Deal lets Europe trade with `pariahs'

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The Independent Online
AFTER marathon negotiations, the United States and Europe have cleared the way for an end to the dispute over extraterritorial American sanctions on foreign companies dealing with Iran, Libya and Cuba, which have long poisoned transatlantic trade relations.

As President Bill Clinton, Tony Blair and the European Union Commission President Jacques Santer acknowledged after yesterday's annual EU-US summit in London, details remain to be worked out. But as Mr Blair put it: "This avoids a showdown, and establishes the basis for a lasting solution."

In recent years, nothing has irritated Europe so much as the US sanctions against investors in energy projects in Iran and Libya, and the separate Helms-Burton act, punishing companies which acquire assets in Cuba which Washington considers to have been illegally seized by Fidel Castro's regime.

But now a deal has been struck. Its essence is that the US will waive specific sanctions so long as parent countries of the companies involved co-operate with the "broad objectives" of American law, denying Tehran and Tripoli the means of acquiring nuclear and chemical weapons. As an Administration official put it: "We will deem these transactions sanctionable, but we won't impose sanctions."

The immediate effect of the agreement will be a "limited case waiver" lifting sanctions against France's Total oil group, in charge of a $2bn gas pipeline project in Iran, also comprising the Petronas group of Malaysia and Gazprom of Russia.

For all its imperfections the compromise was probably the feasible middle path between the insistence of Congress that sanctions are essential to bring Libya and Iran to heel, and the view of much of Europe that they are illegal.

The case of Cuba is trickier, given that Congress must assent to the waiving of sanctions against foreign firms which invest in illegally acquired property, as stipulated in the Helms-Burton bill. EU companies will escape so long as their governments do nothing to support them in Cuba, and keep up the pressure on President Castro to bring in democracy.