Will Congress Let the Iran-Libya Sanctions Act (ILSA) Expire? Not if Israel Can Prevent It

By Andrew I. Killgore

The Iran-Libya Sanctions Act (ILSA) is due to expire in August. Israel is fighting hard for its extension, but the Bush administration may side with the oil industry and allow it to die a natural death.

Passed into law in 1996, ILSA decreed that companies spending as much as $20 million a year in Libya’s or Iran’s oil/gas industry were to suffer U.S. sanctions. In 1997 Russia’s GAZPROM, France’s TOTAL and Malaysia’s Petronas challenged the validity of ILSA when they contracted to spend $2 billion to develop Iran’s huge offshore South Pars gas field in the Persian Gulf.

In March 1998 then-President Bill Clinton met “late into the night” with his “top foreign policy advisers” (Washington Post, March 6, 1998) on what to do about a clear defiance of ILSA by Malaysia, France and Russia. The president decided to take no action. Washington’s Petroleum Finance Company told the Washington Report that Secretary of State Madeleine Albright was one of the “top” advisers present and that “late” was after midnight.

The Israel-leaning Post had obviously tried to downplay the significance of the president’s decision. While ILSA was clearly not enforceable as U.S. policy, Israel and its Washington branch office, AIPAC (American Israel Public Affairs Committee) had their own reasons for keeping ILSA alive.

A Post article of May 8, 2001 tips Israel’s pro-ILSA-extension hand. Oil companies operating in the Caspian Sea—with the possible exception of formerly anti-ILSA British Petroleum—overwhelmingly want ILSA ended so that Caspian Sea oil and gas could be transported via pipelines through Iran to salt water. The Post singled out the German energy company Wintershall as seeking to drill for oil and gas in Libya, where three American companies have concessionary interests.

The May 8 Post article brings forth two of Israel’s slavish supporters in the U.S. Senate, Jesse Helms and Joseph Biden, to denounce Wintershall. Helms “rebuked” the German Foreign Minister Joschka Fischer for not stopping Wintershall, while Biden told Fischer that U.S.-German relations would be “harmed” if Wintershall went ahead with its plans.

The German Embassy in Washington, DC told The Post that several European companies were seeking to drill in Libya. If this triggered disputes they could be settled amicably through agreement—or, if necessary, in the courts.

So what is U.S. “ally” Israel up to? The answer is simple. Israel has an ally in Turkey, one of the non-Arab Muslim countries (along with Iran in the days of the shah) to which the Jewish state typically makes diplomatic overtures. To prove its value to Turkey, Israel must demonstrate that it can “deliver” the United States.

“Deliver” in this context means a super-expensive oil pipeline from Baku (Azerbaijan) to Ceyhan (Turkey), bypassing Iran and Russia. If ILSA expires, the pipeline could go from the Caspian via Iran—and Israel would have failed to deliver the United States.

It’s as simple as that.

Andrew I. Killgore is the publisher of the Washington Report on Middle East Affairs.