Iran sanctions talk encouraging

ORLANDO, Fla.(Reuters) - A top U.S. grain industry official said on Sunday he was encouraged by Clinton administration discussions over whether to allow a one-time sale of more than $500 million worth of U.S. farm goods to Iran. "We don't know how that one's going to turn out," Dave Lyons, a vice president of the Louis Dreyfus Corp., told the U.S. Grains Council's International Government Affairs Committee at the group's annual meeting. "But at least it's going to be discussed," instead of rejected out of hand, he added. All U.S. trade with Iran has been banned since 1995, when President Bill Clinton tightened existing sanctions to protest Tehran's alleged support of terrorism. However, after signs that relations between the two countries were improving, a startup U.S. firm called the Niki Trading Co. began making inquiries and received an order in September from the Government Trading Corp. of Iran (GTC) for 3.55 million tonnes of U.S. farm goods. In December, Niki applied to the U.S. Treasury Department's Office of Foreign Asset Control for a special license to complete the sale. Since then, the issue has been under Clinton administration review. If the Clinton administration gives the go-ahead, it will probably be for a "generalized" sale, Lyons said. The administration is unlikely to grant a single company the exclusive right to handle all the business, he said. Richard Bliss, the president of Niki, has said that his company expects to serve only as a broker and would work with established grain and shipping firms. Alex Jackson, a trade specialist for the U.S. Grains Council, agreed the administration was more likely to approve a generalized sale than issue Niki an exclusive license. "There's no doubt" that the order from GTC was a "serious and verifiable" offer, he said. But questions have arisen about whther Niki had "the ability to pull it off," he said. If the Clinton administration does announce some sort of generalized waiver, Niki could find itself cut out of the business unless the GTC insists on using the firm as a broker. Most U.S. grain companies have contacts with GTC through their offices in Europe or elsewhere and would not necessarily need Niki to broker a deal -- even if it was responsible for stirring up the business in the first place.

Iranian Dissident Cleric Says U.S. Ties Possible

TEHRAN,(Reuters) - A senior Iranian dissident cleric, in remarks published on Saturday, called for Iran to study re-establishing ties with the United States, saying the two countries' estrangement did not need to be permanent. "This issue should be studied by foreign policy experts...away from factional considerations, and one should act resolutely if they conclude that it is in the interest of the country to re-establish relations," the daily Khordad quoted Ayatollah Hossein Ali Montazeri as saying. "The late Imam (Ayatollah Ruhollah Khomeini) called America the 'Great Satan' and generally rejected all ties with it, but it is obvious that such a ruling is temporary and could change according to economic and political conditions," Montazeri was quoted as saying in a newly published pamphlet. Hostile ties between Tehran and Washington have thawed somewhat since the 1997 election of moderate President Mohammad Khatami. But few political figures in Iran have openly called for establishing ties with the United States. Last year, Khatami called for increased people-to-people exchanges to ease tensions. Iranian supreme leader Ayatollah Ali Khamenei has ruled out relations with Washington. "If a bad record were the norm for cutting ties, Britain and Russia have damaged Iran more in the past than America has. Therefore the norm is the current situation of states and the world and the interests of our revolution and system, not what happened in the past," Montazeri said. Montazeri has lived under house arrest since late 1997, when he publicly criticised Khamenei. The cleric has been Iran's leading dissident since Khomeini removed him as his designated successor months before his death in 1989.

Theologian says resumption of U.S. relations is possible

TEHRAN, Iran (AP) -- A senior Iranian theologian, whose views carry the weight of religious rulings, says the resumption of Iranian-American relations is possible, according to remarks published Saturday. Resumption of relations with the United States is among the issues that divide moderates and hard-liners in Iran's Islamic government. Grand Ayatollah Ali Montazeri, who has been under house arrest for several years for his outspoken views, said that the ban on relations imposed by the late revolutionary leader Ayatollah Ruhollah Khomeini was not infinite. His comment came in a written response to a query by students and teachers of theology. Excerpts were carried by the Khordad daily. Montazeri wrote that in 1979, students occupied the U.S. Embassy in Tehran out of anger toward the United States. "That was when the United States severed ties with Iran, and for that reason the late imam (Khomeini) imposed a ban on any sort of ties with Washington." He added: "But it is clear that such a ruling is temporary and can change according to political and economic conditions." Montazeri, who was slated to take over from Khomeini until he was denounced just months before Khomeini's death, said that relations could be resumed if the United States didn't try to dominate the relationship with Iran or take advantage of the country. Since his election in 1997, moderate Iranian President Mohammad Khatami has attempted to improve relations with the West. Iran's hard-line supreme leader, Ayatollah Ali Khamenei, has repeatedly said that it was in Iran's interest to keep its distance. Despite his detention by Khamenei's allies, Montazeri still enjoys a large following among Iranians, where his views carry the weight of a religious ruling.

Iran rial recovers, but economic worries remain

By Firouz Sedarat TEHRAN, (Reuters) - The Iranian rial has recovered somewhat after recent plunges against hard currencies, but traders and economists remain concerned about the economic impact of the currency's fall. On Tehran's illegal but active black market, dealers on Thursday were trading the rial at 8,100 to the dollar compared to about 8,700 rials per dollar three days ago. Traders said the rial improved after police rounded up dozens of street dealers since Tuesday. The currency is still 11 percent lower against the dollar compared to two weeks ago. ``I think currency speculators are betting on Iran running seriously out of hard currencies, with a view to the recently approved budget and its debates,'' said economist Fariborz Raisdana, referring to the heated parliament debates which exposed Iran's fragile financial situation. Many deputies expressed skepticism about forecast state revenues being realised due to low oil prices and predicted that the government would face another debilitating budget deficit like this year's shortfall of $6 billion. The heavy deficit has forced the government to seek $3 billion in new loans from foreign creditors and to slash hard currency expenditures at home, forcing many state-run firms to turn to the black market for their hard cash needs. Economists say fears of a possible flurry of price rises in the new year which starts on March 21, when fuel prices will be increased by up to 75 percent, had also prompted many ordinary Iranians to buy hard currencies as a hedge against inflation. ``Economically the concern is that the private sector seems to be sinking its liquidity into the black foreign exchange market again, instead of other relativlely more productive ventures, such as construction,'' Raisdana said. Iran has had strict foreign exchange controls since 1995, when the government imposed an official rate of 3,000 rials to the dollar and banned free-market currency exchange. The rules, adopted to halt a plunge of the rial and a capital flight after the United States announced sanctions against Iran, led to years of relative stability of the currency after police arrested scores of black market dealers. But the rial has lost 40 percent of its value against the dollar since early last year as a slump in oil prices hit the economy. Iran, the world's third largest oil exporter, depends on oil for about 80 percent of its hard currency income. Khosrow Sobhe of the Iranian Carpet Exporters Association said the rial's frequent fluctuations were hurting exports. ``There is a daily confusion on prices among dealers because of the rial's fluctuations, and that does not help the prestige of Persian carpets,'' said Sobhe about the rugs which are Iran's second biggest hard cash earner after oil. Sobhe said dealers were finding exports less profitable because of the large difference between the black market rate and the official rate of about 5,700 rials per dollar at which they are required by law to sell their hard currency earnings.

Iran Carnival Features U.S. Touch

By AFSHIN VALINEJAD The Associated Press TEHRAN, Iran (AP) -- A carnival celebrating the Iranian revolution for the first time featured U.S. cartoon characters, dancing and music -- a sign of how much the government has relaxed limits on music and dance. Actors dressed as Mickey Mouse, Bugs Bunny and a variety of animals sang and danced in a procession of more than a dozen floats that circled Enghelab (Revolution) Square, entertaining a crowd of more than 5,000 people. Called the ``Caravan of Joy,'' the carnival was organized by the Ministry of Culture as part of the celebrations leading up to the 20th anniversary of the 1979 overthrow of the U.S.-backed Shah on Feb. 11. The style of the parade demonstrated how much the government's restrictions on music and dance have been lifted since President Mohammad Khatami took office in 1997. Islamic hard-liners accuse Khatami of undermining the revolution by his relaxation of social restrictions. ``I'm very happy that we are celebrating with joy in the place where we staged the revolution 20 years ago,'' said Morad Najafi, a 50-year-old bank employee, who had come to Azadi Square with his wife and two small children. ``Joyful celebrations are not necessarily un-Islamic, and I'm sorry that we did not celebrate like this before,'' said Najafi, Even so, there were no women among the carnival performers. Women cannot dance or sing in public.

Iranians make new lives in America but hope for return

By Scott Hillis LOS ANGELES, (Reuters) - Hamid Rafatjoo was nine when militiamen raided his home. Several Iranian revolutionary guards searched the house in suburban Tehran and hauled his parents away for questioning. ``At that point my parents made the decision to leave,'' recalled Rafatjoo, now 28, whose father was a respected surgeon. ``If a doctor's home wasn't safe, what was?'' Iran's Islamic revolution, which erupted 20 years ago under the leadership of Ayatollah Ruhollah Khomeini, drove out an ancient pro-Western monarchy under Shah Mohammad Reza Pahlavi that the fundamentalist cleric claimed had strayed from Moslem ideals. The upheaval, in which thousands of Iranians were executed, drove many of the wealthiest and best-educated to seek refuge in Europe or the United States. Two decades after Khomeini declared the Islamic Republic of Iran, the Persian diaspora have fashioned new lives as doctors, shopkeepers and scientists while clinging to dreams of a return to their homeland. An estimated three million now live outside the ancient country once known as Persia and half a million of them have flocked to southern California, drawn by the area's sunny climate and economic prospects. 'VERY RICH' LEFT FIRST ``The main portion of those who left first were the very rich because they didn't like living in a country with problems,'' said Ali Limonadi, president of IRTV, a Persian television station based in Los Angeles. Intellectuals were not far behind as the new regime tightened its grip on academics and professionals. ``The main reason for people leaving was the freedom, which just wasn't there,'' Limonadi said. While many Iranians initially fled to Germany or France, the spectre of xenophobia there chased many to the shores of America, despite its own struggles with racism. ``In America they could feel at home -- not right away, of course, but it was better than Europe,'' Limonadi said. Los Angeles has sprouted thousands of Iranian businesses ranging from shops selling intricate hand-woven Persian carpets to music stores hawking the latest hits from Iranian pop stars. More than 70 Persian restaurants pepper the city, offering rich Middle Eastern fare such as marinated lamb kebabs and stews laced with walnuts and pomegranate juice. Persian culture is so prevalent in some parts of Los Angeles it is sometimes referred to as ``Tehrangeles.'' But, despite this success, the road to acceptance has been hard for exiled Iranians. Many were hounded in their new country after Islamic radicals stormed the U.S. embassy in Tehran in November 1979 and took 62 Americans hostage. ``That has died down and there's an awareness now that the people who are here are not necessarily religious fundamentalists,'' Rafatjoo said. LANGUAGE BARRIER Some older Iranians have also been vexed by the language barrier. Rafatjoo initially fled to France with his mother and brother, gaining a command of French -- only to be uprooted two years later to come to the United States. ``The only English I knew was the theme song for 'Happy Days,''' Rafatjoo said, referring to the popular TV sitcom. Elham Gheytanchi, 26, said language problems forced her father to abandon his career as an agricultural engineer and he now works in a Los Angeles men's store run by her uncle. For her, a female Jewish Iranian who is now a U.S. citizen, even answering the question ``What nationality are you?'' sparked some serious soul-searching. ``For me, from the very beginning I had this real burdensome problem of identity,'' she said. Reaping the fruits of the traditional Persian emphasis on learning, younger Iranians are installing themselves in America's corporate towers as well as its ivory ones. Rafatjoo is an attorney with a law firm in Irvine, California. Gheytanchi is toiling on a doctorate in sociology at the University of California in Los Angeles. Even now, 20 years later, a large chunk of the Iranian community still hope they can one day return to their homeland. ``My goal is to keep Iranians here together until the day we can go back,'' Limonadi said. As with many other groups, the Internet has become the Iranians' favourite outlet for dissent, with dozens of human rights and reformist Web sites cropping up. The rise of a reformist faction in Tehran led by the moderate President Mohammad Khatami has fuelled hopes of a U.S.-Iranian thaw that could reunite friends and families. While some Iranians are able to return for visits, that is off-limits to people like Limonadi, who declare themselves the ``opposition'' of the Islamic government. ``I am blacklisted, they would kill me right away,'' Limonadi said. Gheytanchi welcomed any sign of rapprochement, saying: ``You need to know what happened in the past but not hold on to those ideas because then you're stuck in the past.'' But Rafatjoo doubts many exiles would return for long, given Iran's economic woes and the higher standard of living enjoyed in the United States. ``During the Iranian New Year I remember my parents saying 'Hopefully next year we will be in Iran,''' he said.

An Ideal to Die For

By Nora Boustany Washington Post Two decades after Iran's Islamic Revolution scrambled political and religious landscapes of the Middle East and of Muslim states beyond, Arash Farouhar, 30, the son of Iranian dissidents who were stabbed to death late last year, offered a glimpse into the unresolved and heroic struggle for freedom and democracy in his country. His father, Daryush Farouhar, a lawyer and secretary general of the opposition Iran National Party, and his activist mother, Parvaneh, were assassinated Nov. 22. They were victims of a wave of killings and kidnappings -- which moderate government leaders have blamed on extremist security and intelligence elements in the regime -- that was aimed at paralyzing a growing challenge to the legitimacy of Islamic rule. Arash Farouhar, who lives in exile in Germany, said he is touring the United States to call for an international nongovernmental group to investigate the killings. The Tehran government has acknowledged that elements of its security apparatus were implicated in the terror campaign and has called for an investigation, but no one has been named, charged or brought to justice, Farouhar said in an interview Monday. A cleric close to President Mohammed Khatemi who was sent to express condolences to the family told the young Farouhar that "international pressure" was needed because "Khatemi cannot do it alone." A commission assigned by Khatemi to investigate the killings announced recently that "the motivation was not political." That infuriated students and activists who say that failure to identify the culprits will discourage intellectuals and encourage a "reign of terror." "Those . . . who expected to improve the establishment were suppressed by the very same establishment," Daryush Farouhar said in an interview three weeks before his death. A week later, he wrote in an underground journal that Khatemi was "distancing himself from what he has promised as days go by. Expecting something from him is a major deviation from the path we must follow." At the Farouhars' funeral in Tehran, which drew more than 100,000 people, one mourner went down on his knees facing the freshly dug grave and away from Mecca, Arash Farouhar recalled. Daryush Farouhar, who had fired the imagination of young Iranians, had been stabbed 11 times in the chest and placed on a chair facing the qiblah -- the point to which Muslims turn to face Mecca when they kneel in prayer. So the mourner, turning his back to Mecca, declared: "They said they killed you and directed you toward the qiblah. You are my qiblah." Students, who formed protective chains around Arash Farouhar when he came for his parents' burial, told him that the time will come when Khatemi must choose between the rule of clerics and of the people. "I don't want to defend Khatemi, and I don't want to condemn him," Farouhar said. "He will only make a difference when he puts his life on the line."

Iran Court Bans Liberal Cultural Journal

TEHRAN,(Reuters) - An Iranian court has banned a liberal cultural journal after it found its editor guilty of lies and dissemination of corruption, the official IRNA news agency reported on Tuesday. "Branch 1410 of Tehran court found the managing director of 'Adineh' bi-weekly, Gholam Hussein Zakeri, guilty of insult and dissemination of lies and corrupt articles," IRNA said. It quoted the public relations office of the Tehran justice department as saying that the court ordered Zakeri to pay fines totalling nine million rials (about $1,035 according to black market rate). It said the newspaper has 20 days to appeal the ruling. Iranian newspapers on Tuesday quoted Iran's former top press official, a noted moderate, as warning that the country's new-found press freedom was under threat. They quoted outgoing Culture and Islamic Guidance Deputy Minister Ahmad Bourqani as comparing the country's press freedom to a young tree about to be uprooted. "Young trees have shot up, but there are apparently people who are determined to cut them off at the roots," Bourqani was quoted as saying in a farewell speech at the ministry. "The only excuse for this is that someone might not like the smell if these young trees grow and flower," Bourqani added. Bourqani was in charge of press affairs at the ministry before his resignation was announced earlier this week. Moderate newspapers, many of which started publishing after moderate President Mohammad Khatami was elected to office in 1997, have expressed concern that Bourqani's departure might signal a more restrictive atmosphere against the press.

Iran Mends Ties with most of World, Not yet U.S.

LONDON (Reuters) - Two decades after the Islamic revolution sent shudders around the Middle East, Iran's relations with the outside world are better than at any time since Shah Mohammed Reza Pahlavi was overthrown. But ties with the United States remain elusive, snared in political demonology in both countries, despite cautious attempts at a thaw on each side. Tehran's foreign relations have undergone a transformation in the 18 months since President Mohammed Khatami took office, although he does not have full control of policy. Conservative Supreme Leader Ayatollah Ali Khamenei has ultimate authority. Iran has boosted ties with Persian Gulf Arab neighbors, played a constructive role in the former Soviet republics of Central Asia, restored full relations with European Union countries and is soon to exchange ambassadors with Britain. It has also begun to break the stranglehold of U.S. economic sanctions on its vital oil and gas sector, luring European, Russian and Asian companies into developing offshore fields. "This is 100 percent Khatami's doing. He has transformed Iran's foreign relations. It's a major success," said Gary Sick, executive director of the Gulf/2000 research project and a former U.S. National Security Council member during the 1979-1981 crisis over U.S. hostages in Iran. SMILING FACE FOR IRAN IN WORLD The president, a reformist Shiite cleric who espouses the rule of law and civil society, has given Iran a smiling face after two decades in which the late Ayatollah Ruhollah Khomeini's vengeful scowl was the country's world image. The United Nations has taken up Khatami's call for dialogue between different cultures and religions, officially naming 2001 the Year of Dialogue among Civilizations. The president is expected to visit Saudi Arabia and France soon in tangible displays of a new chapter in relations. Analysts say the blossoming of Iran's external ties is due to its abandonment of the aggressive export of revolutionary Islam, a changed Gulf security environment with a weakened Iraq and increased world interest in Caspian Basin energy reserves. "International reconciliation also reflects changed attitudes in the United States and Europe. As long as Saddam Hussein is in power in Iraq, the Taliban rule Afghanistan and there is instability in Transcaucasia, the West has a lot of common interests with Iran," said Ali Ansari, an expert on Iranian foreign policy at Durham University in England. The opening to Saudi Arabia is the most spectacular change after bitter past feuds over oil production, Riyadh's support for Baghdad in the 1980-88 Iran-Iraq war, the behavior and treatment of Iranian pilgrims on the annual Muslim hajj and the U.S. military presence on Saudi soil. Crown Prince Abdullah, who effectively runs the country because of King Fahd's ill health, was given a warm welcome when he attended an Islamic Conference Organization summit in Tehran in 1997 and has personally driven the rapprochement. Diplomats say Abdullah sees closer ties with Iran as a way of reducing tension in the Persian Gulf, neutralizing a potential source of subversion and enabling Washington to lower its politically sensitive military profile in the area. Khatami's visit to Riyadh in March should seal closer ties, although the two countries are at odds over the amount of oil Iran should be allowed to export under OPEC ceilings. Yet some Gulf Arab states, notably the United Arab Emirates, remain wary of Tehran, both because of its continued military presence on three disputed Gulf islands and because they see a powerful Iran as a longer-term threat. Iran's relations with Iraq have defrosted, with exchanges of prisoners-of-war and pilgrims, but each country harbors the other's rebels and experts say mutual hostility will endure as long as Saddam, who invaded Iran in 1980, is in power. Iran has maintained close ties with Syria, which shares its hostility toward Israel, concern at the Jewish state's growing military alliance with Turkey and support for Shiite Hizbollah guerrillas fighting Israeli occupation of a strip of Lebanon. Khatami has also sought to restore ties with Egypt, but progress has been slow. The street outside the Egyptian Embassy in Tehran is still named after Khaled Istambouli, the Islamic militant who assassinated President Anwar Sadat in 1981. FENCES MENDED WITH EUROPE Khatami has mended fences with the European Union after a 1997 diplomatic crisis when a German court ruled that Iranian leaders had ordered the killing of four Kurdish dissidents in a Berlin restaurant. Iran denied responsibility. Italian Prime Minister Romano Prodi last year became the first major Western leader to visit Iran since the revolution, and Khatami's trip to Paris, probably in April, will be the first by an Iranian president to a West European country. Iran and Britain agreed to normalize ties last September when the Tehran government publicly dissociated itself from Khomeini's 1989 death edict against British author Salman Rushdie for allegedly blaspheming Islam. Although hard-liners asserted that the "fatwa" (religious order) remained in force and an Iranian foundation raised its bounty on Rushdie's head, British officials say Iran has kept its word. Diplomats say the two countries are expected to upgrade their charges d'affaires to ambassadors in March, once the 20th anniversary of the Iranian revolution and the 10th anniversary of the "fatwa" have passed. "We are quietly putting the different bricks back into the wall of relations, but the last thing Khatami needs is an enthusiastic embrace from the cousin of the Great Satan," a British official said. The United States remains the big exception to Iran's opening to the outside world despite Khatami's landmark call in January 1998 for a "crack in the wall of mistrust." They have exchanged academics and wrestlers but official diplomatic contacts remain taboo in Tehran, and Washington is still using sanctions and pressure to exclude Iran, the natural transit route, from transporting Caspian oil and gas. Khamenei and the hard-liners continue vituperations against Washington and insist that Iran does not need relations with the country that Khomeini branded "the Great Satan," which his heirs refer to as "the global arrogance." Khatami's room for maneuver is very limited, especially since hard-liners in the U.S. Congress oppose any easing of sanctions against Iran, which they brand a "rogue state" -- a sponsor of terrorism bent on developing nuclear weapons. "Both countries are trapped in their own demonology," a West European diplomat said.

No Quick Thaw Seen in U.S.-Iran Ties

WASHINGTON, (Reuters) - Twenty years after the Islamic revolution in Tehran plunged the United States and Iran into a diplomatic Ice Age, official ties are still frozen and prospects for dramatic improvement appear remote. A tentative thaw that began with rhetorical overtures last year from moderate new President Mohammed Khatami seemed to offer promise. Officials talked boldly then about President Bill Clinton wanting to make Iran his "China" -- a reference to President Richard Nixon's 1972 diplomatic coup of establishing relations with the communist rulers in Beijing. No more. U.S.-Iranian rapprochement is stuck in political quicksand and the Clinton administration has tempered its expectations. "What we're trying to do is be exceedingly patient," a senior U.S. official told Reuters in an interview. "There's no upset in the administration about this...We've done exactly the right thing and we're seen internationally as having done the right thing too. We've done our outreach. The response (from Tehran) will come in their good time...There isn't any sort of nervousness that it hasn't happened yet," the official said. In this view, the core problem is that Khatami "has to much to take care of at home," where hardline fundamentalists are battling with the president and his moderate allies for the heart and soul of Iran's still unfinished Islamic revolution. Struggling for his own political survival, Khatami is unwilling or unable to do what it would take to launch a direct dialogue with Washington until political stability is restored, officials and experts say. But some analysts believe the administration has squandered an opportunity by not taking more initiative to reach out to Tehran. "I don't think the moderates have more than another year" to improve Iran's economy and deliver on campaign promises of a better life for young Iranians, the country's dominant age group, said Anthony Cordesman, a Middle East and arms expert with the Centre for Strategic and International Studies. Faced with this, and a 40 percent drop in Iranian oil revenues, "we have wasted a time window," said Cordesman, who visited Iran last year. The history of U.S.-Iran relations is long and tortured. Washington for years propped up the late shah but became the hated "Great Satan" to Islamic militants who toppled his regime on Feb. 11, 1979. Iranian student radicals seized the U.S. embassy in Tehran and held 52 Americans hostage for 444 days, making America feel bitter and powerless. The two nations became bitter enemies, with Washington terming Iran a "rogue state" bent on terrorism, acquiring nuclear weapons and sabotaging Middle East peace. An attempt by President Ronald Reagan to reach out to Iran in the 1980s was an embarrassing failure. It wasn't until Khatami took office in August 1997 that Washington began to see real possibilities for change. A year ago, Khatami offered contacts between the two peoples. But he rejected the government-to-government dialogue that Washington says is needed to grapple with the terrorism and nuclear disputes and which it wants to show progress before U.S. sanctions on Iran can be lifted. The United States took up the offer of closer cultural ties, easing visa restrictions, revising a travel warning and promoting cultural exchanges, including visits by wrestling teams. But U.S. officials and experts say Tehran has cooled on such contacts. "Sports and cultural exchanges are increasingly blocked by resistance from Iranian traditionalists and extremists," Cordesman said. The administration, stressing a determination to recognise positive change, took Iran off its list of drug trafficking countries last year after deciding Tehran had eradicated its crop. But officials say Iran will once again be named a top sponsor of terrorism when the State Department's annual list is released. What the United States can or should do to boost Iranian moderates is a matter of protracted debate. Said the senior U.S. official: "One of the things that we've been very careful about is not to try to get involved in (Iran's internal turmoil) in any way, not to try to help (Khatami) because there's no way that we can do that well. There's no way that any of us...can possibly understand the exact circumstances that would help or hurt." "That's why I say the doors are open for him to walk through. We don't want to embrace him. We don't want to overreach," the official said. The administration is debating a proposed sale of U.S. commodities to Iran. But one U.S. official said he expected it to be turned down because of opposition in Congress to any loosening of sanctions against Tehran.

BP Amoco Seeks To Drill in Iran

By David B. Ottaway and Martha M. Hamilton Washington Post Staff Writers The newly formed British-American oil giant, BP Amoco PLC, has taken advantage of a U.S. waiver of sanctions against European companies investing in Iran to submit a preliminary proposal to develop three major fields in southern Iran. The possible involvement in the Iranian energy sector of a multinational energy company with large American assets raises a delicate issue for the Clinton administration, which continues to bar all U.S. companies from investing in Iran because it considers Iran a sponsor of international terrorism. The issue involves whether the administration should treat BP Amoco as a British company possibly exempt from U.S. sanctions legislation or as being sufficiently American to fall under those restrictions. The U.S. firm Amoco was merged into British Petroleum Co. on Dec. 31. Ranking as the world's third-largest private oil company, BP Amoco has about 50 percent of its assets in the United States, according to company officials. One U.S. official responsible for enforcing U.S sanctions on Iran said there was no official position within the administration regarding the oil giant's status but that the general feeling was that "BP absorbed Amoco" and is a British entity. The company's headquarters is in London. The discussions with Iran began with British Petroleum before the merger, according to BP Amoco. The official said that "as long as companies are talking prospectively for when sanctions are removed and no contract is drawn up, it doesn't violate" U.S. sanctions even if an American company is involved. Even so, BP Amoco may run into obstacles posed by the United States if the talks go further. "This would pose a serious problem for us in granting waivers because of our policy on Iran, which is firm," Energy Secretary Bill Richardson said. "Investment in Iran, in our judgment, provides the Iranian government the means to carry out measures" including support of international terrorism, opposition to the Middle East peace process and building weapons of mass destruction, Richardson said. One American company, ARCO, submitted "an expression of interest" in November in the project, subject to the lifting of U.S. sanctions, ARCO spokeswoman Linda Dozier said. But this was not a formal bid, she said. The bidders include Italy's ENI, France's ELF and Total, Royal Dutch/Shell, and the British firm Lasmo, according to Julia Nanay, an oil industry analyst with the Petroleum Finance Co. BP Amoco's proposal is the most sweeping, covering the entire reservoir, she said. But the proposal is what the company calls a "technical proposal" with no dollar figures attached and is not a formal bid, according to company officials. "It's a feeler we put out to them. We don't know how or when they will respond," said a BP Amoco spokesman in London. The project in question is Iran's Bengestan reservoir, which contains three oil fields. Together, they contain an estimated 65 billion barrels of oil, though only 10 percent may be recoverable, according to press reports. BP Amoco proposes to use its technology to increase the recovery of oil and natural gas from the fields. "We need to open a dialogue with them first to see where we can take it," the spokesman said. A BP Amoco official here said the company had discussed its proposal at considerable length with State Department officials before submitting it to the National Iranian Oil Co. on Jan. 19. Since President Clinton issued two executive orders in 1995, U.S. companies have been prohibited from entering into contracts for the development of Iran's energy resources. In 1996 Congress extended the sanctions to European and other foreign companies. The measure touched off a feud with the 15-nation European Union and was put to the test in 1997 when the French oil company Total, Russia's RAO Gazprom and Malaysia's Petronas disclosed plans to invest $2 billion in development of an Iran gas field. After prolonged negotiations between the United States and the European Union, President Clinton announced in May that Washington was waiving sanctions against those three firms even while reaffirming the prohibition on U.S. companies investing there. Nanay said remarks by Secretary of State Madeleine K. Albright after the waiver had signaled to other European firms that similar waivers might be forthcoming from the Clinton administration. But Richardson cautioned that there has been little progress in Iranian-U.S. relations. "We have always said we're willing to have government-to-government discussions with the authorized representatives of the Iranian government, but thus far Iran has expressed interest in only people-to-people exchanges but has rebuffed us on government-to-government," Richardson said. Two months after Clinton announced the waiver, Iran took the first step toward opening its energy sector to outside investment, calling for bids from foreign companies on 43 oil and gas development projects both onshore and in the Persian Gulf. The bidding officially closed at the end of November, and it is not clear whether the Iranian government has accepted the BP Amoco proposal that came six weeks late. Nanay said Iran has encountered serious difficulties negotiating deals with foreign partners because its constitution requires the government to compensate them with production out of the fields under development. In addition, Iran has insisted that the contracts expire within five to seven years, making it difficult for a foreign company to get back its investment and make a profit. Low oil prices have made this ever harder. "These projects really are going very slowly," Nanay said. "The Iranians have to be very disappointed."

Iran sets up fund to counter American interference

TEHRAN, Iran (AP) -- The Iranian parliament has approved creation of a special fund to counter what it sees as American interference in Iran's affairs, Iranian television reported. The broadcast late Saturday did not disclose the amount of the fund but said it could be used to "initiate proceedings against America in international courts." Another purpose, the broadcast said, would be to "enlighten the public inside and outside the country regarding America's cultural onslaught." During the vote, deputies of the Majlis, or parliament, chanted "Death to America," the broadcast said. Relations between the United States and Iran, broken off in 1979, have warmed slightly since the election of moderate Iranian President Mohammad Khatami in 1997. But Washington still considers Iran a sponsor of terrorism.