 (Reuters) - Europeans tempered their delight at a U.S. sanctions waiver for non-American Iran investment with dismay on Tuesday over continuing U.S. grumbling about Tehran's links to Caspian oil and gas.

Western companies and analysts also pointed nervously to Congressional anger at Washington's conditional lifting of a threat to punish non-American companies for investing in Iranian energy.

But Monday's waiver announcement continued to fuel robust investor fascination with a country that owns the world's second largest gas reserves and pumps the third largest oil exports, they said.

``Economic pragmatism leaves little room for political policemen,'' said an approving Gundi Royle, oil analyst at Deutsche Securities in London.

``It is facing reality, which is a trans-national global industry.''

President Bill Clinton announced in London the decision not to penalise Total SA of France, Russia's Gazprom and Petronas Dagang Bhd of Malaysia.

The three firms' $2 billion contract to develop Iran's South Pars gas field fell under the 1996 U.S. Iran and Libya Sanctions Act (ILSA), which targets investments in those two countries' energy sectors.

Washington also promised more waivers for European Union companies so long as the EU cooperated with Washington on Iran policy. But there were no promises for Russia or other countries similar to those for EU firms.

All eyes are now on an Iranian tender next month for foreign investment in 20 oil and gas projects that Iran says holds the promise of finding billions of barrels of additional oil reserves.

Brian Constant, director general of Britain's Middle East Association, said there would be great excitement in the oil industry when companies obtained confirmation that the waiver was being applied.

``It's a toe in the door. It's very good news. And the American oil companies are bashing on the White House door to be allowed back in as well,'' Constant said.

``But what are the caveats? Remember he (Clinton) doesn't control Congress.''

New York Republican Sen. Alfonse D'Amato, author of the legislation, as expected blasted Clinton's move as a mistaken signal at a time when when Iran continued to sponsor terrorism. Iran denies it supports terrorism.

Another cloud appeared on the horizon when Washington disclosed the waiver promise did not cover firms from any country involved in projects for oil pipelines transiting Iran from the Caspian basin, a route to which the United States is strongly opposed.

U.S. officials said this proviso remained a bone of contention with European Union countries, especially Britain, Germany and the Netherlands.

A recent pipeline deal with Turkmenistan has consolidated Tehran's economic and strategic ties with the new Central Asian republics, burnishing its hopes to become a major transit route for gas supplies to Turkey and Europe.

Several large companies including Anglo-Dutch giant Royal Dutch/Shell have plans to send gas from the Caspian across Iran to markets elsewhere.

``We welcome in principle what's happened, but we are studying the details,'' was Shell's cautious response to the waiver promise.

Some oilmen in private were even more circumspect.

They said it appeared any future waivers would be tied to specific projects, in effect giving Washington a veto on their busioness plans, and this perception would do little to calm corporate jitters about sanctions.

``We're not happy about it and you can bet a lot of other oil companies won't be happy about it either,'' one executive at a European major said.

``It's all about interpretation. I don't think Senator D'Amato will see the law as defunct. We're looking very closely at what it does mean to us.''

Analysts say questions remained over Washington's attitude to a Shell study for a possible $1.6 billion natural gas pipeline across Iran, Turkmenistan and Turkey.

But other analysts were more sanguine about ILSA in general and Shell's prospects in particular.

``The immediate winner is Total,'' said one. ``The longer term winner is probably Shell.''

One said Washington had shown signs that they would distinguish between oil and gas export routes, allowing Shell to go ahead with the gas pipelines, but keeping a ban on oil transport.

Tehran radio said American companies would be left behind in the drive to develop Iran's rich oil and gas resources because of continued sanctions.


End of DNI-NEWS Digest - 18 May 1998 to 19 May 1998
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