March 2, 2010, - 12:27 pm

Caterpillar Does the Right Thing on Iran (Finally); When Will Shell?

By Debbie Schlussel

As I’ve noted over the years, U.S. companies get around our embargoes and boycotts of nations like Iran (and, previously, Iraq and Libya) by trading through foreign subsidiaries.  Prior to becoming Vice President, when Dick Cheney was Chairman of Halliburton, the company got around our embargo on Libya, using a foreign subsidiary.  Using its subsidiary, KBR (then known as “Brown and Root”), Halliburton built underground steel tunnels, which allowed Libya to move vehicles and weaponry underground, impervious to our satellite views.


And, since then,  many U.S. companies like General Electric and Caterpillar, have been doing business with Iran through their foreign arms.  As I’ve noted, even Coke and Pepsi sell to Iran through their Irish subsidiaries. It emasculates our sanctions and severely hampers our efforts at foreign policy sticks with regard to Iran and other such human rights violators and Islamic nuclear proliferaters.

But now, at least, Caterpillar–under pressure from a lobbying group, United Against Nuclear Iran–is doing the right thing, and has announced it will no longer sell its heavy equipment to Iran though its European subsidiary and its Iranian distributor, Arya Machinery.  Caterpillar has also done the right thing by refusing to bow to Palestinian Muslim pressure to stop selling equipment to Israel.  And for doing the right thing in two instances–especially when this tough economy includes shrinking sales for Caterpillar, anyway–the company should be applauded.  GE’s board, too, voted to stop new business in the country in 2005.


Caterpillar Inc. has prohibited its non-U.S. subsidiaries from accepting orders known to be headed to Iran, the heavy-equipment manufacturer said in a letter to a lobbyist group.

Caterpillar, of Peoria, Ill., has acknowledged in the past that its equipment is sold in Iran despite U.S. sanctions that prohibit most American exports to the Islamic Republic. The company has said its foreign subsidiaries have conducted limited sales to independent dealers outside Iran, which resell to customers inside the country. Caterpillar has said those sales have been in full compliance with U.S. export regulations.

As recently as late last year, closely held Arya Machinery, with offices in Tehran, marketed itself on its Web site as Iran’s exclusive dealer of Caterpillar equipment. A senior sales executive at the company told The Wall Street Journal in October that Arya buys equipment from a Caterpillar subsidiary in Europe.

While it may be legal, it has become increasingly difficult for many multinationals to shoulder the public-relations burden that has come with even limited business with Iran. German engineering conglomerate Siemens AG in late January said it would wind down its Iranian business and not accept any more orders from the country. . . .

The lobby group that claimed credit for Caterpillar’s reversal, United Against Nuclear Iran, has turned up the heat recently on U.S. and European companies. The group is led by a number of former Democratic and Republican national-security officials, including R. James Woolsey, former director of the Central Intelligence Agency under President Bill Clinton. UANI President Mark Wallace was a deputy campaign manager for former President George W. Bush in 2004 and then served as an ambassador-level diplomat to the U.N during the Bush administration. . . .

“We applaud Caterpillar’s decision to prohibit its non-U.S. subsidiaries from doing business in Iran,” Mr. Wallace said in a press release over the weekend announcing the decision. “All responsible companies that transact business in Iran through the veil of a foreign subsidiary should take this as a wakeup call.”

In a letter to Mr. Wallace, dated Feb. 25 and released by UANI, Caterpillar Chairman and Chief Executive James Owens defended the company’s past practices. He said Caterpillar’s indirect business with Iranian buyers amounts to less than two-tenths of one percent of 2009 world-wide sales. . . .

In an emailed statement Monday, a Caterpillar spokesman said the company “now has gone a step further by prohibiting its non-U.S. subsidiaries from accepting any orders for Caterpillar machines, engines and new parts where the subsidiary knows that the product would be shipped to Iran.”

UANI also has targeted Royal Dutch Shell PLC. The Anglo-Dutch oil giant has only a small presence in Iran: it operates a lubricants-marketing business and acts as an adviser to China Petroleum & Chemical Corp., or Sinopec, on the big Yadavaran oil project. Also, in 2008 it entered into a service contract to develop the South Pars fields, part of a huge liquefied-natural-gas project called Persian LNG in the northern Gulf. Shell, which says it hasn’t reached a final decision on whether to proceed with the project until all the commercial and engineering work is complete, declined to comment on whether it would follow Caterpillar in divesting from Iran.

Unfortunately, even though Caterpillar and GE aren’t doing business with Iran anymore, far too many U.S. companies are.  And not just through their U.S. subsidiaries.  As I’ve noted in the past, the U.S. allows for “emergency” goods to be sold and shipped to Iran, but in most cases, it’s hardly the stuff of emergencies.  Since Bill Clinton reduced that amount to $8 million in goods, the Bush Administration upped the amount to nearly $150 million in goods, and it continues to grow.  Companies–including Pepsi, Coke (both of which also sell to Iran under this provision and not just via their Irish arms), and even bra manufacturers–continue to, legally, do biz with Iran.  The shipments even include arms and weapons from the U.S. to Iran.  Not kidding.

We wouldn’t want those Iranian women to sag, right?  That’s an “emergency.”  Ditto for having a Coke and an Ahmadinejad Smile.  And why let them fight us, without providing the ammunition . . . just to make it fair.

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13 Responses

I imagine they’ll just begin getting a bunch of new orders for heavy earth moving equipment from Dubai. That will somehow end up in Iran. Of course this will mean Iran will have to spend more money to get the same equipment.

Daniel on March 2, 2010 at 12:56 pm

I’m glad to hear this news,because I love Caterpillar boots and just ordered a new pair this past weekend.

Now I don’t have guilt.

Thanks Debbie!

ebayer on March 2, 2010 at 1:52 pm

I go back and forth on this topic. I agree on weapons of course, but if Iran wants Caterpillar heavy equipment, it will get it through some intermediary or otherwise on the secondary market. Prohibiting sales by foreign subsidiaries will hurt the company and the workers in Peoria who make the equipment. How about a huge tax on sales to Iran from the foreign subsidiary? Make Iran pay a premium to get the equipment or key replacement parts. You could even “earmark” (horrible word..) the money to support groups that foster democracy in Iran.

Kaiser Sozay on March 2, 2010 at 1:59 pm

I suppose I shouldn’t be surprised to see that Jim Woolsey is leading the anti-Iran lobbying group. There are few things he touches that I find myself at odds with.

I never quite understood why anti-Semitic groups pick on Caterpillar. Perhaps the enmity shown toward Caterpillar by anti-Semites underscores how irrational anti-Semitism is.

KBR stands for “Kellogg, Brown & Root”. I have some industry buddies who just shoved off for 6-month hitches with KBR in Afghanistan in hopes of finding a better economy here in Michigan when they get back.

TINSC: At the time, it was just Brown & Root. DS

There is NO Santa Claus on March 2, 2010 at 4:11 pm

Are you certain GE stopped selling to Iran? I only occasionally watch his show now, but a couple of times last year Bill O’Reilly claimed GE was still selling to Iran. I did not see this, but I hear last year he pulled a stunt by having his producer show up at a GE shareholder meeting and ask why they were still selling to Iran.

At any rate unless we are wiling to go to war against China and Russia by militarily enforcing a complete blockade against Iran these moves mean nothing. The Russians and Chinese will make sure Iran gets whatever it wants.

I_AM_ME on March 2, 2010 at 4:19 pm

    You are right. Japan has Hitachi, Komatsu and other heavy eqip manufacturers. The boycott of Iran will have to be on a scale of the boycott of South Africa. Then again, Israel did a good bit of business with So. Africa as well as sold missle tech to China. Seems everyone acts in their own, short term, self interest.

    We may need a military blockade for Iran or to lend the Israelis our mothballed F117 steath fighters to hit their nuke facilities. The mentality of a suicide bomber +nukes would be a disaster, however on a bright note, the nuclear response to any attack would eliminate the problem.

    Samoyed on March 3, 2010 at 11:22 pm

I hope this is more than symbolic, but without enforcement mechanisms, it might just be PR; I’m still happy to see the announcement, but I’m cynical. I hope United Against Nuclear Iran has some means of evaluating the degree of compliiance Caterpillar maintains & how well it carries through on this announcement.

Maybe I’m too pessimistic; after all the sales to Israel are out in the open and Caterpillar apparently is not backing off here.

But there’s only one way to prevent a Nuclear Iran, and it is not sanctions; buy the time they took effect, if ever, even with cooperation across our economy Iran will be nuclear. The emphasis of this group should be on getting the US to support Israel, & giving Israel all the help it needs, before and after to take Iran’s nukes out.

Little Al on March 2, 2010 at 7:10 pm

Perhaps Cat could create jobs by negotiating a contract to build jet fighters capable of delivering nuclear winter to Teheran.

Nothin’ says lovin’ like somethin’ from the oven…..

efffrem on March 3, 2010 at 7:00 am

Cat boots and apparel are just licensed crap made-in-China products. Caterpillar Equipment Inc. has nothing to do with making shoes.

DS_ROCKS! on March 3, 2010 at 9:28 am

If Russia and China are giving aid to Iran, they’re slitting their own throats. Muslims have repeatedly attacked Russia and China in the past, and will continue to. Fools.

Truth on March 3, 2010 at 10:21 am

I’m disappointed at most of the commentators siding with Caterpillar, and GE’s actions. First of all, they’re supporting a foreign policy that is flawed because we don’t have a legitimate reason to be at odds with Tehran. They’re not building nukes. Get over that!

Secondly, these companies are going to slit their own throats by closing off these streams of business. Caterpillar which in past years have never had a layoff, have experienced their first ones not too long ago.

By the way, Iran can not only obtain construction, and farming equipment from China, but they are now starting to build their own. Not too long ago, Iran opened such a factory in Venezuela.

The US leadership’s quest to isolate Tehran, is only going to backfire on us. In the end, it’s America who’ll be isolated, and the sad part is that it’ll be the common working man who’ll suffer the most consequences.

But if that’s the path that our government wants to take us, so be it. Divine justice will sort it all out in the end.:-)

Ed on May 30, 2010 at 11:41 pm

    Ed—mommy have any babies born with an intact brain?

    Occam's Tool on October 6, 2011 at 10:24 pm


Every year at Cat’s annual stockholder meeting, there are Israel-haters pressing for Caterpillar to stop selling construction equipment to Israel. They claim “human rights” reasons; I shall not bore you with the details.

What angers me is that none of these so-called “Human Rights Activists” ever show up at construction equipment manufacturer’s annual stockholder meetings to take issue with the fact that Iran uses construction cranes to hang people in public. This barbaric act of public terrorism uses construction cranes so that the executed can be seen for miles away dangling by the neck from the arm of the construction rig.

The pictures are easily seen on the internet using a google search. I shall not elaborate more as these are rather disturbing pictures.

What bothers me is the gross hypocrisy of these so-called human rights activists. It seems to me that the only time they complain about “human rights” is if there are Jews to blame. That’s not human rights activism. That’s anti-Semitism.


There is NO Santa Claus (aka TINSC)

There is NO Santa Claus on August 28, 2012 at 10:22 pm

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