Iran’s nuclear ambitions will not ease the country’s tense relationships with the international community, since the UN and the Western powers seem determined to follow through with sanctions. Nor President Ahmadi Nejad’s defiance encouraged by the conservative wing of the Mollahs will ease the country’s internal crisis.

Nevertheless, some people say: Why would the sanctions system succeed in bringing Iran to compliance with the international rules? And though this skepticism is understandable, with regard to  past defections of the same sanctionative system, the issue deserves a moment of reflection.

Actually, the main challenge to the sanctionative system may be internal, not external. As some of you recall, the Iran and Libya Sanctions Act of 1996 was the culmination of a long series of unilateral US sanctions against both countries imposed over two decades. 

Regarding Libya, there is no question that the sanctions imposed because of the Lockerbie affair have achieved their purpose: Not only Tripoli admitted its responsibility when it accepted to pay compensation for the families of the victims, but it went even further in making a deal with the USA: giving up its whole chemical and biological programme, along with its connections to the "terrorist" and "revolutionary" nebulae. 

Otherwise: selling off the old friends in return for normalisation of its relations with the USA and the West. But in the case of Iran, the story was a little more complicated. Why? The primary reason is that the law has not always been respected. Not only by European companies that continued to deal with Iran, but also by US corporations through their subsidiaries. 

In this context, Halliburton offers an interesting case study on the behavior of the American businessmen when the law incommodes his transactions. 

 Iran was one of three states cited by  former President Bush in his famous speech on the "axis of evil." Recently, Newsweek's Fareed Zakaria, recalling a speech of John McCain, wrote that if he had won presidency instead of Obama, "he would have tried to overthrow the government of Iran."  Maybe. But what about the US corporations that made huge profits from dealing with Iran despite the sanctions? Violations of  the1996 law: ILSA, occurred, though. True, the corporations avoided dealing directly with Tehran. However, theirs subsidiaries were able to do it... legally, as long as they did not employ U.S. citizens and were not mere "screens" for the mother-company. 

All the big US companies have affiliates abroad that are quite useful to them. This is the reason why the US Department of Justice, the Federal Grand Jury in Texas, and the SEC (Securities and Exchange Commission) each have launched an investigation just for the purpose of making sure that Halliburton had not breached the law on trading with Iran. 

In 1998, when he was CEO of Halliburton, Dick Cheney personally lobbied the Senate, seeking to have a special exception for Halliburton on the ILSA. Two years later, Cheney has publicly declared that "American companies should be allowed to do the same thing that most other societies around the world are allowed to do, i.e. to operate in Iran. 

“We are kept out of the country mainly by our own government which has decided that American companies should not be permitted to invest,” had he reportedly said. But most importantly is the fact that when Cheney  was leading the lobbying campaign against the sanctions, Halliburton subsidiaries were already working in Iran, according to a report by Middle East Economic Digest. Could you believe this was the man who will be the Vice President of the USA? 

Apparently, things were going so well that in 2004, CBS News estimated the sales of services to the Iranian oil industry conducted by Halliburton Products and Services, LTD (which is a subsidiary company registered in the Cayman Islands) at approximately $ 40 million just for  this year alone. In the same year, William Thompson submitted a resolution calling for Halliburton shareholders to review and justify its dealings with Iran. 

Halliburton tried to keep away the resolution of its shareholders, but the SEC rejected the request, attracting even more attention on the activities of Halliburton in Iran, to which the CBS News programme "60 minutes" devoted a broadcast. Hence the initiation of criminal investigations about the company's activities.  

This is not all. Something else must be considered, which concerns the need of concertion between the countries imposing the sanctions. Recent researches by the Institute for International Economics calculated the impact of US unilateral sanctions (including those against Iran) on trade, jobs, and wages in the United States.

They found that US exports to the 26 countries subject to US sanctions in 1995 were $15 to $19 billion lower than they would have been in the absence of the sanctions; that is if these lost sales were not offset by exports to other markets, employment among US export industries (though not necessarily in the economy as a whole) would be reduced by 200,000 or more jobs; and that shift in US employment would result in a loss of about $800 million to $1 billion annually in export sector wage premiums for US workers (since workers in US export industries earn on average $4,000 per year more than the average wage in manufacturing).The longer these sanctions remain in force, the greater the cumulative cost for US workers. 

Now, if the objective of the present sanctions is to give the Iranian leaders an opportunity to increase their faltering credit among their people and develop a new "Saddam" regime in the region, with religious rhetoric, just impose sanctions while turning a blind eye on the "parallel" activities of the corporative world.

 Yet, if sanctions are intended to induce a change in Iranian foreign policy, the UN and the concerned leaders have to think seriously about alternatives to past unsuccessful dealings with Iran. For something is sure: globalisation has made it easier for countries targeted by sanctions to tap international trade and capital markets and find alternative suppliers of goods and capital.

 Initially published on The Gulf Today (UAE).