The European Union and France warned the United States yesterday against imposing sanctions against the French oil firm Total, which has signed a $2 billion (£1.3 billion) deal to invest in the Iranian gas industry.
The French foreign ministry said Washington should "weigh carefully the consequences of implementing" the so-called D'Amato law which urges sanctions against US and foreign firms which invest more than $40 million in the Iranian and Libyan oil and gas industries. The US accuses Iran and Libya of sponsoring international terrorism.
In Brussels, a European Commission spokesman, Mr Peter Guilford, said US sanctions against Total under the D'Amato law would be "illegal and unacceptable". And in Paris, foreign ministry spokesman Mr Jacques Rummelhardt said: "The application of the terms of this law would constitute a serious precedent in terms of trade under international law.
"Sanctions valid under international law are those taken by the UN Security Council," he said, adding: "France hopes the American administration will use the margin for manoeuvre which this law allows."
In Washington, a State Department official said the US "regrets the fact that Total has signed this contract." The official said the administration had launched an investigation to determine whether Total had violated US law. "We're reviewing the case," the official said.
The contract could be in violation of the US 1996 Iran-Libya Sanctions Act, which penalises foreign firms that invest more than $40 million in the energy sectors of Iran or Libya.
Iran confirmed yesterday it had signed the contract, saying it posed a severe challenge to the US.
"The deal presents the United States with the severest test," the official IRNA news agency said. "The decision to call Washington's bluff is part of a move by the European Union to defy a series of extra-territorial laws by the United States, which uses trade as a political weapon," IRNA said.
IRNA said the agreement had been signed late on Sunday in Tehran between the National Iranian Oil Company (NIOC) and a "consortium made up of Total, a Russian and a Malaysian company". - (AFP)