U.S. deal with European oil firms hobbles Iran Air

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By Thomas Erdbrink
Washington Post Staff Writer
Saturday, October 16, 2010; 9:38 PM

TEHRAN - A recent agreement between four of Europe's largest oil companies and the United States aimed at further isolating Iran is already having an impact, with Iran Air, the Islamic republic's national carrier, unable to refuel its planes in most of Europe.

The fueling problem follows a new push by the Obama administration to move beyond the strict letter of sanctions it imposed to a broader attempt to discourage international businesses from dealing with Iran.

It also illustrates a shift away from an earlier U.S. policy of reaching out to the Iranian people and trying to target mostly state organizations central to Iran's nuclear program. Officials now admit that the increased pressure is hurting ordinary Iranians but say they should blame their leaders for the Islamic republic's increasing isolation.

Under the agreeement, announced in Washington on Sept. 30, Total of France, Statoil of Norway, Eni of Italy, and Royal Dutch Shell of Britain and the Netherlands pledged to end their investments in Iran and avoid new activity in the country's energy sector. In turn, U.S. officials said, the companies would be protected from possible U.S. penalties for doing business with Iran.

In recent weeks, several major oil firms, including British Petroleum, Royal Dutch Shell and Q8, have abruptly canceled jet fuel delivery contracts with Iran Air. The move by some big oil companies that were not part of the September agreement appears to indicate a ripple effect across the industry, as administration officials had hoped.

"The goal here is . . . to end companies from doing business within Iran," Deputy Secretary of State James B. Steinberg said when he announced the deal. He added that he hoped others would "see that this is what responsible companies are doing and that they should follow in those footsteps."

As a result of the canceled jet fuel contracts, all Iran Air planes departing from destinations such as Amsterdam, London and Stockholm are now forced to make lengthy fuel stops either at an airport in Germany or one in Austria, where Total of France and OMV of Austria are still providing the 66-year-old airline with jet fuel until their contracts run out, possibly as soon as next month. At that point, Iran Air could be forced to cancel or severely reduce flights.

During such a stop in the Austrian capital last Sunday, several passengers complained about the unannounced stop. "What do we have to do with our government?" an Iranian man asked loudly, after discovering to his surprise that the plane had landed on the Vienna tarmac. "We are becoming prisoners because of these disagreements between Iran and America.''

Iran Air's refueling problems come as the U.S. attempts to pressure the Islamic republic to abandon its nuclear program by targeting those who do business with Iran in the fields of finance, insurance, and transportation.

Earlier moves to isolate Iran focused on Iranian state organizations suspected of producing a nuclear weapon such as the Revolutionary Guard Corps or the Iranian Atomic Energy Organization. But the latest sanctions, which included restrictions on the sale of refined oil products to Iran, as well as the growing pressure on businesses to steer clear of Iran, are now affecting the private sector and ordinary civilians. For example, it is becoming increasingly difficult to import items from luxury cars to raw materials.

Last week, Japan's top oil explorer, Inpex Corp., said it had pulled out of Iran's Azadegan oil field project, citing concerns that the U.S. sanctions could make it more difficult for the company to raise money from U.S. banks.

Iran Air, a state airline, is the main lifeline for Iranians with the outside world. Nearly 500,000 passengers a year fly between Tehran and 11 European capitals and beyond, a top Iran Air official said.


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