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Florida senator presses firm to stop doing business with Iran

State Sen. Ted Deutch has a vision where Florida puts a stop to Iran's nuclear ambitions.

His weapon: public opinion.

His ammunition: a $125-million fuel depot being built in Port Canaveral by one of the world's largest oil traders.

Deutch has asked Gov. Charlie Crist to broker a meeting with executives from Vitol, the Swiss company that supplies one quarter of Iran's fuel and is building the largest private investment in Port Canaveral's history. Deutch hopes to leverage public opinion to persuade Vitol to stop selling gasoline to Iran.

"We have one chance in history to prevent Iran from developing nuclear weapons, and this is it," said Deutch, 42.

His campaign is part of a growing effort by states throughout the country to penalize companies that do business with Iran. The efforts raise nettlesome questions, not least of which is whether state leaders should meddle in U.S. foreign affairs. For Deutch, there's a more important question: Could it work?

Cutting off fuel to Iran is not a new idea. Iran, although oil rich, has long been unable to build new refineries.

In speeches during his campaign, President-elect Obama brought up the possibility, saying in the Oct. 7 debate, "That starts putting the squeeze on them."

What may be relatively new is the involvement of state leaders.

Deutch, a Delray Beach Democrat, spearheaded legislation last year that made Florida the first state to force its pension fund to divest from companies doing business in Iran's energy sector. The state has since sold more than $1-billion worth of investments as part of Protecting Florida's Investments Act, which also bars investments in Sudan. Deutch has traveled around the country to talk about the divestment act, and about a dozen other states have since adopted similar rules.

It's a matter of personal conviction, Deutch said. He represents a large community of Holocaust survivors and their families, and he needs, as he put it, "to be able to look them in the eye."

Deutch learned about Vitol from an op-ed article published last month in the Wall Street Journal. Orde Kittrie, a law professor at Arizona State University and a fellow at the Foundation for Defense of Democracies, wrote that the United States has been pressuring banks not to do business with Iran's financial institutions. Targeting companies at the state level isn't much different, he argued.

Port Canaveral estimates that Vitol's $125-million Seaport Canaveral project will bring in at least $1.2-million a year, and possibly more than $5-million a year — about 10 percent of the port's current annual revenue. Construction on the 36-acre project is expected to be completed next year.

Kittrie called on Florida leaders to pressure Vitol in the way that Minnesota Gov. Tim Pawlenty pressured Essar last year. The Indian company called off a planned investment in Iran after Pawlenty threatened to pull state support for its project in Minnesota.

"Florida has an opportunity to be a hero," Kittrie said.

•••

Vitol is one of the world's largest oil traders with more than $100-billion a year in revenue, according to its Web site. The company handles 4-million barrels of oil a day, nearly 5 percent of the oil consumed worldwide.

A company of that size is bound, as California collections attorney David J. Cook put it, to have "some dirt under its fingernails."

In 2001, the British newspaper the Observer reported that a British affiliate of Vitol had paid $1-million in 1995 to a brutal Serbian war criminal nicknamed "the Butcher of Vukovar" for his help in getting payment for oil from a Belgrade businessman.

Bob Finch, then director of Vitol's London operations, told the Observer, "It does not look good, I agree."

Last year, the company pleaded guilty to paying kickbacks to Iraq's state oil company for oil bought under the U.N. oil-for-food program, and agreed to pay a $17.5-million penalty.

Vitol spokesman Don Goldberg said the incidents were poorly handled but they were isolated. Controls are in place to prevent similar mistakes, he said.

Cook, best known for making sure that the proceeds from O.J. Simpson's book If I Did It went to Ron Goldman's father, encountered Vitol in a tangled collections case. In 2003, a U.S. civil court found Iran responsible for the 1983 bombing of a U.S. Marine barracks in Beirut, Lebanon. Iran trained the bombers, who killed 241 service members. The courts later awarded surviving family members $2.7-billion in damages.

Cook has tried to get oil or cash held by oil companies doing business with Iran. However, foreign companies like Vitol have argued, with some success, that they are not subject to the jurisdiction of the U.S. courts.

Broad trade sanctions prevent U.S. companies from trading with Iran, with certain narrow exceptions. American oil companies cannot directly buy oil from Iran; nor can U.S. refineries sell fuel to Iran. So the European company Vitol S.A. can trade with Iran, while the U.S.-based Vitol Inc. can't.

"Vitol Inc., the U.S. company, does not have any business dealings with U.S.-sanctioned countries, including Iran," the company said. "This is in accordance with the law of the United States."

In Cook's mind, the legal argument leaves the company with an "irreconcilable moral conflict." He asked, "How can you profit off the United States and profit off a state sponsor of terror whose avowed purpose is to destroy America and America's way of life?"

•••

It's the perception of a moral conflict that people like Deutch and Kittrie hope to exploit.

"What we're hoping is that Vitol will be put to a business choice between continuing to sell gasoline to Iran and selling gasoline in the U.S.," Kittrie said.

Is public opinion leverage enough?

Gary Hufbauer, author of Economic Sanctions Reconsidered and a senior fellow at the Peterson Institute for International Economics, said Florida's chance of affecting decisions in Tehran is "approximately zero." Other oil companies will simply fill the breach. Florida's actions may anger potential allies abroad, undermining international efforts to get Iran to the negotiating table.

"State actions against companies like Vitol may advance the political careers of state governors and legislators," Hufbauer said, "but they do not serve the national interest."

Times staff researcher Will Gorham contributed to this report. Asjylyn Loder can be reached at aloder@sptimes.com or (813) 225-3117.

Florida senator presses firm to stop doing business with Iran 12/05/08 [Last modified: Wednesday, December 10, 2008 8:47pm]
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