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IRAN: Despite sanctions, business as usual

March 15, 2009 |  9:01 am

Iransanctions_2 A South Korean firm announced Sunday that it had completed construction of a $2.1-billion natural-gas processing plant in Iran, the latest sign that years of Western efforts to isolate Iran economically were not not having a huge effect.

South Korea's GS Engineering & Construction Co., the country's No. 2 builder, said Sunday it had finished the plant in Assaluyeh, in southern Iran, according to South Korea's official Yonhap news agency.

The company began construction of the plant in 2003. It will be able to produce 19 million tons of natural gas a year.

The announcement comes a day after Iran announced it had signed a $3.2-billion deal with China for exploitation of the gigantic South Pars natural-gas field in the Persian Gulf.

China's vote of confidence in the Iranian energy market came, coincidentally,  just shortly after Chinese leader Wen Jiabao voiced worry about the solvency of the United States.

The latest news shows how hunger for natural gas and business deals are undermining the longstanding U.S. policy of shunning business with Iran as a way of putting pressure on the government to abandon its nuclear policy and curb its regional ambitions.

The U.S. maintains an extensive embargo against trade with Iran. Advocates such as Rachel L. Loeffler say the West can tighten the noose on governments it doesn't like by tightening financial and trade restrictions.

But Iranians are clever about finding ways around such regulations, though they do add to the price of consumer and industrial goods. In the long run, critics say that sanctions mostly hurt ordinary people in a country like Iran, where government revenues come primarily from exports of oil and gas rather than tax revenues generated by trade.

That was what many concluded about Iraq, where U.S. and United Nations sanctions during the 1990s decimated the middle class while allowing strongman Saddam Hussein to tighten his hold on power.

-- Borzou Daragahi

Photo: Iranians use a Bank Mellat ATM in downtown Tehran. Iran's Bank Mellat unveiled plans last month to sell an 80% stake to private investors despite being under U.S. sanctions. Mellat Chairman Ali Divandari told reporters that talks were underway with a number of European and Persian Gulf banks. Credit: Behrouz Mehri / AFP / Getty Images

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