United States' Economic Diplomacy against Iran's Oil Industry

Tightening economic sanctions against Iran because of the country's nuclear program has been a lengthy debate in the international stage. Recently the United States and its European partner, France, have called for a boycott on Iran's oil and gas industry. They have also asked energy companies to leave Iran.

 

Iran has been negotiating with oil giants Royal Dutch Shell and Total to start development of oil and gas fields in south, and lay the foundations for expansion of this lucrative industry.

 

A study of Iran's economic status in recent years, especially after its nuclear activities became the focus of UN attention, reveals United States' influential role in its economic and industrial interactions. Due to its influence on other countries, its warm relations and mutually profitable economic ties, the United States can convince other countries to cope with its political demands.

 

This became pretty obvious last year. Japanese companies refused to start oil projects in Iran, European oil companies left Iran after they US warned them of impact of cooperation with Iran on their ties with US, and China, India, Saudi Arabia, UAE and some other Middle Eastern countries were offered incentives to stop working with Iran, all signs of the way US undermines Iran's economic ties with other countries.

 

At the global level it is argued that what happened for Iran last year clearly illustrates how important diplomatic relations are in economy. What happened, especially regarding sweeteners offered to some countries by the United States, portrays an active economic diplomacy.

 

 

United States' ultimatum to Western companies to leave Iran suspended many contracts. Royal Dutch Shell and Total who were about to sign contracts with Iran refused to do so bringing excuses like the inappropriate prices or more time needed to clarify some sections of the contract etc. and plans for development of South Pars gas field, which is highly crucial for Iran, stopped progress. Currently there are talks about replacement of other companies.

 

On 4th of May, Reuters quoted Spain's Expansion newspaper report that under pressure from the United States, Royal Dutch Shell and Repsol YPF SA are going to pull out of the 10-billion dollar project of South Pars Block 14 project.

 

Meanwhile, Hojatollah Ghanimifard, Director of Foreign Relations of the Iranian National Oil Company, has said: "no official request for withdrawal has been sent for Iran by the two companies and there have been no such talks in negotiations".

 

Reuters also quoted heads of Royal Dutch Shell and Repsol that they'll help Iran to find companies to develop its oil fields. The most important options are companies from India and China, and Russia's Gazprom.

 

A study of the history of cooperation between foreign companies and Iran shows that these companies can not establish good ties with Iran without United States' consent. Russia, for example, turned the 2-years project of power plant construction in Bushehr into a 26-years project, in order to receive privileges from both sides of nuclear dispute, i.e. Iran and West. It only finished construction and delivered the nuclear fuel cargo only after it informed, or better to say gained permission of, the United States.

 

The 14-years project of Iran-Pakistan-India pipeline is another example. Lengthy negotiations had taken place for finalization of the project, but after Iran-West relations entered a stormy phase and sanction resolutions were imposed on Iran, India seized on different excuses to delay the project.

 

Iran and Pakistan's efforts to convince India, the last of which was made during Ahmadinejhad's travel to India proved vain since in this visit Indian officials set three new terms for Iran to start their cooperation.

 

Meanwhile, American analysts commented that the countries do not have the financial capability to run this project. According these analysts Pakistan needs financial aids from World Bank and considering United States' influence on the bank and its dissatisfaction with construction of this pipeline, chances for realization of project are low.

 

This is another sign of the impact United States, as the superior economic and political power of the world, has on Iran's economic relations, especially oil and gas projects. The projects have a vital role in Iran's economy and no bright future can be envisaged without their development.

 

China, the only Asian supporter of Iran in international stage whose 2-billion dollar contract with Iran through Sinopek was called evidence of friendship, behaves like India. United States expressed its dissatisfaction with this contract. In a short time, American and European officials traveled to this country in order to sign huge contracts to persuade the country to keep away from Iran.