Report: Pentagon Sought Iran's Help to Boost Afghan Economy

Even though sanctions forbid U.S. companies from working with Iran, a special Pentagon task force sought permission to engage with that country to help boost Afghanistan's struggling economy, in a plan that could hinder ongoing nuclear talks with the Iranians, Sen. Mark Kirk says.

According to government documents reviewed by The Wall Street Journal, along with interviews with people involved in the outreach effort, the task force sought assistance to establish Afghanistan's first pharmaceutical company and to develop four mines.

"It's why they see us as a paper tiger," said Kirk, an Illinois Republican. "It is impossible to convey to the Iranians that you are getting tougher on them if DoD personnel are involved in granting Iranians special favors. It represents a total incoherence in the Obama administration."

Further, he said, it could be expected that Afghans would reach across the border to their neighbors, but for the United States to do the same thing "defeats the purpose of nuclear negotiations."

Ignoring Iran is impossible for Afghanistan, Joseph Catalino, head of the Pentagon's Task Force for Business and Stability Operations, which is seeking to help build the Afghan economy through investments and business ventures, told the Journal. "They're a major partner to them in many ways."

The cooperation is just one way the Obama administration has been trying to break the ice with Iran, including plans to ease sanctions. U.S. allies are concerned about Iran's plans, the Journal reports.

The Pentagon task force started in 2006 and has been courting businesses to invest in Afghanistan. Meanwhile, hundreds of Iranian companies conduct business in the country, and Afghan exports to Iran have grown from $9.2 million in 2009 to $16.8 million in 2013, according to the International Monetary Fund.

However, for U.S. firms to do business with Iran, they need special licenses from the Department of Treasury because of the ongoing sanctions, and the Pentagon says Afghanistan's mineral resources, particularly in copper and gold, could bring economic independence to the poverty-stricken country.

The mining industry has not taken hold, but in 2012 the Pentagon task force learned that an Iranian company was interested in investing in the mines.

The task force could not work with the Iranian company, but still got Treasury's approval to provide officials in Iran with access to data the U.S. Geological Survey had gathered about the sites, and then invited them to tour the mines, said then-task force director James Bullion.

Eventually, when communicating with the Iranian company became difficult, the bids were awarded to one firm from Turkey, one based in Canada and the United Arab Emirates, and two others from Afghanistan.

But Bullion said Iran could not have been excluded when the bids were being sought.
"It wouldn't have made sense," he said. "Iran is a huge [Afghan] trading partner — more probably than any other neighbor."

In the case of the pharmaceutical plant, the company, Afghan Pharma, wanted $10 million in U.S. financing, but planned to ship its products through Iran, which would have violated U.S. sanctions.

The Pentagon tried to persuade the Overseas Private Investment Corporation to provide funding, but OPIC passed on that, saying it was not comfortable in dealing with Iran.

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