MORE REASONS DUE FOR VETOED DEALS

When U.S. foreign policy vetoes international business agreements, companies deserve a full elaboration of the reasons. The Clinton administration didn't explain nearly enough last week when it scuppered a two field, $1 billion offshore development agreement between National Iranian Oil Co. and the Dutch unit of Conoco Inc.

March 20, 1995

3 min read

According to official statements, Conoco's deal conflicted with policy aimed at isolating a regime that sponsors international terrorism, may be developing nuclear weapons, and resists peace in the Middle East. Those are serious allegations. If true, they warrant serious international response. Evidence made public to support them, however, is sketchy.

INTERNAL TENSIONS

Iranian behavior since the Islamic revolution of 1979 certainly raises concerns. But the country's external mischief nearly always springs from internal tensions, which will forever frustrate efforts to identify, let alone isolate, the responsible regime. Especially since the 1989 death of revolutionary leader Ayatollah Khomeini, a power struggle has been under way between religious isolationists and pragmatists keen to resume international commerce. Yet the U.S. insists on viewing a country at ideological war with itself as a monolithic, Muslim menace. Such dogma discredits resulting policy and casts doubt on the base suspicions. It also forecloses strategies capable of capitalizing on Iran's internal divisions.

Conoco obviously didn't think it was dealing with terrorists in business costume. The U.S. position comes down to an insistence that NIOC officials are bad guys playing a good guy-bad guy charade. Both sides can't be right.

An unfocused policy that tries to change Iranian behavior through isolation has two big problems. The first is how external pressures affect 60 million Iranians torn between their country's political extremes. Where do those people turn if the U.S. somehow succeeds-probably alone-in isolating them? To politicians espousing accord with hostile outsiders? Certainly not. Isolation makes the mullahs' fiery brand of Islam the only resort.

The other problem is that the U.S. apparently wouldn't recognize change if it did manage to pry some out of Tehran. The Conoco deal itself represented new behavior. Forget the signatory's Dutch address: NIOC cut a deal with Americans. It didn't do that without some sort of accommodation from - or weakening of-Iran's radicals. Alas, U.S. officials won't distinguish between car bombers and petroleum engineers. They may have missed a pivotal opportunity.

The administration may know more than it's telling about Iranian terrorism, military aims, and efforts to subvert Mideast peace. If so, the time to substantiate governing impressions with details is right now, even if that intensifies the U.S.-Iranian conflict. And pieties about how the U.S. never deals with terrorists are out of order; the records of parties to Mideast peace negotiations are hardly devoid of terrorist acts.

FLAWS OR SECRETS

Isolated or not, Iran is an important part of the Middle East and a bridge to Asian states of the former Soviet Union. U.S. policy toward these two vital regions cannot succeed if its policy toward Iran contains serious flaws. The Conoco-NIOC debacle highlights either flaws in that policy or existence of official secrets that justify a stagnant antagonism riddled with peril. Oil companies need to know which is the case. Surprises are standard hazards of business in the Middle East. The U.S. government shouldn't be one of them.