Sunday, October 28, 2007

Minnesota Loses while Pawlenty Backs Bush’s Ineffective Sanctions

Today’s Star-Tribune reports that “A deal with Indian company Essar Global to build a $1.6 billion taconite mill on the Iron Range may be on the rocks, just three days after it was announced, because of the company's developing ties with Iran.”

Earlier, the Star-Tribune reported : BANGALORE, INDIA - Gov. Tim Pawlenty's trade trip took a welcome turn Thursday as the governor learned that Indian firm Essar Global has closed on its acquisition of Minnesota Steel Industries and will proceed with plans to build a $1.6 billion taconite-to-steel mill on the Iron Range.[SNIP] "We are talking to them about timetables and about their expectations about what they expect from the county, the Iron Range Resources Board, and the state," Pawlenty said of Essar, adding he is hopeful that construction can begin early next year.

Yet, just a day before Reuters described the Iran project: “The facility, estimated to cost $8-$10 billion and which would be the first foreign-invested downstream project in sanctions-hit Iran, will boost the OPEC member's stagnant refining sector that is struggling with petrol shortages.” [SNIP] “Essar, owned by the Mumbai-based Ruias family, will take a 60 percent equity stake in the project with Iran taking the rest, said the Tehran-based and India-based sources.
"The priority of the new refinery will be to meet domestic gasoline and diesel requirements, and we will export the surplus products," said an India-based source familiar with the deal. ”


Pawlenty should be personally embarrassed by this episode.

Why wasn’t Pawlenty briefed by the US State Department prior to his visit to India ?
Pawlenty was previously scheduled to dine privately with the company's controlling Ruia family prior to the announcement of the MSI deal. He should have known about the company's Iran plans as Reuters reported in January that an Essar official stated the company wanted to strengthen its relations with Iran and was looking to buy into Iranian exploration and production blocks to help meet electricity needs for its planned steel plant.

This should have been a RED FLAG.

As mentioned in my previous commentary Coalition of the Only there is a 1996 US law which mandated action against any foreign company that prop up Iranian Government by investing more than $40 million there.

DUH. 60% of $8 Billion is more than $40 million. This was going to be a problem regardless of Bush’s ineffective sanctions.

What Pawlenty and residents of the Iron Range are learning is that sanctions hurt America.
Does anyone think that Iran will not be able to get foreign investment ?
America tried and failed to get pipeline project terminated between Iran and India. It is possible that Krupp-Thyssen may not pursue a steel production project with Iran, but that just opens the door for Essar. Read my commentary cited above for Russia's and India's plans. America has had a variety of sanctions against Iran since the 1980’s and even supported Saddam Hussein during the Iran-Iraq war. And we don’t seem to be able to get compliance … even from ourselves as The New York Times reported in September : officials acknowledge that the United States has not carried out existing Security Council penalties on several companies linked to Iran’s nuclear and missile programs

It’s time to end these ineffective sanctions.

Candidate George Bush spoke how he would act as President I view free trade as an important ally in what Ronald Reagan called ''a forward strategy for freedom.'' The case for trade is not just monetary, but moral, not just a matter of commerce, but a matter of conviction. Economic freedom creates habits of liberty. And habits of liberty create expectations of democracy. There are no guarantees, but there are good examples, from Chile to Taiwan.

As Baron de Montesquieu wrote in his 1748 work, The Spirit of the Laws, “Peace is the natural effect of trade. Two nations who traffic with each other become reciprocally dependent; for if one has an interest in buying, the other has an interest in selling: and thus their union is founded on their mutual necessities.”

Democratic candidate for President, Senator Chris Dodd recently observed the United States' most potent weapon against totalitarianism is the influence of ordinary American citizens. They are some of the best ambassadors we have.

Simply stated -- Trade is a building block for peace.
Yet Bush’s sanctions strategy is depriving Minnesotans of being the Ambassadors of Peace that we could be. If only President Bush would remember the words of Candidate Bush Freedom is not easily contained. Once a measure of economic freedom is permitted, a measure of political freedom will follow.

Governor Pawlenty should work with Senator Coleman and the other Republican leaders to change this ineffective stategy.

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