The Obama administration conceded Tuesday that foreign firms are jockeying to be “first in line” to do business with Iran once sanctions are loosened, despite U.S. warnings that even preliminary trade deals risk weakening the West’s economic leverage.
Two senior administration officials were on the defensive to explain the parade of trade delegations visiting Iran long before a hoped-for deal to permanently curb Iran’s disputed nuclear program is complete. A delegation from France, a partner with the United States in bargaining with Iran, went this week.
The United States has lobbied other nations not to undermine talks that begin in earnest this month, or prejudge the outcome, by welcoming one of the world’s foremost oil producers back to the international marketplace after several years as a near-pariah. That argument has not really worked, as State and Treasury Department officials allowed under skeptical questioning by Democratic and Republican senators.
“As far as we have seen today, there are not deals getting done but rather people getting first in line in the hope that someday there will be a deal,” Wendy R. Sherman, undersecretary of state for political affairs, told the Senate Foreign Relations Committee.
She said that while the U.S. preference is that “people won’t go to Tehran,” those who do at least raise expectations there that the Iranian government will follow through on the nuclear deal.
For now, Iran has obtained very limited easing of sanctions under a six-month placeholder deal. Companies or governments still risk heavy penalties under United Nations, U.S. or European sanctions, said Sherman and David S. Cohen, Treasury undersecretary for terrorism and financial intelligence.
“We are as crystal clear as possible in all of our engagements that if these talks turn into something more, if these talks turn into deals that violate the elaborate sanctions that remain in place, that we will take action,” Cohen said.
A final deal with Iran would allow for removal of banking and oil sanctions applied over a decade of a diplomatic standoff. Foreign firms stand to benefit far more than any in the United States, since there are separate long-standing prohibitions on most U.S. financial activity with Iran.
“We have told them all that they are putting their reputations, themselves, and their business, [their] business enterprises, at risk if they jump the gun,” Sherman said.
A French delegation of more than 100 potential investors began a three-day visit to Iran on Monday. The largest European business delegation to visit Iran in more than 30 years, it includes executives from some of France’s biggest companies, including energy giant Total, the Associated Press reported.
Delegations from the Netherlands, Germany, Italy, South Korea and other countries have made similar trips since Iran and six world powers reached the landmark interim deal at the end of November.
Under that agreement, Iran suspended its most troubling uranium enrichment activity but continued lower-level enrichment. The United States and European Union lifted some sanctions on petrochemical products, insurance and precious metals, as well as the auto industry and parts and services for passenger planes.
The deal also allows for the phased release of $4.2 billion frozen Iranian oil assets. Sherman and Cohen said Iran’s compliance will be monitored in monthly reports, and the money could be withheld if Iran falls short.
Director of National Intelligence James R. Clapper Jr. told a House hearing Tuesday that Iran appears to be complying so far.
“That’s not to say they won’t take advantage of that which is not prohibited,” Clapper said. “They will.”
All the U.S. officials urged Congress not to impose additional sanctions now, something the Obama administration argues could spoil negotiations.