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. Last Updated: 07/27/2016

France Tests U.S. Law With Iran Gas Deal

PARIS -- France on Monday threw down the gauntlet to the United States over trade with Iran, warning it against taking any retaliation against French oil company Total for signing a gas contract with Tehran.


The contract, billed as the biggest foreign investment in Iran since the 1979 Islamic revolution, will be the first European test case of a controversial U.S. law aiming at curbing trade with Iran and Libya.


In Washington, a State Department spokesman said the United States was reviewing the situation and would fully apply the law.


Total said on Sunday it had won a $2 billion contract to develop the giant South Pars Iranian offshore gas field along with junior consortium partners Petronas of Malaysia and Gazprom of Russia.


The contract flies in the face of the 1996 Iran-Libya Sanctions Act requiring President Bill Clinton to penalize any foreign company investing significantly in those two countries. The United States also has similar laws curbing investment in Cuba.


In a carefully worded declaration, France's Socialist-led government threw its weight behind Total.


"Total is a private, multinational and competitive company which makes decisions according to its strategic interests," Foreign Ministry spokesman Jacques Rummelhardt told a news conference.


The contract was in keeping with French policy of maintaining dialogue with Iran and complied with international law, since no internationally recognized rules existed limiting trade with Tehran, he said.


"France hopes that the American administration will weigh carefully the consequences of an application of this law," he said. "France hopes that the American administration will use the room for maneuver provided in this law," he added.


"The application of the provisions in this law would constitute a serious precedent in international trade."


France and its European Union partners have consistently opposed what it sees as a U.S. attempt to export its policies toward longtime enemies Iran, Libya and Cuba beyond its borders.


"It is an American law which applies in the United States, to American citizens and American companies," Rummelhardt said.


In Washington, State Department spokesman Christopher Bush said the law on trade with Iran "is the a law and we will apply it fully".


"Our position on any investments in Iranian gas and oil fields is clear -- such investments make more resources available for Iran to use in supporting terrorism and pursuing missiles and nuclear weapons," he said.


Total chairman Thierry Desmaret, in an interview in the French afternoon daily newspaper Le Monde, said Total had backing from the French government and from the European Union in signing the deal.