The Atlantic Council’s Sanctions-Busting Backers

Corporations that have evaded Iran sanctions financially support Hagel-chaired think tank

February 12, 2013

Multiple foreign corporations that have bypassed or attempted to bypass United States and European Union sanctions against Iran are funding the Atlantic Council, a Washington-based think tank chaired by defense secretary nominee Chuck Hagel.

One council sponsor, Italian oil company Eni, has vehemently defended its trade with Iran, saying it was "proud" of its cooperation with the regime.

"Given the existence of foreign pressures, implementation of most projects in Iran is challenging and complicated," Eni’s Executive Vice President Guido Michelotti told reporters during a 2011 visit to Iran. "Yet, we have always been interested in cooperation with the Iranian side since we feel proud of cooperation with Iran."

Eni recently obtained a limited sanctions exemption to recover compensation from Iran for prior work.

Another Atlantic Council sponsor, Deutsche Bank, is currently under U.S. investigation for sanctions violations. Hagel sits on Deutsche Bank’s board.

Over 10 percent of the Atlantic Council’s corporate sponsors are either Turkish energy companies or companies with a large stake in Turkey’s energy sector, which is closely linked with Iran.

Turkey’s energy industry has played a critical role in propping up Iran’s energy sector, with 90 percent of Iran’s natural gas exports going to Turkey. Iran has recently evaded international sanctions by exchanging its Turkish oil revenues for gold, which can be transferred back to Iran. International restrictions prevent Iran from transporting Turkish lira outside of the country.

"Turkey is allowing Iran to access means to use the revenues from oil for whatever purposes Iran seeks," said Emanuele Ottolenghi, a senior fellow at the Foundation for Defense of Democracies. "The Turks so far have not been willing to do the things you’d expect them to do to squeeze Iran."

Turkish energy companies that fund the Atlantic Council include Calik Enerji, which is owned by Turkish Prime Minister Recep Erdogan’s son-in-law. Azerbaijan’s state-owned oil company SOCAR has also partnered with the Atlantic Council, and has representative offices in both Turkey and Iran.

Both Hagel and the Atlantic Council have been critical of Iran sanctions in the past. The defense secretary nominee repeatedly voted against sanctions legislation while in the Senate, and the Atlantic Council has published reports questioning the effectiveness of sanctions.

Hagel said he does support sanctions, as long as they are multilateral at his recent Senate hearing.

A congressional aide who has worked on Iran sanctions issues said the corporate links raise questions about whether Hagel was aware these companies were attempting to bypass sanctions.

"We really need more information, more disclosure, before we can know if Sen. Hagel did something wrong here," said the congressional aide. "The obvious question for Sen. Hagel would be what did you know, when did you know it, and what did you do about it after you found out."

A spokesperson for Hagel did not comment on whether he was aware of the efforts of some of these corporate sponsors to avoid Iran sanctions.

But an official working on the Hagel nomination defended his chairmanship of the Atlantic Council, noting that Condoleezza Rice, Madeleine Albright and James A. Baker have served as "honorary directors" of the think tank.

"Sen. Hagel serves the Atlantic Council without compensation, so he has not been a direct or indirect beneficiary of any contributions to the Council," said the official. "This is a distinguished organization committed to promoting transatlantic cooperation."