Defense and Oil Companies Lobby Against Iran Sanctions

Bloomberg reported today that Boeing, Exxon Mobil and Halliburton are three of several companies lobbying against a fourth round of sanctions on Iran; the giant defense and oil and gas corporations say sanctions on Iran may cost $25 billion in U.S. exports.

The current legislation before Congress would expand the 1996 Iran and Libya Sanctions Act–later renamed the Iran Sanctions Act–financially penalizing foreign companies that invest more than $20 million for the development of petroleum resources in Iran. U.S. firms, already barred from investing in the country, claim their global sales could be negatively affected by provisions that prohibit doing business with companies in Europe, Russia or China that trade with Iran.

“We are up on Capitol Hill talking about the collateral damage,” William Reinsch, president of the National Foreign Trade Council, a Washington-based group that represents Exxon and Boeing, said in an interview. “There is legitimate, non- Iran business that will be cut off.”

Bloomberg reported that Cargill Inc., ConocoPhillips, Hannover Re, Bechtel Corp., Halliburton Co. and Siemens AG are among more than 20 international companies that have lobbied against increased sanctions.

The legislation passed the House by a 412-12 vote on Dec. 15 and the Senate unanimously on March 11. The bill is likely to pass Congress in final form later this month or early next month, according to Christopher Wenk, the trade lobbyist for the U.S. Chamber of Commerce; and While the Obama administration has tried to water down the bill, Wenk predicted the president would ultimately sign it.

The current legislation would expand the sanctionable investments to include the sale and refining of oil. It would also expand the financial penalties to cover property transfers or sales from U.S. companies to those that are sanctioned.

For U.S. companies, “virtually any transaction with foreign entities doing business related to the Iranian petroleum sector could be prohibited,” the National Association of Manufacturers said in a study that estimated the potential loss of $25 billion in exports.

Companies doing business in Iran “will pay a significant economic price for doing so,” Representative Howard Berman, a California Democrat who heads the House Foreign Affairs Committee, said in an e-mailed statement. “The safest course for all such companies, and their subsidiaries, would be to cease any and all business operations with Iran at the earliest possible opportunity.”

Wenk said the lobbying is largely focused at modifying, not totally killing, certain provisions of the bill.

“We know we can’t stop this bill,” Wenk said in an interview. “But the provisions go far beyond Iran. There are some real unintended consequences.”

According to the Bloomberg report, Boeing–the world’s second-largest commercial plane maker after Airbus SAS–wants to cut out a provision banning U.S. companies from being aided by foreign export-credit agencies that also guarantee exports to Iran, spokesman Timothy Neale said. Exxon, the biggest U.S. oil company, wants to eliminate a prohibition on joint ventures with companies that separately have oil projects in Iran, said Alan Jeffers, a spokesman for the Irving, Texas-based company. Lloyd’s and other insurers based abroad want an exemption for “cooperating countries” working with the U.S. to curb sales to Iran, Charles Landgraf, the insurance market’s Washington lobbyist, said in an interview.

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