Turkey’s new Islamic-led government initialed a multibillion-dollar natural gas deal with Iran on Sunday, insisting it does not defy U.S. measures that seek to block foreign investment here.
The 22-year agreement calls for oil- and gas-rich Iran to sell 140 billion cubic feet of gas a year to Turkey beginning in 1998. The total value of the gas imported by Turkey through a pipeline will reach $20 billion.
The deal comes just days after President Clinton signed a law that authorizes the U.S. government to penalize American and foreign companies that invest more than $40 million a year in the oil and gas sectors in Iran and Libya. Washington accuses the two countries of sponsoring terrorism.
Washington’s allies in Europe and elsewhere have condemned the law, and Turkey’s action poses a direct challenge to U.S. attempts to further isolate Iran. Trade between Iran and Turkey totaled nearly $1 billion last year.
Turkish officials say the new deal does not violate the sanctions.
“The sanctions ban investments in Iran. We’re not going to invest in Iran. This is only a trade agreement,” Abdullah Gul, the Turkish government spokesman, told reporters. “The two countries will build their own sides of the gas pipeline.”
The formal signing of the agreement is scheduled for today by Turkey’s visiting Prime Minister, Necmettin Erbakan, and Iranian President Hashemi Rafsanjani.
The Clinton administration has sought to persuade Turkey, a U.S. ally and member of NATO, not to go ahead with the gas deal. The case will put the Americans in an awkward position and test U.S. willingness to impose punitive measures on countries such as Turkey.