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    Halliburton Connected to Iran Office

    Wall Street Journal
    February 1, 2001

Halliburton Co., the U.S. oil-services giant until recently headed by Vice President Richard Cheney, has opened an office in Tehran and operated in Iran in possible violation of U.S. sanctions.

Since 1995, U.S. laws have banned most American commerce with Iran Halliburton Products and Services Ltd. works behind an unmarked door on the ninth floor of a new north Tehran tower block. A brochure declares that the company was registered in 1975 in the Cayman Islands, is based in the Persian Gulf sheikdom of Dubai and is "non-American." But, like the sign over the receptionist's head, the brochure bears the Dallas company's name and red emblem, and offers services from Halliburton units around the world.

Mr. Cheney's spokesman, Juleanna Glover-Weiss, declined to comment, except to say that "the vice president is no longer head of Halliburton and has severed all ties to the company."

But a U.S. official said a Halliburton office in Tehran would violate at least the spirit of American law. The Treasury Department's Office of Foreign Assets Control declined to comment on a specific company, referring inquiries to a Web site summary of Iran sanctions that bans almost all U.S. trade and investment with Iran, specifically in oil services. The Web site adds: "No U.S. person may approve or facilitate the entry into or performance of transactions or contracts with Iran by a foreign subsidiary of a U.S. firm that the U.S. person is precluded from performing directly. Similarly, no U.S. person may facilitate such transactions by unaffiliated foreign persons."

An executive order signed by President Clinton in March 1995 prohibits "new investments [in Iran] by U.S. persons, including commitment of funds or other assets." It also bars U.S. companies from performing services "that would benefit the Iranian oil industry." Violation of the order can result in fines of as much as $500,000 for companies and up to 10 years in jail for individuals.

Halliburton spokeswoman Wendy Hall said the Tehran office didn't violate the Treasury Department's restrictions on foreign subsidiaries of U.S. firms operating in Iran.

"This is not breaking any laws," Ms. Hall said. "This is a foreign subsidiary and no U.S. person is involved in this. No U.S. person is facilitating any transaction. We are not performing directly in that country." Ms. Hall suggested that other companies were performing in a similar fashion in Iran but did not elaborate.

The Halliburton brochure in Tehran says the company has performed oil-drilling services on two offshore drilling contracts in the Iranian sector of the Persian Gulf. One is the Sirri field, being developed by France's TotalFinaElf SA, and the other is Phase 1 of the South Pars field, being developed by an Iranian company. "We are committed to position ourselves in a market that offers huge growth potential," it says.

Halliburton's Tehran subsidiary opened nearly a year ago, workers in the building said. At that time Mr. Cheney was Halliburton's chief executive officer. He was such an outspoken critic of U.S. sanctions policy that Senate Majority Leader Trent Lott related last week that Mr. Cheney once called him "to complain vigorously about how we handle sanctions, unilateral sanctions, and what it was doing to undermine the ability of American companies to be competitive."

U.S. companies feel left behind in the race to develop Iran's 90 billion barrels of proven oil reserves, about 9% of the world's total, and its natural-gas reserves, the second largest in the world. TotalFinaElf, Italy's ENI SpA and Asian companies have meanwhile ignored U.S. sanctions to sign up a potential $8 billion in deals since Iran opened up its oil industry to foreign investment in 1998.

Iranians are convinced that the new Republican administration in Washington will soon relax a policy that has crippled their economy for years. Already last year, Washington allowed renewed imports of Iranian carpets, pistachio nuts and caviar. In January, Secretary of State Colin

Powell told the U.S. Senate that "differences need not preclude greater interaction, whether in more normal commerce or increased dialogue."

A January meeting in New York brought together Iranian Foreign Minister Kamal Kharrazi and the chiefs of Exxon Mobil Corp., Chevron Corp. and Conoco Inc. "The [Iranian] oil ministry is even keeping certain fields back for the [U.S.] majors ... and is encouraging them very much," said Rocky

Ansari, managing partner of Tehran legal advisers Cyrus Omron International. "A huge amount of investment is necessary for Iran to renovate the industry. That cannot only come from Europe."

Foreign Minister Kharrazi told the Iranian national news agency IRNA in January that the time is right for the U.S. to "rectify" its policies. Foreign Ministry spokesman Hamid Reza Asefi likewise told an Iranian newspaper that there was a good opportunity for change and that Iran would give an "appropriate response" if the U.S. lifts sanctions.

"It's in our interest, as well as America's. We can buy anything we want via Europe. But they know we can't get it from America, so it's more expensive for us," said one senior Iranian official.

The official said Iran's mainstream conservative and reformist factions agreed on the basic need to restore relations broken after Iranian students seized 52 Americans in 1979 and held them hostage in the former U.S. Embassy for 444 days. Both Iranian factions agreed on what would be said when reformist President Mohammed Khatami appealed for an end to the wall of mistrust between the U.S. and Iran shortly after his election in 1997.

The Iranian official said Iran was subsequently upset by U.S. "preconditions" about discussing American allegations of Iranian backing of terrorism, nuclear programs and opposition to the Middle East peace process. But he hoped for a new beginning if Mr. Khatami was re-elected president in June.

A U.S. official in Washington said the U.S. was keen to sit down to talk with Iranian representatives "anytime, anywhere," but that Iran refuses to meet unless the U.S. puts aside all of its differences with Iranian policies.

"It is absurd to say that we have imposed conditions upon any dialogue with Tehran," the official said. "But at the same time, we're not going to enter into a bargain with Iran that would have us agreeing to set aside all the issues that separate us in order to begin to talk."


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