President George W. Bush's first State of the Union speech Jan. 29 gave US oil companies the clearest indication yet the administration is not yet prepared to allow American investment in Iran.
President Bush linked Iran with North Korea and Iraq, saying "states like these, and their terrorist allies, constitute an axis of evil, arming to threaten the peace of the world."
According to Bush, "Iran aggressively pursues these weapons [of mass destruction] and exports terror, while an unelected few repress the Iranian people's hope for freedom. "
Two presidential directives dating from the administration of former President Bill Clinton effectively block US oil companies from making investments in or trading oil with Iran. The White House has the power to rescind both at any time without permission from Congress.
After Sept. 11
In the months following the Sept. 11 terrorist attacks by the Islamic extremist group Al Qaeda, US oil companies were encouraged by what they saw as a new dialogue between the US and Iran. Last fall, the country's moderate President Mohammad Khatami pledged to help the US in its war on terrorism. And that led some US policy-makers to be more receptive toward industry's longstanding interest in restoring trade between the two countries, including long-term investments in the oil sector.
Bush's comments may have stalled that momentum, but his words did not stop what is still expected to be an increasingly close relationship between the two nations, industry officials and US policymakers insist.
Iranian officials following the speech strongly condemmed Bush's remarks but later held out hope the country is willing to work with the US on facilitating change.
"Instead of waging negative propaganda, the Americans had better give us any information they have, so that we go after them and keep them out of Iran," said Foreign Minister Kamal Kharrazi Feb. 5.
Toning down rhetoric
US officials also appear to be toning down the recent tough talk. The US, for instance, made it clear it will not try to block European countries from making their own investments in Iran.
Congress last August renewed legislation Bush later signed into law that seeks to punish countries that invest in either Iran or Libya. That law, the Iran Libya Sanctions Act, gives the president wide discretion; no White House has imposed sanctions yet.
So despite the recent heated exchanges between the two former enemies, there is hope that the countries will continue making efforts to restart a dialogue that could lead to investment in the not too distant future, industry officials say.
"There's been a lot of harsh rhetoric on both sides," said Shahriar Afshar, president of the US-Iran Business Council. "It's two steps forward and one step back. For whatever reason Bush used those words, we hope he continues a policy of engagement. Iran has not stopped being an important Middle East country, and, ironically enough when you look at its neighbors, Iran is still an island of stability."
