Allies Stress Sovereignty in Dealing With ‘Rogue’ States

Amid the transatlantic rift sparked by a French-led group’s decision to risk U.S. penalties and invest $2 billion in a natural gas field in Iran, one fact seems clear: Similar clashes between the United States and its closest allies are almost certain to follow.

In a world where the global economy has become a cliche, European and American economic competition for rich third-country markets is bound to accelerate in the years ahead. But the fundamental differences between the U.S. and European approaches to nations accused of sponsoring terrorism so far remain largely unchanged.

The initial responses to a French oil consortium’s deal with Iran, announced Monday, underscore how great these differences are. For the United States, the $2-billion contract is widely seen as a major blow to the fight against international terrorism, a decision that merely strengthens Iran’s ability to carry out deadly, illegal acts.

“It is . . . of great concern to us that our friends and allies don’t get it,” Secretary of State Madeleine Albright said Tuesday in a speech to the Council on Foreign Relations in New York. In her typically blunt style, Albright complained that some U.S. allies believe that it is possible to deal with Iran economically without supporting its acts of terrorism and efforts to gain weapons of mass destruction.

The 1996 Iran-Libya Sanctions Act gives the administration the power to impose a package of sanctions against any foreign company that invests more than $20 million in the petroleum sector of either country. Administration officials said they are considering how to respond to the French move.

For France and a majority of its European neighbors, however, the dominant issue is not terrorism at all. For them it is a matter of their own sovereignty--and a rejection of American attempts to extend U.S. law across the Atlantic.

“In the U.S., you debate about terrorism and missile sales. But in Europe this is about efforts to subject European companies to American legislation,” said Dominique Moisi, director of the French Institute of International Relations in Paris. “It’s really a dispute between Europe and the U.S. Congress, and it will make the government here very popular,” she said.

In Brussels, European Commission Vice President Leon Brittan called the deal, in which the French oil company Total will head a French-Russian-Malaysian group to develop Iranian natural gas fields, “a commercial decision for Total alone” and warned the United States not to retaliate.

“I hope the U.S. administration will reflect long and hard about the wisdom of taking any action against Total under the [Iran-Libya Sanctions] Act,” he added.

Several ingredients contribute to the transatlantic differences. The strong U.S. position reflects the unusual intensity of America’s experience with Iran and Libya. It was the U.S. Embassy in Tehran that was besieged in 1979 and American diplomats who were held hostage for 444 days. It was an American jumbo jet that went down over Lockerbie, Scotland, killing all aboard just before Christmas in 1988, in a terrorist attack traced to Libya.

Europeans have reacted with stiff measures when they have been directly affected. The 15-nation European Union, for example, ended its “critical dialogue” with Iran earlier this year after a German court ruled that Iranian government agents were involved in a 1992 attack on a Berlin restaurant.

But Europe is disproportionately dependent on Middle East oil and has weaker emotional ties to Israel than does the United States. And many Europeans argue that experience shows the U.S. hard-line policies do not work.

They contrast America’s persistent--and, so far, futile--efforts to bring down Cuban President Fidel Castro by isolating the Caribbean island with the successful attempts to engage Moscow’s satellite states of Eastern Europe, which they believe precipitated the collapse of communism in Europe.

“It was the influx of Western products and ideas that brought down the Soviet empire,” commented a senior European diplomat here. “You continue to isolate Cuba and try to convince us of your failed policy.”

Defending the Total deal with Iran, the same diplomat argued that it could bring new maneuverability to moderates in Iran. “You can’t take a closed country to openness without a degree of economic lubrication,” he said.

There are signs that voices in the United States also are questioning the advisability of America’s hard line toward Iran and “rogue” states in general. The business community, especially, has begun to question the wisdom of sanctions ordered not by the administration but passed by Congress.

“I think politicians who get involved in this kind of thing generally don’t think there’s any real cost to them so they just jump on the sanctions bandwagon,” said Willard M. Berry, president of the European-American Business Council.

Berry said a study scheduled to be released by his organization today found that 80% of the companies polled, American and European, found that sanctions had affected their worldwide operations negatively, resulting in job losses, reduced U.S. exports and broken supply contracts with American companies.

Noting that Europe’s attempts to engage Iran have made little headway, some in the United States have begun to call for an era of cooperation with the Europeans.

“Both policies are at a dead end,” said Simon Serfaty, director of European studies at the Washington-based Center for Strategic and International Studies. “We should try to work together on a policy of selective engagement.”

Times staff writer Norman Kempster in New York contributed to this report.

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Diplomatic Flashpoints (Southland Edition, A6)

The United States differs with its European allies on how best to deal with what it views as “rogue” nations.

IRAN

U.S. policy: No diplomatic relations. 1996 Iran-Libya Sanctions Act, allows the admininstration to impose a package of up to six punitive economic measures against any company investing more than $20 million in the petroleum sectors of Iran or Libya.

European Union policy: Broke off high level diplomatic contact and so-called “critical dialogue” earlier this year after German court ruled Iranian agents were responsible for attack on Berlin restaurant. But E.U. still oppose economic sanctions.

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LIBYA

U.S. policy: No trade or diplomatic relations, full economic sanctions in accordance with United Nations resolutions applied n the wake of Libyan link to Lockerbee bombing.

European policy: Applies U.N. economic sanctions with exception of oil exports.

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CUBA

U.S. policy: No diplomatic or trade relations. 1996 Helms-Burton Act imposes sanctions against non-American companies using U.S. assets and property in Cuba expropriated by the government of President Fidel Castro.

European policy: European Union suspended initial efforts to reach a trade agreement with Cuba last year, but has no specific trade restrictions in place and provides humanitarian aid.

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MYANMAR

U.S. policy: Earlier this year, added to package of economic sanctions by barring new U.S. investment in the country, which is ruled by a military junta.

European policy: Earlier this year suspended trade preferences usually extended to developing countries; joined the U.S. in banning military sales.

Source: Times staff