Sunday, March 07, 2010

NYTimes Suggest US Iran Divestiture Is Complicated

House Bill (HB) 241, sponsored by Rep. Gatto and co-sponsored by Reps. Ramras, Keller, and Lynn, calls for state funds (retirement, permanent fund, etc.) to divestinvestment in Iran has passed the Alaska House State Affairs Committee and is now in the Finance Committee.  It is modeled in part after similar federal legislation. 

But the New York Times today says the federal law isn't working very well because, among other things, companies doing business in Iran also do business that helps US.  Here are some exceprts:
The government can, and does, bar American companies from most types of trade with Iran, under a broad embargo that has been in place since the 1990s. But as The Times’s analysis illustrates, multiple administrations have struggled diplomatically, politically and practically to exert American authority over companies outside the embargo’s reach — foreign companies and the foreign subsidiaries of American ones.
Indeed, of the 74 companies The Times identified as doing business with both the United States government and Iran, 49 continue to do business there with no announced plans to leave.
One of the government’s most powerful tools, at least on paper, to influence the behavior of companies beyond the jurisdiction of the embargo is the Iran Sanctions Act, devised to punish foreign companies that invest more than $20 million in a given year to develop Iran’s oil and gas fields. But in the 14 years since the law was passed, the government has never enforced it, in part for fear of angering America’s allies.
That has given rise to situations like the one involving the South Korean engineering giant Daelim Industrial, which in 2007 won a $700 million contract to upgrade an Iranian oil refinery.
According to the Congressional Research Service, the deal appeared to violate the Iran Sanctions Act, meaning Daelim could have faced a range of punishments, including denial of federal contracts. That is because the law covers not only direct investments, such as the purchase of shares and deals that yield royalties, but also contracts similar to Daelim’s to manage oil and gas development projects.
But in 2009 the United States Army awarded the company a $111 million contract to build housing in a military base in South Korea. Just months later, Daelim, which disputes that its contracts violated the letter of the law, announced a new $600 million deal to help develop the South Pars gas field in Iran.
You can read it all at the New York Times.

This issue did arise in the State Affairs committee as members asked how the bill would affect our relationship with large oil companies or oil support companies who might do business, through a subsidiary, in Iran.  The answer?  The bill only requires retirment pension funds, etc.  to divest.  We can still do business with the companies. 

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