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Author Topic:   How the oil industry finally lost
posted July 16, 2001 15:17     Click Here to See the Profile for Ardalan     Edit/Delete Message   Reply w/Quote
Oil Spill

The New Republic
by Lawrence F. Kaplan

July 12, 20001 (Issue date 07.23.01)

Pity the oilmen. In a few weeks Congress will decide whether to renew the Iran-Libya Sanctions Act (ILSA), which punishes foreign companies that invest more than $20 million in either country. The legislation will probably be renewed, and the oil industry and its allies, for whom the bill amounts to kryptonite, already know whom to blame. When he was CEO of Halliburton, Dick Cheney griped that sanctions are driven by "some group or other here at home." Edward Walker, who until May was assistant secretary of state for Near Eastern affairs, is more specific: He blames "an all-out effort by AIPAC." They're both right. The oil companies and the State Department have been outmaneuvered by the Israel lobby and by the American families whose relatives were murdered by the countries with which the oil companies now wish to do business. In short, the good guys have won.

With Bush in office, the oil industry didn't expect to lose. In late March, Conoco Chairman Archie Dunham flew in from Texas to lobby his old Halliburton business partner, Cheney, on the need to lift the sanctions against Iran and Libya. According to National Journal, lobbyists from USA*Engage--a business coalition opposed to sanctions and run by Halliburton's chief lobbyist, Don Deline--have also met with Cheney's chief of staff, I. Lewis Libby; State Department policy planning director Richard Haass; and Commerce Department general counsel Ted Kassinger. Emissaries from USA*Engage have lobbied against ILSA in dozens of congressional offices as well.

In its search for Washington crude, the oil industry has also relied on a triangular trade of sanctions opponents who move effortlessly between oil companies, think tanks, and government: oil-industry-funded groups like the American Iranian Council and the Iranian Trade Association; Washington lobbying firms like the Duberstein Group (led by Bush ally Ken Duberstein), which Conoco has hired to push for its interests in Libya; and recently retired government officials like Robert Pelletreau, Clinton administration assistant secretary of state for Near Eastern affairs. When not offering advice to Americans looking to do business in Iran or counseling the likes of Kamel Ghribi, a Tunisian-born oil tycoon and a close associate of Muammar Qaddafi, on what steps Libya should take to improve its image abroad, Pelletreau travels the capital's panel circuit arguing for improved relations with both countries. And then there's Bush pere's National Security Adviser Brent Scowcroft, dean of the Washington oil consultants and a vocal Iran booster, who has advised George W. to press Congress to curtail ILSA's duration.

But the oil industry's favorite weapon against ILSA is that incorruptible Washington convention, the think-tank report. In May, ExxonMobil provided the major funding for a conference about sanctions on Iran and Libya at Georgetown University's Center for Contemporary Arab Studies, where speakers like Pelletreau and USA*Engage Vice President William Reinsch took turns inveighing against the legislation. Meanwhile, Conoco helped sponsor a widely publicized study, "Thinking Beyond the Stalemate in U.S.-Iranian Relations," published by the Atlantic Council the same month. (The council refused to disclose the identity of the project's other sponsors, but participants claim roughly one-third of the funding came from the oil industry.) It, too, recommends against renewing ilsa, because, as the report puts it, "The current stalemate between the United States and Iran, while emotionally satisfying to many Americans, does not serve overall U.S. interests well." But the project, whose members include officials from Halliburton, Conoco, and Caterpillar, ended up being so one-sided that several Middle East experts who worked on it refused to lend their names to the final report. This, however, did nothing to dissuade project chair Scowcroft from taking to the op-ed pages to trumpet its "wise counsel."

But the wisdom of the oil industry's counsel may be gleaned from its own arguments. "To anyone prepared honestly to understand Iran and Libya today," says Conoco's Dunham, "it's obvious that both countries wish to enhance their relations with the United States." Or not so obvious. The State Department reports that "Iran remained the most active state sponsor of terrorism in 2000." Similarly, the CIA finds that "Iran remains one of the most active countries seeking to acquire weapons of mass destruction," while Attorney General John Ashcroft declared last month that Iranian officials "inspired, supported and supervised members of Saudi Hezbollah" who murdered 19 U.S. airmen in the 1996 Khobar Towers bombing. Meanwhile, in January a Scottish tribunal found a Libyan official guilty of destroying Pan Am Flight 103 "in furtherance of the purposes of ... Libyan Intelligence Services." And an unrepentant Qaddafi maintains ties to an alphabet soup of terrorist organizations and continues to shop for weapons of mass destruction.

When the argument that Iran and Libya are merely misunderstood crumbles under scrutiny, ILSA's detractors fall back on an even more demonstrably false claim: that, as USA*Engage's Reinsch put it recently, "[t]here is no evidence that ilsa can deter foreign investment in Iran or Libya's energy sector." But Reinsch has things exactly backward. Just ask Iran. In 1998 the Iranian government reported to the United Nations that ILSA had "led to the disruption of the country's economic system," a "decline in its gross national product," and a "reduction in international investment." Since ILSA was enacted, Iran has promoted more than 50 foreign investment opportunities in its energy sector but has landed only eight contracts, which earned it barely half what its minuscule neighbor, Qatar, netted during the same period. Sanctions have cost Libya billions of dollars in lost investment as well.

The anti-ILSA crusaders had ample reason to believe that their efforts to lobby the Bush administration would be rewarded. Even Qaddafi was hopeful: "George W. Bush will be nice," he predicted in January. And ILSA opponents believed that Cheney, who directs the administration's energy task force, would be especially nice. As chairman of Halliburton, Cheney lobbied loudly against sanctions on Iran, which, he griped, left U.S. corporations "cut out of the action." According to senior administration officials, his views didn't change on January 21. "[U]nilateral sanctions--including the executive orders on Iran and Libya and the Iran-Libya Sanctions Act--affect some of the most important existing and `prospective' petroleum producing countries in the world," a leaked draft of Cheney's energy report complained. The draft elicited an outcry from the Pan Am 103 families, who promptly requested a meeting with the vice president. Though he had met with Conoco's Dunham to discuss ILSA, Cheney refused to see them.

The State Department, too, has been campaigning to lift sanctions since Bill Clinton was in office and, with the arrival of Colin Powell, seemed close to getting its wish. At his confirmation hearings, Powell implored the Senate to "stop, look, and listen before you impose a sanction.... For gosh sakes, please give them all a sunset clause, make them all go away at the end of a year." And in recent weeks the State Department's policy planning staff, along with its Bureau of Near Eastern Affairs and Bureau of Economic Affairs, has been pressing to make ILSA go away even sooner than that.

Yet ILSA won't go away. While the oil industry has been lobbying the White House and the State Department, ilsa's supporters have focused their energies on Congress--which will actually determine the bill's fate. And, thanks largely to the families of the victims of the Pan Am 103 bombing, the legislation still enjoys overwhelming support on Capitol Hill. The Lockerbie verdict in January and the leaked energy task force report left the families concerned that the administration was about to take the "L" out of ILSA. Ever since, they've been a constant presence on the Hill, testifying to ILSA's value in front of congressional panels, canvassing Senate and House members for their support, and mobilizing the friends and relatives of Lockerbie victims in districts across the country. "The families have been pushing ILSA very, very hard," says Susan Cohen, whose daughter died on Pan Am 103. "We've spoken to everyone in Congress who's involved in the issue." And senators like Ted Kennedy, Paul Sarbanes, and Charles E. Schumer, from the East Coast states where most of the families live, have helped to persuade their colleagues to keep the legislation in place.

AIPAC, for its part, initially wavered. Believing that the oil-friendly administration was intent on killing the bill and unsure how much political capital to expend in its defense, it wasn't until March that aipac decided to lobby seriously for ILSA's extension. And once it did, it found that most representatives already backed the legislation. Still, its lobbyists and board members have visited congressional office after congressional office to press for its renewal and have circulated "Dear Colleague" letters in the House and the Senate to attract support for the bill. As a result, ILSA already has enough sponsors on Capitol Hill--more than 70 in the Senate alone--to pass by a veto-proof margin.

Oddly enough, it was the administration that decided not to lobby hard on ILSA. Despite its oil ties, the White House spent months trying to figure out what position to take on the legislation, and the depth of congressional support for ilsa caught the Bush team by surprise. Last month it finally weighed in with a halfhearted proposal to renew ilsa for only two years. But the gesture came too late, and White House advisers say the administration has decided not to risk a collision with ILSA's backers. Indeed, Bush has announced that sanctions against Libya "will remain until such time as they not only compensate for the bombing of [Pan Am 103] but also admit their guilt and express remorse." As for lifting the embargo against Iran, Bush adds, "I don't intend to do that anytime soon."

According to a senior administration official, "The only one who's still pushing this is [the State Department's office of] policy planning, and they're out there on their own." But even Foggy Bottom is losing its nerve. According to senior Bush advisers, Powell has instructed his sanctions point man, former Conoco consultant Haass, to forget about defeating the bill. On the heels of its failed campaign to loosen Iraq sanctions and its fruitless attempt to revive the Middle East peace process, ILSA's renewal is more bad news for the State Department. More important, it's bad news for the captains of industry who believe the oil sector deserves its own foreign policy.

And for those who think America should stand for something more than cash and ruthlessness, that's good news indeed.

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