Hassan Dai, 14 October 2013

Oil Minister Zanganeh introduces himself as Iran’s second Foreign Minister because by offering attractive energy contracts to Western oil companies, he can push them to lobby against the sanctions and influence the West’s policy with Iran, notably on nuclear issue

Bijan Namdar Zanganeh holds the position of Oil Minister in Rohani’s cabinet, just as he did under Mohammad Khatemi, and has a positive record in attracting major international companies to the Iranian oil industry. About two months ago, in a meeting with private sector representatives he said “In the present situation, after the foreign minister, the oil minister with a very active energy policy will play the role of the second foreign minister.”

The Economist of London echoed Zangeneh’s declaration and wrote: “Mr Zanganeh hopes that offering juicy deals to Western oil firms will make them lobby their home governments to ease sanctions.”

A report in the BBC’s website highlights the regime’s objectives in using oil to influence the West’s policy.

“Iran probably will try to use oil contracts as an incentive to resolve the  nuclear dispute. Offering large projects with contracts that are more attractive to Western companies may persuade these countries to show more flexibility in nuclear talks. Certain media outlets even talk about offering certain projects to U.S. oil companies, a move that Tehran hopes will lead to improved relations with Washington. This whole scenario is only possible if at the least some of sanctions are lifted.”

Bijan  Khajehpour, an Iranian oil broker and the founder of Atieh Bahaar, a tehran based oil consulting company, explains Zanganeh’s strategy in an article written for Al Monitor:

Dealing with the negative impacts of sanctions will evidently need to be his main priority. To address the lack of foreign investment and technology, Zanganeh will adopt two approaches: On the one hand, he will return to his “energy diplomacy,” whereby his ministry will utilize oil and gas opportunities to help the government achieve its foreign policy goals. For example, in 2000, when Iran discovered the largest onshore oil reservoir (Azadegan), Zanganeh’s ministry presented that project to Japanese investors as a way of encouraging Japanese companies to lobby their government for better relations with Iran. It is expected that Zanganeh will try to use oil and gas opportunities as a means to compel international companies to work against the existing sanctions regime as well as to once again lobby for better relations with Tehran. On the other hand, Zanganeh will address the shortcomings in the legal aspects of operating in Iran and improve the contractual and operational structures so that companies that are not affected by Western sanctions, such as Asian companies, will engage the Iranian market more aggressively.

Mehdi Hosseini, a veteran in dealing with Wetern oil companies has been appointed  by Zanganeh as “the President of the committee to review all oil contracts in the Oil Ministry,” to pursue the policy of making oil contracts more attractive.

Stimulating and incentivizing  Western oil companies

The regime’s effort in using oil leverage to influence Western policy is not a new thing. Traditionally, major oil companies have been Iran’s main ally in the West and especially in  the U.S, and they have played a significant role in shaping US policy toward Iran. (See the report “The trade lobby and US policy with Iran“)

Iran has the fourth largest oil reserves and first natural gas reserves of the world. According to the oil lobby, friendship with Iran will open the Iranian oil and gas sector to US corporations, it will also  brings stability to the region and oil supply from the Middle east  and will also allow access to much cheaper oil and gas from Central Asia.

In early 1990s the Hashemi Rafsanjani’s government signed a pre-agreement with US oil company Conoco for a project in Iran. The US oil giants considered it as a positive signal and started a campaign to soften the public opinion about Iran and allow the US administration to green light business with Iran.

In 1997, the so-called reformist Mohammad Khatami became president and launched a charm offensive to soften the western attitude toward Iran. The American business interests grasped the opportunity and launched a lobbying campaign to change US policy with Iran and remove economic sanctions. The National Foreign Trade Council (NFTC), representing large US corporations, launched its own lobby arm called USA*ENGAGE joining forces with oil giants.

Khatami’s presidency acted as the real start of pro-engagement lobby in Washington that has continued to grow in power and influence since 1997. But following the failure of negotiations between Iran and the international community in 2010, and at the start of the new crippling sanctions, the oil companies lobby in U.S. has declined sharply . Now, the Rohani government and Zanganeh have launched a new campaign to try to rekindle the attraction of Iranian oil and gas and the promise of sweet deals, to provoke their main allies, the big oil companies, to intensify their lobby in Washington D.C.

Two months ago, Bijan Zanaganeh began his extensive campaign to attract the support of major oil companies in the U.S. and Europe. Zamgeneh planned to accompany Rouhani to New York in September and meet with executives from US oil companies but his trip was cancelled. AReuters report on this story stated:

U.S. oil firms – barred by Washington from Iran for nearly two decades – planned to meet Oil Minister Bijan Zanganeh last week at the United Nations, encouraged by the new tone in Tehran, industry sources said. He intended to travel with President Hassan Rouhani to New York, but called off the trip at the last minute, the sources said. Executives from U.S. and European companies will be seeking new opportunities to meet with Iranian oil officials on neutral ground.

In step with his president’s efforts to end sanctions, Zanganeh has re-appointed Western-friendly oil experts, including his former deputy, Mehdi Hosseini, and ordered a review of Iran’s buy-back contracts that compensate foreign investors with production.

Tehran’s declarations to offer juicy oil contracts, has won the attention of major oil companies in U.S. and Europe, and these companies have intensified their lobby in Washington and other European capitals. Mohamamd  Nahavandian, Hassan Rohani’s Chief of Staff and the head of Chamber of Commerce met with the representatives of major companies in his trip to New York and attempted to establish a mutual agreement. Upon his return in an interview with Donaye Eghtesadmagazine, Nahavandi seemed very pleased:

Our private meetings showed that these companies are worried to give up the great economic opportunities to China and Europe, this shows that these companies have arrived to the point of believing that the era of sanctions has ended. Our public and private meetings within the two weeks were not comparable with the past, and everyone seemed very enthusiastic. Some discussions offer a real hope that sanctions will be reduced, also this trip delayed the new Senate Bill to intensify sanctions against Iran and the plan to bring the Iran’s oil sales to zero and the Geneva negotiations may follow the possibility of reducing the sanctions.

Three Regime’s Foreign Ministers: Bomb, Smile and Oil

In the  past 30 years, the Iranian regime has pursued the policy of auctioning off the nation’s assets at below market prices to achieve its foreign policy goals. Several years ago, in an interview Hadi Nejad Hosseinian, the former Deputy Oil Minister reveled the unprecedented auctioning of oil and gas by Ahmadinjead government which offered 225 billion dollar discount to both India and Pakistan in an attempt to encourage both countries to reach a deal and to sign an agreement and  begin the pipeline known as “peace project”.

It is clear that the Mullah’s regime has three Foreign Minister’s operating simultaneously. The first is Qassem Soleimani the head of Quds Forces who uses bombs and missiles to pursue the regime’s regional policies. Javad Zarif, has launched the “smile and Facebook diplomacy”  to deceive public opinion and Bijan Zanganeh pleases the oil companies by auctioning the nation’s wealth to keep them at the forefront of the appeasement and support of the mullah’s regime.

Hassan Dai (Daioleslam) is a human rights activist, political analyst and editor of the Iranian American Forum. He is well-published in Farsi and English and frequently appears as an expert guest on the Voice of America and major Persian language media.