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October 24, 2007
Sanctions Give Russian Oil Company Pause
US commercial sanctions on companies doing business in Iran have given one Russian oil company second thoughts about assisting the Iranians with developing their oil industry:
Citing American sanctions on foreign oil companies that invest more than $20 million in the Iranian economy, the vice president of Lukoil, Leonid Fedun, announced yesterday that work on the Anaran field has stopped. Eli Lake, who penned this piece in the New York Sun, may be overstating the case a bit. President Putin has indicated in the past that he may support additional sanctions against Iran in the Security Council but it is unlikely he would go along with the must stricter sanctions regime advocated by America and some of our European allies. In that sense, he is still an obstructionist.
"We opened the largest field in Iran, but we can't work there because the U.S. State Department has banned third countries from investing more than $20 million," Mr. Fedun said at a press conference in Moscow....
If other Russian companies, such as Gazprom, follow Lukoil's lead, Iran will soon be left with only China's diplomatic support within the U.N. Security Council. To date, the Russians have opposed serious U.N. sanctions against Tehran and have sold Iran and Iran's ally Syria advanced air defense systems.
However, this turn of events is certainly good news. The less foreign investment in Iran's oil industry infrastructure, the less efficient it will become, having already seen a significant drop in production due to aging and poorly maintained equipment. This means that Iran will have less money to spend on their nuclear program and support of terrorism around the world - something the sanctions were designed to accomplish.
But we should not disabuse ourselves of the idea that Putin won't play Iran and the US off against each other for his own purposes. No matter what happens in the Security Council, Putin is still very interested in partnering with Iran in the region to checkmate US policy initatives across the board.
(Hat Tip: Ed Lasky)