February 17, 2020
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Clogging The Pipe Line

A top Democratic congressman introduces legislation that would sanction any country, including India, which finalises energy deals with Iran. If eventually signed into law, it could create a stumbling block for the India-Iran gas pipeline

Clogging The Pipe Line


A top Democratic congressman on Thursday introduced legislation that would sanction any country, including India, which finalises energy deals with Iran. If eventually signed into law by President George W. Bush, it could create a stumbling block for the India-Iran gas pipeline at a time when India needs congressional support for its civilian nuclear deal with the U.S.

Congressman Tom Lantos' spokeswoman pointed out that the California Democrat was never in favour of the India-Pakistan-Iran gas pipeline. "Any further progress on the pipeline would send the wrong signal at the wrong time," Lynne Weil told Outlook.

U.S. laws ban domestic oil and gas companies from investing in Iran's energy sector. These laws also prohibit foreign oil companies from investing more than $20 million annually in Iran. U.S. presidents have been reluctant to impose sanctions on firms that are based in countries allied to Washington. Mr. Lantos' bill—the Iran Counter-Proliferation Act of 2007—seeks to strip the president of his authority to waive sanctions against foreign companies that invest in Iran's energy sector. It will also declare the Iranian Revolutionary Guard Corps a terrorist group.

Mr. Lantos, who is the chairman of the House Committee on Foreign Affairs, said on Tuesday, "Until now, abusing its waiver authority and other flexibility in the law, the Executive Branch has never sanctioned any foreign oil company which invested in Iran. Those halcyon days for the oil industry are over."

"If Dutch Shell moves forward with its proposed $10 billion deal with Iran, it will be sanctioned. If Malaysia moves forward with a similar deal, it too will be sanctioned. The same treatment will be accorded to China and India should they finalize deals with Iran," he said at a full committee hearing on "The Iranian Challenge."

Bush Administration officials privately oppose the measure.

Lisa Curtis at the Heritage Foundation told Outlook Mr. Lantos' bill "would likely give pause to Indian plans to move forward with negotiations on the proposed India-Iran-Pakistan gas pipeline."

In the past, Indian government officials may have not taken Washington's statements of concern on the pipeline issue seriously because of U.S. lack of enforcement of sanctions contained in the Iran Sanctions Act of 1996, she said. "Congressman Lantos' bill demonstrates, however, the direction U.S. policy is heading regarding sanctions enforcement on companies that invest in Iran's oil and gas industries and would need to be taken into account by both India and Pakistan," she added.

Mindful of U.S. opposition to the gas pipeline, India has been treading carefully so as not to derail a civilian nuclear agreement with the United States. The International Oil Daily reported this week that India and Pakistan may have found a way to circumvent possible U.S. sanctions and build the long-projected $7 billion, 2,100 kilometer gas pipeline.

"Setting up an international consortium in the usual way — comprising state companies from the three countries plus international firms — for the construction and operation of the project could be a nonstarter because of mounting political and legal opposition from the U.S.," the daily notes. Instead the three countries will each lay only the section of pipeline that crosses their territory, an Indian Petroleum Ministry official told International Oil Daily.

With the three countries separately constructing the pipeline on their own land, the project would be protected from U.S. sanctions and may even enable American consultants and contractors to participate in parts of the project, the official said.

However, lawmakers opposed to business deals with Iran are concerned about Iran gaining financially from these ventures. Under the pipeline project, India will be buying gas from Iran.

Mr. Lantos warned that if a nation aids Iran's nuclear programme, it will not be able to have a nuclear cooperation agreement with the United States. Asked whether India could lose Mr. Lantos' support for the civilian nuclear deal if it were to go ahead with the gas pipeline, Ms. Weil said that was a "hypothetical situation."

Mr. Lantos has been a key supporter of the nuclear deal and an architect of the bill that won overwhelming support in Congress. According to sources, it was at Mr. Lantos' insistence that a non-binding clause was introduced in the bill ensuring Indian support for U.S. efforts to curb Iran's nuclear programme. The clause has caused much consternation in India.

Both the House of Representatives and the Senate must vote in support of a 123 Agreement before the civilian nuclear deal can be implemented. The agreement is the term for a peaceful nuclear cooperation pact with a foreign country under the conditions outlined in Section 123 of the Atomic Energy Act. U.S. and Indian negotiators have been engaged in tough talks to iron out differences over the 123 Agreement.

Walter Andersen at the Johns Hopkins School of Advanced International Studies said the bill "partly reflects the concerns of those who are sensitive to Israel's well being." But he pointed out India has very good ties with Israel, "something that could be used to its benefit in the U.S. should there be any difficulties."

Explaining the urgency for his bill, Mr. Lantos said, "The reason for this all-encompassing approach — and for its urgency — is that we have so little time. Iran is forging ahead with its nuclear programme, in blatant defiance of the unanimous will of the UN Security Council and the International Atomic Energy Agency. Before it is too late, we must try to persuade others to join us in increasing the diplomatic and economic pressure on Iran."

Mr. Andersen didn't think Mr. Lantos' bill would be of immediate concern to New Delhi. "The Iran-Pakistan-India pipeline is many years away for a variety of reasons, not the least is the price that Iran is demanding, higher than either Pakistan or India are willing to pay. So the question at present is hypothetical and is likely to remain so for some time," he said.

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