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. Last Updated: 07/27/2016

EU Blasts Iran, Libya Trade Sanctions

BRUSSELS -- The European Union was gearing up for another trade battle with the United States on Wednesday after Washington moved toward widening its laws against foreign companies doing business with "enemy" nations.

Reaction against the so-called "D'Amato bill" was swift, and the European Commission -- the EU's executive -- warned that retaliatory measures being considered to counter recent anti-Cuba laws could also apply to other U.S. legislation.

EU Energy Commissioner Christos Papoutsis said the legislation threatened oil markets.

The U.S. House of Representatives on Tuesday approved the bill, which would punish companies doing business with Iran and Libya, nations Washington considers sponsors of terrorism.

Although not as punitive as the Helms-Burton Act which became law last week, the D'Amato bill is likely to affect many more European companies.

"We remain firmly opposed to the extra-territorial nature of both pieces of legislation," said Peter Guilford, spokesman for EU Trade Commissioner Sir Leon Brittan.

Papoutsis said with Iran and Libya controlling 10 percent of the world's oil market, any disruption would have an effect on supply and prices.

On Wednesday, the EU's commissioners deferred for a week a final decision on proposals to counter the Helms-Burton Act. EU sources said the commissioners agreed in substance on the retaliatory measures but were seeking clarification on details.

The sources noted that the measures being considered did not mention specific laws or countries to which they would apply in order that they could swiftly be adapted to include new laws the EU considers extra-territorial.

The D'Amato bill, which calls for staggered penalties to be applied against companies investing in oil or gas projects in Iran of Libya, must now go to U.S. President Bill Clinton for approval. Observers said there was little chance of him vetoing the bill in an election year.

Reaction against the bill was swift -- particularly from Italy, which imports the bulk of its oil needs from Libya. The Italian Foreign Ministry said it was concerned and fully supported European Union counter measures.

"We have the same concerns that we have expressed many times before," said a spokesman.

The Italian energy group ENI, parent company of oil company Agip, declined to comment on the U.S. bill.

A new gas pipeline project between Sicily and Libya is in the discussion stage. If it goes ahead, it would allow Agip to import 8 billion cubic meters of natural gas a year.

"We have vigorously lobbied against this legislation both bilaterally and with our EU partners," the Italian Foreign Ministry said.

In London, a Foreign Office spokesman said Western policy on Iran and Libya should be mutually decided.

"But we cannot accept U.S. pressure on its allies to impose sanctions under the threat of mandatory penalties on our companies carrying out trade with these countries in the oil and gas sectors," a spokesman said.

"We shall now be urgently consulting with our EU partners."