For Italy, Iran's nuclear hopes carry high price

By Phil Stewart

ROME (Reuters) - The chief executive of Italy's largest oil and gas company may be feeling U.S. pressure on Iran, but you wouldn't know it from talking to him.

Eni's Paolo Scaroni is one of the Italian businessmen who, far from rethinking operations in Iran, says he is considering further deepening investment there.

This is despite a U.S.-led campaign to use economic sanctions to isolate Iran over its nuclear program, and new legislation before the U.S. Congress meant to encourage "disinvestment" in foreign companies which profit in Iran's energy sector.

"I intend to respect Italian laws, not the American ones," Scaroni told Reuters, when asked if he felt U.S. pressure. He quipped at an earlier press event: "You don't find oil in Switzerland."

Italian Prime Minister Romano Prodi's government has spoken strongly against Iran's nuclear ambitions in public, voting for U.N. sanctions and supporting U.N. deadlines for Iran to stop nuclear enrichment.

But Washington wants Rome to send a stronger message to its corporations and banks about the risks of doing business in Iran, a senior U.S. official told Reuters. President George W. Bush, who visits Italy this week, is calling for the international community to "speak with one voice" on Iran.

"It is one of the most critical issues in terms of our economic engagement with the Italians," the U.S. official, speaking in Rome, told Reuters.

EXPORT CREDITS

Italy is one of Iran's largest trading partners thanks to companies like Eni, which this year celebrates its 50th anniversary in Iran. Bilateral commerce grew nearly 10 percent last year to 5.7 billion euros ($7.66 billion).

While the U.S.-led campaign is expected to discourage new entrants, established European firms have a lot to lose.

Even the Italian state's export credit agency, known as SACE, has 4.1 billion euros at risk in Iran.

That's about 15 percent of all its exposure worldwide, and SACE's highest concentration of risk anywhere, according to data it provided to Reuters.

SACE, citing official data, said there has also been an increase in requests by Italians looking to invest in Iran.

"The Italians are so very exposed," the U.S. official said. Beyond a public posture against investing in Iran, he said Rome needed "more diligence in credit policy".

But things are changing, SACE responded. It also provided Reuters with data showing it had slashed its Iran portfolio by more than 1 billion euros ($1.35 billion) since 2004.