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World Opinion Roundup by Jefferson Morley

Halliburton Doing Business With the 'Axis of Evil'

By Jefferson Morley
washingtonpost.com staff writer
Thursday, February 3, 2005; 8:00 AM

The award for oddest geopolitical couple of 2005 goes to the government of the Islamic Republic of Iran and the Houston-based Halliburton.

You might not think that a charter member of President Bush's "axis of evil" could enlist the oil-services firm once run by Vice President Cheney to bolster its bargaining position with an international community intent on curbing its nuclear ambitions.

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But that is apparently what happened last month.

The story began on Jan. 9 when the Iran News ran a Reuters story reporting that Halliburton "has won a tender to drill a huge Iranian gas field."

The deal to develop two sections of Iran's South Pars gas field promises significant economic benefits.

"The project includes onshore and offshore sections and its initial phase is to become operational by the first quarter of 2007," said the Tehran-based news site. The total output of the phases will reportedly produce 50 million cubic meters per day of treated natural gas for domestic use and 80,000 barrels of gas liquids per day for export.

Within days three hard-line members of the Iranian parliament attacked the deal. In an open letter they alleged the contract had been arranged by a businessman named Sirous Naseri, who also serves on the Iranian government team negotiating with European powers seeking limits on Iran's nuclear programs. The Halliburton contract, the parliamentarians complained, was "a threat to Iran's nuclear stance."

An Iranian government spokesman did not respond to the allegation but defended the contract saying Halliburton offered a good price and that the project "served the interests" of the Islamic state.

That probably did not please Cheney. On Inauguration Day, he told a nationwide talk radio audience that Iran was "right at the top of the list of potential trouble spots" facing the Bush administration. Many online pundits interpreted his remarks as a threat of military action against Iran. Cheney was not asked about Halliburton's venture.

Two days later, American political analyst Michael Ledeen, a neoconservative advocate of ousting the government in Tehran, described Halliburton's actions as "disgusting." In a Jan. 23 online chat sponsored by the Student Movement Coordination Committee for Democracy in Iran, Ledeen was asked about "secret business deals between some U.S. companies, like Halliburton, and the Islamic regime."

"What has happened is against U.S. laws . . . and the people involved in this transaction must be put in jail, according to American law," Ledeen replied.

Halliburton denied it had violated a U.S. law banning "direct or indirect exportation of U.S.-origin goods, services, or technology to Iran or the Government of Iran."

Halliburton spokeswoman Wendy Hall said the company had not broken the law because all of the work in the South Pars gas field would be done by non-Americans employed by a subsidiary registered in the Cayman Islands.

"We are in the service business, not the foreign-policy business," she said. "We have followed and will continue to follow applicable laws."

Then, on Jan. 27, more details emerged. The Financial Times of London (subscription required) confirmed that Naseri, "a senior Iranian diplomat negotiating with Europe over Iran's controversial nuclear programme ... [was]... at the heart of deals with US energy companies to develop the country's oil industry."

The FT described Naseri as "a leading board member" of Oriental Kish, the Iranian company leading the South Pars project. Oriental Kish, in turn, subcontracted parts of the project to Halliburton Products and Services registered in the Cayman Islands. Unnamed Iranian sources were quoted as saying that Naseri has a "close relationship" with Iran's clerical establishment. Oriental Kish's deal with Halliburton could not have happened without "high-level approval on the Iranian side," the FT said.

The next day Halliburton announced the South Pars gas field project would be its last in Iran. The BBC reported that Halliburton, which took in $30-$40 million from Iranian operations in 2003, "was winding down its work due to a poor business environment."

But don't expect Halliburton to leave Iran any time soon. The company has opened an unmarked office on the 10th floor of a Tehran office building, according to Vivienne Walt of Fortune Magazine. Since the South Pars project is expected to take 52 months to complete, according to the Tehran-based Mehr news agency, Halliburton seems likely to remain in Iran through 2009.

So while President Bush attempts to pressure Iran to abandon its nuclear ambitions, the Tehran government reaps the benefits by doing business with Vice President Cheney's former employer.

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