New York Times: While President Obama struggles to negotiate United Nations sanctions with teeth against Iran, a parallel campaign to turn up the heat is gaining momentum by pressuring American and foreign corporations individually to cut their business ties there. The New York Times
By PETER BAKER
WASHINGTON — While President Obama struggles to negotiate United Nations sanctions with teeth against Iran, a parallel campaign to turn up the heat is gaining momentum by pressuring American and foreign corporations individually to cut their business ties there.
Two giant American accounting firms, PricewaterhouseCoopers and Ernst & Young, disclosed this week that they no longer had any affiliation with Iranian firms, becoming the latest in a string of companies to publicly shun the Islamic republic. After a similar decision by KPMG this month, that leaves none of the Big Four audit firms with any ties to Iran.
In recent months, other companies have announced that they would stop sales, cut back business or end affiliations with Iranian firms, including General Electric, Huntsman, Siemens, Caterpillar and Ingersoll Rand. Daimler said it would sell a minority share in an Iranian engine maker. An Italian firm said it would pull out after its current gas contracts ended. And the Malaysian state oil company cut off gasoline shipments to Iran, following similar moves by Royal Dutch Shell and trading giants like Vitol, Glencore and Trafigura.
The tangible impact of these moves varies depending on the firm. After three decades of sanctions, American companies have relatively little business in Iran at this point, while foreign and multinational companies often find ways to circumvent measures intended to sever ties with Iran. China has become an increasingly robust partner.
But current and former American officials said the recent announcements would further isolate Iran as it pursued its nuclear program in defiance of international pressure.
“No one of these actions is that significant,” said Stuart Levey, the Treasury under secretary who has led the American effort to persuade firms to abandon Iranian ties first under President George W. Bush and now under Mr. Obama. “But the overall trend, if you analyze it with the increasing political isolation of Iran, could be very significant.”
Mark D. Wallace, a former ambassador under Mr. Bush and now president of an advocacy group called United Against Nuclear Iran, said the growing trend could undercut the Tehran government. “This is a sort of tipping point,” he said. “You’re seeing the regime standing at the precipice and if a few more companies pull out and they don’t have the ability to access international services and goods and capital, they’re in real trouble.”
Foreign businesses have been an important source of support for Iran in recent years. In the last five years, 41 foreign companies have helped Iran develop its oil and gas sector, which accounts for more than half of the Tehran government’s income, the General Accountability Office reported this week.
None of those companies were American, but an analysis by The New York Times last month showed that the federal government had awarded more than $107 billion in contract payments, grants and other benefits over the past decade to foreign and multinational American companies doing business in Iran.
The campaign to pressure companies to give up Iranian business began a few years ago under Mr. Bush even as three successive rounds of United Nations sanctions failed to stop Iran from enriching uranium.
The American government initially focused pressure on international banks and financial institutions, but the recent announcements show that it is extending well beyond that sector to manufacturers, insurers and service providers.
The pressure comes not just from Mr. Levey and his team, who present firms with evidence showing how other companies have run afoul of sanctions rules because of Iranian subterfuge. It also comes from Congress, where both the Senate and the House have passed bills limiting the government’s ability to do business with companies that contribute to Iran’s development of petroleum resources. The two chambers must reconcile separate versions before sending a bill to Mr. Obama.
And then there is Mr. Wallace’s group, which was formed in 2008 by a group of prominent Republicans and Democrats, including some now in the Obama administration, to focus public attention on Iran’s nuclear program. The group has tried to shame companies with ties to Iran by posting a list on its Web site. Among those it has cited have been KPMG, Caterpillar and Ingersoll Rand. .
This week, Mr. Wallace’s group received letters from both PricewaterhouseCoopers and Ernst & Young assuring the group that they had cut ties with Iranian firms. PricewaterhouseCoopers wrote that the Middle East member of the company’s global network had had a “cooperating firm relationship” with Agahan & Company, an Iranian firm, but that it expired last year. Ernst & Young said it cut its ties in 2001 to the Tadvin Company, one of Iran’s largest accounting firms, even though Tadvin was still listed on its Web site this year.
Mr. Wallace called that a breakthrough because by publicly avoiding Iran, the American accounting firms that audit so many other companies send an important signal. “What it says is if it’s too risky for the Big Four accounting firms,” he said, “it should be too risky for other companies.”