Escape Hatch

Beating the pipeline sanctions

It seemed like just the sort of sales coup that a fast-tracking high-tech firm would want to talk up. Thus when Andrew Corp. of Orland Park, Ill., which makes sophisticated telecommunications gear, managed to land a $3.5 million contract to supply microwave antennas to a French firm, company officials preened publicly at their achievement. The customer, Thomson-CSF, would be using the equipment to help establish a complex communications network that would serve much of the Yamal region of Soviet Siberia, where the U.S.S.R.'s vast 3,700-mile natural gas pipeline to Western Europe would originate. Then came the Reagan Administration's abrupt ban on U.S. export deals related to the pipeline, and by last summer Andrew's French connection looked broken. But the company, which first sold stock to the public in 1980 and has seen its value more than triple since then, did not give up.

Now, after months of high-pressure lobbying of the White House by both the company and Illinois Senator Charles Percy, chairman of the Senate Foreign Relations Committee, the fast-growing telecommunications firm (1981 sales: $140 million) has received an official go-ahead to honor its contractual commitments in spite of pipeline sanctions. Andrew's friends and lawyers had succeeded in convincing the U.S. Department of Commerce that the company's microwave antennas were not really intended to be used directly on the pipeline project, but were simply for independent use that might indirectly be of some benefit to the Soviet builders of the pipeline. The argument highlights one of the unresolved problems with the sanctions: distinguishing between what is and is not directly related to the huge $10 billion construction effort. Though the Administration's sanctions specifically apply only to oil-and gas-related technologies, the project could not go forward if the Soviet Union were not able to import everything from earth-moving equipment to spare parts for cars and trucks.

Andrew Corp.'s dilemma was doubly vexing because its United Kingdom subsidiary, Andrew Antennas Ltd., had actually signed the delivery contract with Thomson. As a result, even as the parent company was being ordered by the U.S. to stop participating, the subsidiary was being compelled to move ahead by the British government.

The Commerce Department's ruling could encourage other companies to plead their cases in Washington. By one estimate, some 225 U.S. firms have already raised pipeline-related questions with the department. With the Andrew Corp. case as a precedent, enforcing the sanctions could prove more and more difficult.

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