Support for Iran embargo losing ground By Guy Dinmore in Washington Published: March 13 2006 02:00 | Last updated: March 13 2006 02:00
US efforts to isolate Iran over its nuclear ambitions are colliding with the energy concerns of Asia's economic powers, testing Washington's ability to form a diplomatic coalition and its influence on oil and gas markets.
Officials tell the Financial Times that the US is looking at "creative" ways of addressing the energy worries of China, Japan and India - major buyers of Iranian oil.
The US is searching for a viable energy framework that would persuade such thirsty customers to halt planned investments in Iran's energy sector or even contemplate the shock of a sudden break in oil exports.
Officials and analysts are sceptical it can be done and, so far, US moves seem to be having the opposite effect.
Iran, second largest producer in the Organisation of the Petroleum Exporting Countries, is racing to conclude big energy deals with all three countries before possible discussion of sanctions reaches the United Nations Security Council.
China, meanwhile, brought its concerns to Washington last month, laying out three principles that underpinned its energy policy: no interference in the internal affairs of others, no nuclear proliferation and secure energy supplies from the Middle East.
The US urged China to avoid investing in Iran; China said it would support diplomatic efforts to resolve the Iranian nuclear crisis as long as oil supplies were not affected.
The US's success last week in referring Iran to the Security Council over breaches in its nuclear safeguards commitments raises the prospect of sanctions, although the US says they are not the first step. Nonetheless, it is moving towards "targeted sanctions" - such as a travel ban and an asset freeze for senior officials - and forming a coalition of "concerned countries" to impose what Dick Cheney, the vice-president, has called "meaningful consequences".
The US message to China and Japan - as well as India and Pakistan, which want to share a gas pipeline from Iran - is that Iran cannot be trusted as a reliable energy provider.
But the Bush administration's image is also taking a hit. "The general perception in the oil industry is that the biggest risk to the oil industry is the US administration," commented Fareed Mohamedi, chief economist with PFC Energy consultants. This was China's perception too, he said, following the destruction of Iraq's oil industry after the US invasion and the long-standing US embargo that has hobbled Iran's energy sector.
To enhance its independence of energy supplies, China is investing where the US is absent: Iran, Sudan, Burma, Uzbekistan and, possibly Venezuela. "They fear that in the case of conflict or a cold war, the US will interfere in China's oil supplies," Mr Mohamedi said. "By saying 'we can help', the US is making the situation even worse. There is very little the US can offer China."
James Placke, analyst with Cambridge Energy Research Associates, doubts the US can devise an energy framework that would exclude Iran and satisfy Asia. "If Iran for any reason were to severely reduce exports or stop exporting, the world would really be in a bind in the short term," he commented. "There is not a whole lot the US could do."
One option would be to tap the oil stockpiles of the 26 industrialised nations co-ordinated by the International Energy Agency. Claude Mandil, IEA executive director, recently said emergency stocks were enough to fill an 18-month hole if Iranian oil exports stopped. Countries negotiating with Iran "did not have to worry about an eventual loss of Iranian oil because you have the means to deal with it," he said.
Despite these assurances, analysts say crude oil could easily hit $100 (€84, £58) a barrel if Iran was taken off the market.
The US continues to press Japan not to proceed with the $2bn Azadegan oilfield deal it signed with Iran in 2004. Japan negotiated a clause in the contract to the effect that the deal would be off if Iran's nuclear crisis was not resolved.
"The difficulty, of course, is that Iran has used its oil and natural gas as a weapon, and used it very skilfully with a variety of countries. They've used it with India, China, with others," John Bolton, US ambassador to the UN, told Kyodo, the Japanese news agency. "I hope there's a way to work around the energy question, but it may be awkward for Japan. We understand that, but we think it's important to stick together on the non-proliferation."
A US official said Washington felt it had a "bit more leverage" over its ally, but that Japan had complained China would fill any investment gap left by Tokyo. "They tell us to solve the China problem first," he said. Manouchehr Mottaki, Iran's foreign minister, visiting Tokyo last month, stressed how Azadegan was a symbol of the two countries' good relations.
India and Pakistan are also of concern for the US. Although President George W. Bush skirted the subject to avoid offending his hosts on his recent visit, the White House later clarified that the US remained strongly opposed to the proposed "peace" pipeline from Iran through Pakistan to India.
Nicholas Burns, undersecretary of state, urged India to meet its energy needs by turning to Kazakhstan and Turkmenistan, as well as clean coal technology and nuclear power - with US assistance in a deal that allowed India to develop its nuclear arsenal.
The diplomatic tug-of-war goes on, with pipeline talks in Iran this week.
Iranian pact with Venezuela stokes fears of uranium sales By Kelly Hearn THE WASHINGTON TIMES Published March 13, 2006
BUENOS AIRES -- A recent deal between Iran and Venezuela provides for the exploitation of Venezuela's strategic minerals, prompting opposition figures to warn that President Hugo Chavez's government could be planning to provide Tehran with uranium for its nuclear program. The deal was part of a package of agreements, most of which were announced during a visit last month to Caracas and Cuba by Iranian parliament Speaker Gholam Ali Haddad-Adel. The two countries also established a joint $200 million development fund and signed bilateral deals to build homes and factories, and exploit petroleum. Public details are vague, but Venezuelan opposition figures and press reports have said the deal on minerals could involve the production and transfer to Iran have said the deal on minerals could involve the production and transfer to Iran of Venezuelan uranium taken from known deposits located in the dense jungle states of Amazonas and Bolivar. Mr. Chavez last week ridiculed such speculation as being part of an "imperialist plan" propagated by international news media. "Now they say I am sending uranium to make atomic bombs from here, from the Venezuelan Amazon to send directly to the Persian Gulf," Mr. Chavez said during a meeting at a military club on Tuesday. "This shows they have no limit in their capacity to invent lies." The speculation comes at a time of rising tension between the world community and Iran, which yesterday declared it had ruled out a proposed compromise under which it would process uranium for a peaceful nuclear program in Russia. The five permanent members of the U.N. Security Council -- the United States, Russia, China, Britain and France -- are to meet this week to discuss a draft statement aimed at increasing the pressure on Iran to abandon its nuclear plans. Retired Venezuelan Vice Adm. Jose Rafael Huizi-Clavier said the mining arrangements negotiated last month with Iran are broad and unspecific and could easily include uranium. Other critics of Mr. Chavez point out that Venezuela recently voted against reporting Tehran to the U.N. Security Council for its uranium-enrichment program and that Mr. Chavez in recent months has attempted to purchase his own civilian-use nuclear technology from Argentina. Adm. Huizi-Clavier, who heads the Venezuela-based Institutional Military Front, a group of ex-military officials opposed to Mr. Chavez, said his group is "alarmed by a confluence of facts." He cited construction work at a small military base and the widening of a military airstrip near the Brazilian border, where uranium deposits are said to exist. He also noted that Mr. Chavez expelled U.S. missionaries from areas known to have uranium in February. At the time, Mr. Chavez accused New Tribes Mission, a Florida-based group, of working for the CIA and foreign mining interests. A Florida-based spokesman for the group said none of the missionaries knew anything about uranium-mining activities. Venezuelan Minister of Science and Technology Yadira Cordova said on Thursday that the airfield belonged to the New Tribes Mission. She also denied uranium was being mined or processed in the area, saying such technologically demanding processes "would be detected easily." In Washington, a State Department official said, "We are aware of reports of possible Iranian exploitation of Venezuelan uranium, but we see no commercial uranium activities in Venezuela." Adm. Huizi-Clavier said Mr. Chavez was playing a "dangerous game" by backing Iran at the United Nations in defiance of overwhelming world opinion. Former Venezuelan Defense Minister Raul Salazar said the country's support of Iran's nuclear program was pushing relations with Washington past "the point of no return." Mr. Chavez's support for Iran's nuclear plan has thus far been purely political, he said, but "that is not to say [uranium transfers to Tehran] couldn't happen in the future."
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