Clinton Intervenes to Block $1 Billion Conoco-Iran Deal

Journal Record, The (Oklahoma City), Mar 15, 1995

WASHINGTON (AP) _ Intervening in a politically charged business deal, President Clinton killed an American oil company's $1 billion oil contract with Iran, accusing Tehran of terrorism and undermining Mideast peace.

Clinton's action delivered the death blow Tuesday to a Conoco deal that already was crumbling under pressure from powerful stockholders and sharp criticism from the administration and Capitol Hill.

The White House said Clinton would issue an executive order in a matter of days to block the agreement, which had called for Conoco to develop a huge offshore oil field in the Persian Gulf.

Senate Banking Chairman Alfonse D'Amato, R-N.Y., a leading critic of the deal, praised Clinton's action but said it did not go far enough. He called for a total and permanent trade ban, which he has proposed in a bill that will be considered by his committee Thursday.

"The embargo we have today against Iran is a myth," D'Amato said. "If we don't make it a real embargo it will never have any real impact."

The administration acknowledged that Clinton's order, while blocking the Conoco deal, would not stop American companies from buying Iranian oil through foreign subsidiaries and selling it abroad.

Using this method, U.S. companies buy nearly one-quarter of Iran's oil. D'Amato estimated U.S. purchases at more than $3.5 billion last year.

It is highly unusual that a president would block a business deal. But in this case, after a week of embarrassing publicity, Conoco appeared happy that accord was dead. Indeed, the White House and the oil company worked together to scrap it.

White House Press Secretary Mike McCurry said Conoco, a subsidiary of DuPont, told the administration it would terminate the accord based on an executive order from the president.

"DuPont and Conoco pride themselves on being good corporate citizens in the United States as well as around the world. As a result, Conoco will not proceed with the agreement," said DuPont spokesman Mike Ricciuto.

Outside government, there was powerful opposition to the deal from members of the Bronfman family, who are the top officers of the Seagram Co., which owns more than 24 percent of DuPont. "It was really a moral issue" for them, a family associate said.

The Bronfmans are active in major Jewish organizations which support the administration's efforts to isolate Iran. Edgar M. Bronfman, co-chairman of Seagram, and Edgar Bronfman Jr., president and chief executive, also are friends of Clinton and have attended social events at the White House.

McCurry said he was not aware of any White House contact with the Bronfmans on the Iran deal.

Announcing that Clinton would issue his order, McCurry said it was in response "to the actions and policies of Iran, including support for international terrorism, efforts to undermine the Middle East peace process and pursuit of weapons of mass destruction and the means to deliver them."

He said that allowing U.S. companies to finance or manage the development of Iranian oil would help Tehran's productive capacity and bolster its financial strength.

"We think it is important to stop American participation in these kinds of activities," McCurry said.

Asked why other American companies would not be blocked from buying and selling Iranian oil, McCurry said, "This deal would be markedly different because it would go beyond the existing oil-producing capacity of Iran, moving to offshore reserves which would substantially increase over the long term the capacity of Iran to attract capital, to attract investment, to build up its economic activities."

"So this would represent a substantial new capacity for oil production by Iran," he said.

Conoco has maintained that it kept the administration informed all along about its negotiations with Iran. McCurry said that "we only in recent days became fully aware of the nature of the transaction."

Separately, Energy Deputy Secretary Bill White said, "One needs to balance the interests of U.S. companies and U.S. jobs against the policy of the U.S. in trying to isolate Iran."