August 19, 2010 | Quote

Swiss-Iran Gas Deal Sends ‘Wrong Message’

BERLIN – Swiss energy giant EGL’s €18 billion gas contract with Iran prompted criticism on Tuesday from the US Embassy.

“As we noted in the past when this deal was first announced, oil and gas deals with Iran send the wrong message when Iran continues to defy UN Security Council resolutions. We have raised our concerns with the Swiss government about this arrangement on multiple occasions,” a spokesman for the embassy in Bern told The Jerusalem Post in an e-mail.

“US law [the Iran Sanctions Act, as amended by the Comprehensive Iran Sanctions, Accountability and Divestment Act] provides for sanctions for certain investments that contribute to Iran’s ability to develop and transport its petroleum resources,” the spokesman noted.

When asked about the US criticism of the EGL deal with the National Iranian Gas Export Company, Lilly Frei, head of corporate communications for EGL, told the Post on Wednesday, also by e-mail, that “EGL complies with legal regulations, including those of the international community of states, and will, of course, continue to adhere to them, should they be adjusted. It is not appropriate for EGL to comment [on] possible political developments.

These are to be answered by the respective authorities.”

The spokesman for the American Embassy said that “the US reviews all activities in Iran’s energy sector in light of our law which provides for sanctions on activities that directly and significantly contribute to the enhancement of Iran’s ability to develop and transport its petroleum resources.”

Mark Dubowitz, the executive director of the Washington-based Foundation for Defense of Democracies and an expert on gas sanctions, told the Post on Wednesday, “The Obama administration and the European Union should be scrutinizing the EGL deal to determine if it violates sanctions laws prohibiting investment or the transfer of technology, technical expertise, goods and services in connection with Iran. These are typically complex and opaque deals which require intense scrutiny, particularly given its size and geopolitical importance.”

Dubowitz called on the American and EU governments to “investigate whether the long-term supply contract between EGL and Iran provides the equivalent of investment under US and EU sanctions laws if it’s being used by the Iranian regime as collateral to secure the issue of participation bonds issued to raise funds for South Pars gas field investment or other Iranian energy projects.”

EGL’s 25-year gas contract, signed in 2008, to import more than 5 billion cubic meters of Iranian gas each year caused friction between Israel and Switzerland, resulting in the Foreign Ministry in Jerusalem summoning the Swiss ambassador in 2008. The EGL contract was signed with the National Iranian Export Company, a subsidiary of the National Iranian Gas Company that was placed on the United Kingdom’s Proliferation Concerns List in February 2009.

Frei, from EGL, declined to comment on the parent company’s involvement in nuclear proliferation.

The Swiss business newspaper Handelszeitung noted in an article on Wednesday on rising US criticism of the EGL gas contract that Austrian Foreign Minister Michael Spindelegger expects Switzerland to adhere to the new EU sanctions against Iran.

While not directly naming the EGL, a spokesman for Spindelegger said “companies have to ask themselves the question, whether it is a clever move at this time to conduct business transactions with Iran.”

The Austrian oil giant OMV pulled out of Iran largely because of fear of sanctions and the political instability associated with the Islamic Republic’s drive to enrich uranium.


Iran Sanctions