Rep Lantos Calls For Halt Of US-Malaysia Free Trade Talks

 Dow Jones

January 31, 2007

WASHINGTON (Dow Jones)--House Foreign Affairs Committee Chairman Tom Lantos, D-Calif., Wednesday called for the U.S. trade representative Susan Schwab to immediately suspend free trade talks with Malaysia over a $16 billion petroleum deal the country's SKS Ventures has signed with Iran.

 Schwab's office directed requests for comment to the White House, which said it was preparing a response.

 Lantos' committee has said it will press the administration to enforce U.S. sanctions law that penalizes companies that invest more than $20 million in Iran. So far, the Bush Administration has waived the law, prioritizing trade relations over pressuring Iran through the law.

The call for the administration to use the Iran sanctions law is bipartisan. Ranking member Ileana Ros-Lehtinen, R-Fla., said late Tuesday that Royal Dutch Shell's (RDSA) and Repsol's (REP) planned billion-dollar gas deal with Iran "would likely violate provisions of the Iran Freedom Support Act, and the two companies and their North American subsidiaries must be held accountable."

 At the hearing Wednesday, Ros-Lehtinen called "upon our European allies and a responsible nations to take immediate steps to end investments in Iran's energy sector and to adopt other sanctions to deprive the tyrannical regime of reveue necessary to pursue their nuclear weapons program."

 As the Organization of Petroleum Exporting Countries' second-largest producer, Iran receives almost 60% of its revenues from oil, and undermining development of its energy sector is seen as one way of putting pressure on the regime to stop its alleged nuclear-weapons program.

 State Department spokesman Scott McCormack on Monday said the administation would investigate to see whether the deal did violate sanctions law, but wouldn't speculate whether any action would be taken.

 Political analysts tracking deals in Iran say that more than 20 companies, including France's Total (TOT) and Norway's Statoil ASA (STO), Norsk Hydro ASA (NHY) and Aker Kvaerner ASA (AKVER.OS) are in violation of U.S. sanctions law, but haven't been prosecuted.

Lantos said the United Nations Security Council sanctions against Iran are "pathetic" in their weakness, and many experts agree they're unlikley to pressure Iran to abandon its alleged weapons program.

"At a time when we and the U.N. should be imposing sanctions upon Iran for its nuclear activities, Asian and European companies are signing lucrative contracts to provide massive aditional revenues to fuel Iran's search for nuclear weapons," Lantos said.

"If we permit this kind of heedless and mindless avarice, it will be at the world's peril," the chairman added.

 Many of the committtee's members - in both parties - have said they see implementation of U.S. Iran sanctions law as a diplomatic priority to avoid the potential need for a military strike in Iran.

"Given the urgency of our concerns with Iran, we must use every tool in our diplomatic arsenal," Lantos said.

 -By Ian Talley, Dow Jones Newswires, 202-631-5794;

ian.talley@dowjones.com