Moves to cool Iran row

Amid indications from Washington yesterday that the Clinton Administration would hold off on its threat to impose sanctions on the French oil giant Total for defying a US ban on new investment in Iran, European Union foreign ministers meeting in Luxembourg signalled two gestures which were interpreted as conciliatory.

The first is that EU ambassadors, recalled from Iran in April after a separate dispute with the Iranians, will not return to Tehran yet. The French President Jacques Chirac had fuelled US anger over Total by saying last week that he hoped EU envoys could return soon, but received little backing.

EU ministers also signalled they would draw back from a threat to reopen legal proceedings against the US Iran-Libya Sanctions Act in the World Trade Organisation on 15 October. This was the deadline given by Brussels in April when the two sides called a six-month truce in the related dispute over American attempts to impose sanctions on European companies doing business with Cuba.

That period is about to expire and with little sign of progress in negotiations, the EU should in theory reopen its WTO action next week. But ministers have accepted that talks could continue at least until December and possibly up to next April.

Extending the talks deadline takes the heat out of the immediate row and gives extra time to hammer out the terms of a code which, in effect, would waive American sanctions on future European investments in countries targeted by US "trading with the enemy" legislation. The Clinton Administration hopes it can in exchange force the EU into tougher measures to combat Iran-sponsored terrorism.