Campaign Pushes for Iran Divestment

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An unusual alliance of big-state Democrats and Iraq war hawks is coalescing around a campaign to force European and Asian multinational corporations to stop doing business with Iran, in order to pressure Tehran over its nuclear program and its support for militants in Iraq, Lebanon and the Palestinian territories.

The Iran disinvestment campaign is being marshaled by, among other groups, the conservative American Enterprise Institute, an influential Washington think tank whose experts laid much of the ideological groundwork for the U.S. invasion of Iraq. The AEI has identified dozens of energy companies active in Iran's oil and gas fields and has also pointed a finger at such engineering, transportation and communications giants such as Siemens, Daimler-Chrysler and Volkswagen of Germany, Renault and Peugeot Citroen of France, and Ericsson and Volvo of Sweden.

"Money talks, and the first line of attack has to be taxpayer subsidies for companies that are investing in Iran," says Danielle Pletka, AEI vice president for foreign and defense policy studies. Pletka wants the White House and State Department to arm-twist American allies to end state-funded subsidies that facilitate commercial engagement with Iran. The Bush Administration has resisted, preferring instead to use gentler arguments to build a broad coalition that emphasizes diplomacy. "State doesn't want to do anything," complains Pletka, a former adviser to former Sen. Jesse Helms. "State is all about accommodation and trying to sit down and have a Chamberlain-style peace with Iran."

Although they take a very different line from the AEI on Iraq, a number of influential Democrats have lent their weight to similar initiatives on Iran, out of concern for Israel. On Wednesday, Sen. Barack Obama, the Illinois Democratic presidential hopeful and advocate for withdrawing most U.S. forces from Iraq within a year, joined with Democratic Congressmen Barney Frank of Massachusetts and Tom Lantos of California to propose legislation that would encourage individual and institutional investors, such as state pension funds, to dump stock implicated in trade with Iran.

"Pressuring companies to cut their financial ties with Iran is critical to ensuring that [U.N.] sanctions have their intended result," Obama said in a statement released by his office.

A separate bill by Democratic Rep. Brad Sherman of California would force the Bush Administration to enforce the Iran Sanctions Act of 1996, which targets companies that invest $20 million or more annually in Iran, focusing on its energy sector. Sherman complains that the Bush Administration has routinely waived punishments for big companies from friendly countries.

Last month State Department officials lodged a futile protest after Austrian energy company OMV announced an $18 billion deal to exploit Iran's South Pars gas field. "The Americans may refuse to invest in Iran's oil industry," Austria's Foreign Minister Ursula Plassnik told the Austrian Die Presse newspaper. "But Austria is not bound by U.S. law."

So far, the Bush Administration has been unwilling take more aggressive action against European commercial concerns that trade openly with Iran, and it won't endorse the Obama-Frank or Sherman bill. State Department officials don't relish a repeat of the "freedom fries" confrontation with France and other European nations who opposed the invasion of Iraq. "We've been working with the Europeans and others to put together and maintain this unity and coalition to confront Iran, and that's achieved what we've gotten in terms of the Security Council," says a senior State Department official, referring to two U.N. Security Council sanctions resolutions. "That's what we want to build on, and this legislation is not helpful in those efforts."