US asked to suspend free trade talks with Malaysia over Iran deal
Posted: 01 February 2007 0822 hrs


WASHINGTON - A key US lawmaker on Wednesday called on the administration of President George W. Bush to suspend free trade talks with Malaysia in protest over its mega energy deal with nuclear renegade Iran.

Tom Lantos, the head of the US House of Representatives' top foreign affairs panel, described as "abhorrent" the 16 billion dollar deal signed in January between the state-owned National Iranian Oil Company and Malaysia's SKS Group.

"That is why today I am sending a letter to our trade representative, Susan Schwab, requesting that all negotiations between the United States and Malaysia on a free trade agreement be suspended until Malaysia renounces this proposed deal," Lantos told a Congressional hearing.

The United States and Malaysia, a predominantly Muslim and growing Southeast Asian economy, are preparing for a fifth and crucial round of negotiations to frame a free trade agreement before Bush's powers to strike free trade deals expire in June.

In his letter to US Trade Representative Schwab, a copy of which was obtained by AFP, Lantos said the Malaysia-Iran deal was a "disturbing development that I believe requires swift action by the Administration."

The US Congress recently extended and strengthened the Iran Sanctions Act, requiring sanctions against companies involved in Iranian energy development "as is potentially the case here," Lantos said.

The 25-year deal was to develop the Ferdos and Golshan offshore gas fields in southeastern Iran and establish liquefied natural gas (LNG) plants.

"Since the fundamental purpose of any FTA (free trade agreement) is to strengthen cooperation consistent with broader US strategic goals, I believe we have a right to expect the government of Malaysia to join us in condemning this LNG deal and, more importantly, to make certain that it is nullified before we proceed with further trade negotiations," Lantos said.

Malaysia, he added, stood to benefit greatly from an FTA with the United States, and "it is important that our trade partners are not engaged, actively or passively, in undermining our most basic security policies."

The USTR office said it was studying Lantos' request but gave no detailed comment.

"We have received the letter and are reviewing it," USTR spokesman Stephen Norton told AFP.

A proposed multi-billion dollar agreement by oil giants Repsol of Spain and Royal Dutch Shell to help commercialise Iranian gas deposits could also trigger US sanctions.

The Iranian news agency ISNA reported on Sunday that Iran has signed a preliminary agreement with Repsol and Shell to produce liquefied natural gas from Iran's South Pars gas field in a deal worth some 10 billion dollars.

State Department spokesman Sean McCormack said the investment agreement, if confirmed, would likely trigger a US investigation and possible sanctions under US law.

The 1996 Iran-Libya Sanctions Act requires the US president to impose sanctions on companies which invest more than 20 million dollars in Iran's energy sector.

Iran also said recently it would finalise in February a 16-billion-dollar gas agreement with China's largest offshore oil producer CNOOC.

Beijing is already the second largest buyer of energy products from Iran, home to the world's second biggest proven oil reserves after Saudi Arabia, and the second biggest gas reserves after Russia. - AFP/ir