Stuart E. Eizenstat, Under Secretary of State for Economic, Business and Agricultural Affairs, Testimony Before the Lott Bipartisan Senate Task Force on Sanctions, Washington, DC, September 8, 1998


Economic Sanctions

Mr. Chairman, I welcome this opportunity to share with
you the Administration's views on the use of economic
sanctions as a foreign policy tool.  This bipartisan
Task Force is a welcome initiative and can make a
lasting contribution in developing a consensus in this
important area of policy where both the Executive
Branch and the Congress have clear responsibilities.
As a representative of the Executive Branch, which is
charged with the conduct of our foreign policy, I want
to extend my appreciation to Majority Leader Lott and
to Minority Leader Daschle for convening this panel,
and to Senator McConnell for chairing the Task Force,
and for the leadership of the ranking Member of the
Task Force, Senator Biden.  The Administration stands
ready to work with you in the days and weeks ahead to
develop an improved dialogue between the Congress and
the Executive Branch on sanctions, forge an agreement
and enhance our effectiveness in advancing American
national interests.

We believe that properly designed and implemented as
part of a coherent strategy, sanctions, including
economic sanctions, are a valuable tool for advancing
American interests and defending U.S. values.  Used in
an appropriate way and under appropriate
circumstances, sanctions can further important U.S.
policy goals.


Mr. Chairman, as examples, without economic sanctions
Serbia would not have come to the negotiating table to
end the war in Bosnia; Iraq would not be limited in
its ability to sell oil and acquire weapons of mass
destruction; Libya would not stand isolated for its
failure to hand over the Lockerbie suspects; and South
Africa might not have ended Apartheid.  These
sanctions achieved some measure of success because
they are or were part of an integrated multilateral
sanctions regime.


There is also an important but more limited role for
unilateral sanctions.  Our unilateral sanctions
against Cuba, Iran, Sudan, Nigeria and Burma serve
vital U.S. interests.  However, in recent years, there
has been an explosion in the frequency with which we
turn to unilateral economic sanctions.  According to
one count by the National Association of
Manufacturers, the United States has imposed
unilateral economic sanctions 92 times since the end
of WWII; 62 -- well more than half -- have been
imposed since 1993.  The President s Export Council
notes that more than 75 countries are now subject to
some form of economic sanctions.  Surely this must
give us pause to question whether we are on the right
track.  Most of the sanctions imposed since 1993 have
been non-discretionary measures required by Congress
in law.  In contrast, only three of the 62 unilateral
economic sanctions regimes imposed since 1993 have
been imposed by the Executive Branch as a
discretionary matter using the President s authority
under the International Emergency Economic Powers Act
(IEEPA)--the tightening of the U.S. embargo on Iran
in 1995 and the imposition of a comprehensive embargo
on the Sudan in November 1997.  In addition, after
the President determined that certain factual
predicates had been met concerning Burma, he used his
authority, again under IEEPA, to impose a new
investment ban on Burma in May 1997, as required by
law.

Mr. Chairman, I would like to begin today by focusing
on two specific cases in which flexible sanctions have
been effective because of the waiver authority
Congress gave the President -- The Libertad Act
(Helms-Burton) and The Iran and Libya Sanctions Act
(ILSA). Each of these cases illustrates how we were
able to use Presidential flexibility, such as the
prospect of a waiver, to advance effectively the
objectives of the statute. I will then outline the
overarching principles that, in the view of the
Administration, should govern U.S. sanctions policy.
Finally, I will make some specific comments on pending
legislation and present an outline of the
Administration s ideas about what sort of legislation
would best embody the Administration s principles on
sanctions policy.

Helms-Burton and ILSA each engendered sharp opposition
from our allies. In each case however, we found a way
to reduce tensions and further the purposes of the
Acts.

Let me begin with the Helms-Burton Amendment.

As you know, I have been a strong defender around the
world of the Libertad Act. The exercise of Title III
waiver authority helped lead the EU to adopt its
Common Position in December of 1996 tying any
improvement of its economic and political relations
with Cuba to concrete changes in Cuba's human rights
record. It further agreed to speak more forcefully in
support of democracy.  I am also pleased that we were
able to use that Act and the possibility of a waiver
of Title IV to bring other nations more fully in
support of the objectives of the Act. The prospect of
an amendment to Title IV to obtain a waiver led the EU
on May 18 of this year to agree to new disciplines on
limiting investment in illegally expropriated
properties worldwide, including in Cuba.

The Understanding we reached with the EU on May 18 for
the first time establishes multilateral disciplines
among major capital exporting countries to inhibit and
deter investment in properties which have been
expropriated in violation of international law.  These
restrictions will discourage illegal expropriations,
warning investors to keep "hands off."  The
Understanding will also send a clear and unequivocal
message to any country which engages in repeated
illegal expropriations -- like Cuba -- that it will no
longer enjoy normal economic relationship with other
states.

That message has certainly landed hard in Havana.
Castro understands the significance of our
accomplishment and the serious threat it represents to
his regime.  He has condemned the Understanding "as an
internationalization of the principles of the vile
Helms-Burton Law."  He decries it as "a pact . . .
between the United States and the European Union with
the purpose of strengthening the blockade of Cuba."
This demonstrates the measure of what we accomplished
by joining together with Europe against Castro.
Castro understands only too well that this
Understanding is an effective multilateral endorsement
of some of the core principles underlying Helms-Burton
which will have a profound effect on investment in
Cuba.

But beyond their effect on Cuba, the tough measures
will apply to all countries which, like Cuba, have an
established record of repeated expropriations in
contravention of international law.  All requests for
government diplomatic support or commercial advocacy,
or for commercial assistance, such as risk insurance,
loans or subsidies, will be reviewed to ensure that
the transaction does not involve illegally
expropriated property.  If expropriated property is
found to be involved, the support or assistance will
be denied, and these properties will be added to a
public list of properties with respect to which
investment will be actively discouraged. No support or
assistance should be provided unless and until this
evaluation has been performed.

I would also like to emphasize that with specific
respect to Cuba the European Union has now for the
first time acknowledged in writing that one of the
primary tools the Castro regime used in its mass
expropriation of property from U.S. citizens "appears
to be contrary to international law."  This
acknowledgment is an extraordinary achievement which
represents the first collective acknowledgment by
Europeans since the Cuban revolution that Cuba has
engaged in illegal expropriations of U.S. property.

Mr. Chairman, this result would have been impossible
had we not been able to hold out the possibility of a
waiver from Title IV.  We believe that our success in
achieving this progress with the Europeans on property
disciplines merits serious consideration, on the part
of Congress, to grant targeted waiver authority for
Title IV.  Castro, of course, would be delighted if
this Understanding never took effect.  We must work
together to ensure that this does not happen.  Unless
Title IV is amended to provide this targeted waiver
authority, these important new restrictions on
investment in Cuba will never go into effect.

In developing ILSA, Congress expressed its deep
concern about Iran s programs to develop Weapons of
Mass Destruction (WMD) and their means of delivery as
well as Iran s sponsorship of terrorist activities.
Congress asked the Administration to develop a
multilateral consensus to address these problems.
Congress had the foresight to include provisions in
ILSA both for imposing and for waiving sanctions.
Those provisions were aimed at increasing multilateral
cooperation and the flexibility inherent in ILSA
enabled us to achieve that cooperation.

Since ILSA became law and in the negotiations which
culminated at the recent U.S.-EU Summit, we used these
tools to great advantage and success.  We have
achieved significant, enhanced cooperation on our
Iran-related concerns with the European Union, with
which cooperation was already at a high level.  The EU
has tightened its dual use control system with respect
to Iran, and Russia has put into place for the first
time the legal framework and detailed regulations for
a "catch-all" export control system.  Implementation
has begun but we recognize that sustained and rigorous
implementation will be crucial with the Russians.  We
will continue to closely monitor the implementation
process.

Our concerns with Iran have not changed.  Iran
continues to develop WMD and their delivery systems,
as evidenced by Iran's recent missile tests.  Iran
also continues to support terrorist groups.  We will
not support investments by Europeans or other foreign
firms in Iran while Iran continues these activities.
We will continue to bar our companies from such
investments.

Until such time as Iran changes its own behavior, it
is particularly crucial to work at the "supply end" of
a problem such as Iranian WMD development --that is,
to deny Iran's access to sensitive materials and
technology by working closely with the countries which
are potential sources for these items.  ILSA
recognizes this through its emphasis on building
multilateral cooperation.  We have done just what ILSA
urged with the EU, with Russia, and with Malaysia,
whose companies were involved in the South Pars
investment in Iran.

The Secretary's recent decision in the South Pars case
reflects an assessment that the national interest
waiver which Congress wrote into Section 9(c) of the
Act was by far the most effective way to serve overall
U.S. interests, and to advance the fundamental
objectives of ILSA --constraining Iran's ability to
acquire WMD and delivery systems, and its ability to
support terrorism.

The Administration at the highest levels tried
unsuccessfully to persuade France, Russia and Malaysia
to stop their companies from investing in the South
Pars oil field.  We also carefully examined ILSA's six
sanctions and concluded that sanctions would not be
effective in stopping the South Pars deal.

The Secretary's exercise of the waiver authority that
the Congress so wisely provided has helped consolidate
the gains that we have made with the EU and Russia on
strengthening international cooperation to oppose
Iran's dangerous and objectionable behavior and laid
the foundation for further progress in this vital
area. It has helped us avoid a major dispute with
allies and friends which could have led to trade
retaliation and reduced cooperation on WMD and other
efforts.  The waiver has enhanced our ability to work
with the Europeans, the Russians, and the Malaysians
on a host of bilateral and multilateral concerns.  For
example:

Russian cooperation on nonproliferation, progress
on internal economic reform, and ratification of
START II.

Resolution of differences over Helms-Burton,
including new disciplines to deter investment in
illegally expropriated property worldwide to which
I referred earlier.

Multilateral cooperation on Iraq to maintain
isolation of Saddam Hussein and to bring about
compliance with UNSCR obligations.

Progress on Kosovo and Bosnia, where cooperation
of our NATO allies is essential, as well as on
other European security issues.

In stark contrast, a decision to sanction would have
undermined our efforts at multilateral and bilateral
cooperation on limiting Iran's ability to acquire
weapons of mass destruction and would not have stopped
the South Pars deal.

I want to emphasize, Mr. Chairman, that we already
have a very high level of cooperation with our
European allies on nonproliferation issues.  As
reflected in the joint US-EU statement on
nonproliferation announced at the Summit, the EU is
taking additional steps, separately and in cooperation
with us, to strengthen further their policies in this
area.  This includes an EU commitment to give high
priority to proliferation concerns (including missile
delivery systems) specifically regarding Iran, and a
commitment to stepped-up efforts to prevent dual-use
technology transfers where there is a risk of
diversion to weapons of mass destruction programs.

As you know, we have begun in earnest a
process of re-engagement with both India and Pakistan
in an effort to secure genuine progress on our non-
proliferation concerns.

Deputy Secretary of State Strobe Talbott, who has the
lead in our contacts with the Indian and Pakistani
governments, has had several productive sessions with
the designated representatives of both governments.
As a result of these diplomatic efforts, it appears we
are making progress in defining the principles that
will underpin U.S. relations with India and Pakistan
in the post-test environment, in laying out our non-
proliferation and other objectives, and in discussing
the steps and activities that will be necessary to get
us there.

We are also implementing the Glenn Amendment sanctions
firmly and correctly.  Although it is too early to
quantify the effect that these sanctions will have on
economic growth or business activity in either
country, it is clear that they will result in
significant economic and political costs for both
countries.

That said, the lack of flexible waiver authority under
the Glenn Amendment has limited our ability to be
creative in encouraging India and Pakistan to
cooperate in avoiding an arms race on the sub
continent.  Our purpose is not to punish for
punishment's sake, but to influence the behavior of
both governments.  But our ability to influence
requires greater flexibility.  We do not wish for
unnecessary harm to fall upon the civilian populations
of either country--particularly the poor and less
fortunate-- r on U.S. businesses.  For this reason,
we are pleased that the Senate acted in July to
correct an obvious unintended consequence of the
sanctions law -- preventing the provision of credits
for agricultural commodities.

As recent debates on the Senate floor demonstrate, the
Administration and the Congress share a desire to
inject a greater degree of consistency, flexibility
and effectiveness into the sanctions regimes against
India and Pakistan.  It is absolutely vital that we
build upon this very strong foundation to effect the
requisite changes in our policy and in our laws.

For this reason we strongly supported the Senate s
passage of the Brownback-Robb amendment to give the
President greater flexibility on the India and
Pakistan sanctions.  Ideally, we would want to go even
further and would prefer waiver authority for all of
the sanctions currently in place.  Of course, we will
not use any waiver authority until such time as
substantial progress has been made toward achieving
our non-proliferation objectives, or in the event that
there were a serious negative and unintended
consequence to a specific sanction such as impending
financial collapse leading to economic chaos and
political instability.  We also would like additional
flexibility to guard against an overwhelmingly
disproportionate effect of the sanctions on one
country versus another; ideally, the sanctions should
have roughly the same effect on India as they do on
Pakistan, the latter being in more fragile economic
condition and more dependent on IFI funding, which the
Glenn Amendment requires us to oppose.

That said, we do not believe it would be advisable,
nor could we support efforts, to codify or legislate
the steps that India and Pakistan would need to take
in order to gain relief from sanctions, or to match
specific actions by India or Pakistan to the lifting
of particular sanctions.  Although there is
substantial agreement between the Administration and
Congress on our nonproliferation objectives, it would
greatly complicate our efforts to bring about change
were a series of benchmarks established by law.  Nor
would India or Pakistan respond well to such an
approach.  Writing such steps into law would create
the impression that India and Pakistan would be acting
under pressure, to ensure the lifting of U.S.
sanctions.  This would greatly constrain our chances
of achieving the outcomes we seek.

The history of our use of unilateral sanctions very
clearly shows that in the majority of cases they fail
to change the conduct of the targeted country or, at
best, are a contributory but probably not a decisive
factor in securing the changes of behavior or policy
that we seek.  Sanctions take time to work.  They may
exact significant costs on other U.S. interests.  So
sanctions are not a panacea, they are not a "quick
fix," and they are not cost-free.

Sanctions Must be Effective

Indeed, the first and primary principle which must
guide our sanctions policy is whether sanctions will
be effective in achieving their desired result of
changing the targeted conduct.  Used at the wrong time
and in the wrong ways, sanctions can actually impede
the attainment of our objectives and undermine U.S.
policy objectives.  My first direct contact with
economic sanctions occurred when I served in the
Carter White House with the ill-fated grain embargo
against the Soviet Union following its brutal invasion
of Afghanistan.  The intent was laudable but because
we did not have a monopoly on grain and failed to
secure international agreement, the embargo did not
achieve its goals and had significant costs to U.S.
farmers and other American interests. That is too
often the case.  Unilateral sanctions impose
significant costs and hardships on our farmers and
businesses, frequently without commensurate effect on
achieving our foreign policy goals.  More than that,
sanctions that are ineffective, that impose
substantially more costs on U.S. interests than on the
sanctioned country, that are unable to garner broader
support even among our closest allies, do not send a
message of U.S. resolve, or U.S. commitment.  Rather
they send a message of U.S. irrelevance.  Sanctions
that are easy to evade or avoid, that are imposed
merely to "make a statement," may not only be
pointless in achieving our objectives, but in the
longer run debase and undermine the overall value of
sanctions as a foreign policy tool.

Importance of Comity to Effectiveness

Most importantly, Mr. Chairman, our foreign policy is
most effective when it reflects cooperation and
consultation between the Administration and the
Congress.  The decision to apply economic sanctions --
or to lift or waive potential measures or those
already in place -- should reflect a relationship of
comity between the Executive and Legislative branches.
We must respect the particular role that each branch
plays in making foreign policy.

The Congress shares with the Executive Branch the
responsibility for helping shape our foreign policy.
In the realm of economic measures, Congress has a
clear role which we respect.  At the same time, the
President is responsible for conducting the nation's
foreign policy and for dealing with foreign
governments.  Thus, sanctions legislation needs to
take into account these respective responsibilities.
Sanctions legislation should set forth broad
objectives but should allow the flexibility to respond
to a constantly changing and evolving situation and
give the President the necessary authority to tailor
specific U.S. actions to meet our foreign policy
objectives.  As Secretary Albright has said, there can
be no "cookie-cutter," no "one size fits all" approach
to sanctions policy.

Comity between branches of government is expressed in
sanctions legislation through the inclusion of
appropriate Presidential flexibility, including broad
waiver authority.  Congress speaks, but ultimately
only the President can weigh all the foreign policy
issues at stake at any given moment and tailor our
response to a specific situation.  Congress's power of
the purse and of oversight are more-than-adequate
tools with which to shape our foreign policy; but
those powers should not be used to hobble the
President's authority to act with discretion and
alacrity.  As a matter of general principle,
legislation that empowers the President to impose
economic sanctions should also empower him not to act
and to waive or suspend measures already in place if
it is in the national interest.

If our policies are to be effective, we must work
together to see that our use of sanctions is
appropriate, coherent, and designed to gain
international support.  There must be more structured,
systematic discussions between the Executive Branch
and Congress when sanctions are an option.  The
efforts of this Task Force and this hearing itself
are, Mr. Chairman, a good example of the way our two
branches of government should work together to design
an effective and principled sanctions policy that can
be truly effective in advancing our broad national
interests.

Economic Sanctions not a Tool of First Resort

The second principle that should guide our discussion
is that economic sanctions should not be a first
resort in defending our interests.  Our first line of
action against other countries should be to
aggressively pursue all available diplomatic options.
Thus, engagement is generally the preferred strategy
to influence behavior.   China is a good example.
Tiananmen Square sanctions still exist, reflecting our
concerns over China s human rights record and other
practices but by a more general engagement we have
seen China's conduct in a variety of areas become
closer to accepted international norms.  Available
options can range from the symbolic, like withdrawing
an Ambassador or reducing Embassy staff, to denying
visas to specific figures, to the more formal such as
entering into concerted action with like-minded
countries. Economic sanctions should be resorted to
only after other available options have been
aggressively pursued and have failed or have been
judged inadequate or inappropriate.  We must keep in
mind that the power of positive inducement is often
more productive in achieving our goals.  Actions such
as rewarding desired behavior, providing aid and
assistance, for example, in human rights training, in
establishing modern legal systems, or other measures
designed to help countries in transition to democracy,
can be effective instruments in achieving our
objectives.

Multilateral Sanctions Are More Effective

Third, if diplomatic initiatives and positive
inducements have failed to change the conduct of a
foreign country which we believe is contrary to U.S.
interests, sanctions become an option.  Sanctions with
broad multilateral support will be most effective.
Multilateral sanctions maximize international pressure
on the offending state.  They show unity of
international purpose.  Because they are multilateral,
these sanctions regimes are more difficult to evade or
undermine.  They minimize the damage to U.S.
competitiveness and distribute more equitably the cost
of sanctions across countries.  We should make a
maximum effort to develop a multilateral sanctions
regime whenever such measures are considered, and
should allow a reasonable period of time to develop an
international consensus for such sanctions.

In today's interdependent, global economy, the ability
of the United States to unilaterally deny key economic
benefits to a target country is sharply limited.
There are few products or services for which the
United States is the sole supplier.  Perhaps equally
important, the world is increasingly multipolar with
respect to political and security concerns as well,
ultimately decreasing U.S. leverage on individual
states.  We can do a lot alone, and there will be
times when we must act alone, but we can do a lot more
with support from others.

We also need to recognize that unilateral measures,
especially those that others charge are
"extraterritorial," complicate our efforts to build
multilateral support.  These target not only the
country whose conduct we wish to change but other
countries, including our allies, which do business
with the target country.  The U.S. has traditionally
opposed such sanctions when others have imposed them -
- for example, legislation in 1977 punishing U.S.
companies who abided by the Arab Boycott of Israel.

Multilateral support is important if economic and
trade sanctions are to be a truly effective means for
influencing the policies and behavior of other
countries.  Bosnia, Kosovo, Cyprus, Ireland, and the
Middle East have clearly demonstrated that U.S.
leadership on conflict resolution is essential.  We
have the responsibility to lead and we will do so with
all the tools at our disposal.  But in the post Cold
War world, we must also recognize that, although we
are an essential and indispensable force for peace and
stability, we alone are not sufficient to resolve the
world's pressing problems.

Consultative mechanisms with countries that share our
goals can be helpful on issues of critical concern.
While such mechanisms do not guarantee results, the
absence of such mechanisms can almost certainly
guarantee that we will fail to garner multilateral
support.

We Must be Prepared to Act Unilaterally
Fourth, if we are unsuccessful in building a
multilateral regime, and important national interests
or core values are at issue, we must be prepared to
act unilaterally.  We cannot permit other countries to
veto our use of sanctions by their failure to act.

That said, our primary considerations in any
application of unilateral sanctions must be whether
they are effective; part of a coherent strategy to
change behavior; contribute to rather than detract
from our efforts to gain multilateral support for our
policy objectives; and are consistent with our
international obligations and humanitarian principles.
We must balance gains against costs of imposing
particular sanctions.  Analysis must, of course, not
be limited to economic interests, but take into
account the full range of political and security
interests, which may not be immediately apparent or
which cannot be quantified, like the advancement of
human rights.  At the same time, we also need to
remember that trade-related measures are not the only
form of sanctions.  We have a broad variety of other,
sometimes even more effective measures available.
These may include things such as denial of visas,
opposition to participation in international sporting
events, and visits of CODELs to focus attention on the
problem.

A key measure of sanctions' effectiveness is their
impact on the target.  We must have some expectation
they can be effectively implemented and enforced, that
they will not cause more collateral damage than the
wrong they are trying to remedy.  Due consideration
must be given to the potential adverse impact on
vulnerable foreign populations.  We must try, whenever
possible, in any sanctions regime to target the
sanctions directly on the offending country itself, or
even better on the offending entities or individuals
in that country, rather than on businesses in third
countries.

I would now like to touch on the issue of state and
local sanctions.  We understand the concerns and
frustrations that give rise to local sanctions
measures.  A number of governments around the world
engage in conduct - such as the abuse of human rights
in Burma - that rightfully stirs public indignation.
But when our country does address this type of
conduct, it is important that our country speak with
one voice.  Scattered or inconsistent actions can
leave the impression of a United States divided and,
more importantly, can interfere with the pursuit of
our overall foreign policy objectives.  That is why we
think it important that the federal and state
governments coordinate closely on these types of
issues.  We want to develop a partnership with the
states to work cooperatively on these issues.  We have
been making efforts recently to create just such a
productive and cooperative relationship.

Measures by state and local governments or by the
federal government must be consistent with our
international obligations.  Sanctions that our trading
partners criticize as inconsistent with our legal
obligations -- whether in the World Trade Organization
or in bilateral treaties -- or as  extraterritorial
too often undermine our efforts to secure multilateral
support, impact adversely on other multilateral goals,
and provide grounds for others to question the good
faith of the U.S. in undertaking international
commitments.  Rather than working together with our
friends and allies to exert pressure on offending
states to change their behavior, we end up spending
time and energy resolving these disputes.

In sum, Mr. Chairman, if our policies are to be
effective, we must work together--Administration,
Congress, at the state and local level, as well as the
business community, including NGOs--to see that our
use of sanctions is appropriate, coherent, and
designed to attract international support.

Recent Legislative Initiatives

In the last few months, the Congress has debated
several bills dealing with sanctions issues.  These
range from dealing with broad sanctions reform, such
as the Lugar/Hamilton/Crane Sanctions Reform Act and
the Dodd Sanctions Rationalization Act of 1998, as
well as Senator Glenn s proposal, to those seeking to
utilize sanctions as a tool for securing some specific
policy objective, such as the Wolf-Specter or the
Nickles bills dealing with the important issue of
religious freedom, the Iran Missile Proliferation
Sanctions Act, and various pieces of legislation
dealing with the situation in India and Pakistan.

We have sought to build on the many concepts in the
legislation advanced by Senator Lugar and Congressmen
Hamilton and Crane, as well as Senators Glenn, Dodd,
Robb, Brownback, and others to craft a proposal which
we believe, if adopted, could make a real
contribution.  We are convinced that, working
together, we can make a real contribution to improving
the way we use sanctions to pursue our foreign policy
objectives.

Many of the ideas contained in the proposals they have
advanced provide good examples of the kinds of effort
we need to make to improve the dialogue between the
Congress and the Administration on sanctions issues.
Sanctions policy-making should be conducted in a
deliberate and thoughtful manner, taking into
consideration all factors relevant to the sanctions
decision.  We applaud the leadership these Senators
and Congressmen have demonstrated.

While our views, in some respects, are close to those
in the Lugar/Crane/Hamilton(LCH) bill, we do have
important differences with specific provisions of that
bill, which have prevented the Administration from
endorsing it.  We believe that a sanctions reform
proposal should reflect a common Administration and
Congressional vision on sanctions policy, embodied in
clear procedural and substantive guidelines for both
branches of government.  As currently drafted, the LCH
bill would impose many binding and onerous constraints
on Executive Branch discretion to conduct foreign
policy and provide only limited flexibility.
Although, at first glance, the bill appears to impose
comparable constraints on congressional consideration
of sanctions legislation, Congress's ability to amend
the legislation, change its rules, or to pass future
legislation that takes precedence over it, e.g.
through  notwithstanding any other law  language,
makes it less likely the bill would serve as a
practical constraint on Congress.  In short, the bill
would impose more inflexible restrictions on the
Executive Branch than on the Legislative Branch --
even though the sanctions explosion of the last
several years has come largely from the Congress, not
the President.  As I alluded to earlier, according to
one source, 59 of the 62 sanctions in the last five
years came from Congress.

We would welcome an opportunity to continue to work
closely with the Congress to craft a sanctions reform
proposal that would establish meaningful guidelines
for both the Administration and the Congress, as well
as provide the President with the flexibility
necessary to make any sanctions legislation effective,
including discretion not to impose sanctions.  As
Senator Lugar himself noted in his "Dear Colleague"
letter concerning this legislation, inflexibility
built into an otherwise meritorious effort can
frustrate the very goals the legislation seeks to
achieve.

Because efforts to reform our sanctions policy should
reflect a common Administration and Congressional
vision, embodied in clear procedural and substantive
guidelines for both branches of government, we
particularly welcome this opportunity to share our
ideas on sanctions reform with you.

The fundamental principle underlying our approach is
one of symmetry between the two branches -- Congress,
in short, should be no more prescriptive of the
Executive Branch than it is of itself.

With this basic concept, I would like to share
with you some initial thoughts on how this might be
accomplished.  I want to address five areas: (1)
constraints on Congress; (2) enhanced waiver
authority; (3) constraints on the President; (4)
guidelines for humanitarian assistance and (5) a
statement on multilateral sanctions.

Congressional Constraints

Let me begin with constraints on congressional
consideration of future unilateral economic sanctions
legislation.

The LCH bill constrains congressional consideration of
future sanctions legislation in a number of ways.  It
prescribes certain congressional procedures for
consideration of future sanctions bills.  These
procedures specify that the appropriate congressional
committee must produce a report that includes a
statement whether the bill meets certain content
criteria.  The bill also requires reports by the
President and the Secretary of Agriculture on a
covered bill that is reported by a committee.
Additionally, it provides that a motion to consider a
bill on the floor shall not be in order unless the
Congress has previously received those Executive
Branch reports.

The Administration would like to build on but modify
these ideas.  We endorse the constructive idea that a
Member could raise a point of order if certain
procedural steps are not met before a sanctions bill
is moved to the floor.  But the trigger for raising a
point of order in LCH is a mandatory Presidential
report, and we think it is unrealistic and highly
burdensome to expect a detailed Executive Branch
report each time any sanctions bill is voted out of a
committee.  Thus, we suggest instead that sanctions
reform legislation provide that a bill would not be in
order to move to the floor unless there has been a
report of the relevant committees explaining whether
the bill meets the substantive criteria called for in
LCH.  The legislation could also provide that future
unilateral economic sanctions legislation be
considered a  federal private sector mandate,  which
would require that the Congressional Budget Office
prepare a report assessing the impact of the bill on
the U.S. economy and would trigger a point of order
against a bill reported by Committee without the CBO
report.

LCH would also impose certain substantive constraints
on passage of future sanctions laws, including
providing that future unilateral economic sanctions
legislation should include a statement of objectives,
a "sunset" clause (termination after two years),
contract sanctity, a national interest waiver, be
narrowly targeted, not include restrictions on the
provision of food and medicine, and seek to minimize
adverse humanitarian impact.  We would support the
inclusion of these kinds of provisions in new
sanctions bills, with appropriate flexibility.

A key question is the scope of these constraints, that
is, to what future legislation they would apply.  We
support the proposal in LCH that constraints on
Congress would apply to future "unilateral economic
sanctions" legislation.  The term is appropriately
broadly defined, to apply to bills imposing both
discretionary and mandatory sanctions, and to
sanctions imposed for a wide range of reasons.  We
agree with the sponsors of the LCH bill that these
provisions should not apply to trade legislation - but
also believe they should not apply to labor-related or
environmental legislation either.

The Congress, of course, will always retain the
flexibility to depart from the LCH guidelines, because
a subsequent, inconsistent sanctions law would take
precedence--through  notwithstanding any other law
language--and because Congress can choose to change
or disregard the procedural rules applicable to it.
Nonetheless, we see these provisions as an important
baseline for congressional consideration of sanctions
legislation.

A National Interest Waiver


Certain existing sanctions laws contain inadequate or,
in at least one case -- the Glenn Amendment -- no
waiver authority.  We believe that flexibility
accompanied by appropriate national interest waiver
authority in all legislation is the single most
essential element if we want to make sanctions work.

We believe that the President should be authorized to
refrain from imposing, or taking any action that would
result in the imposition of, any unilateral economic
sanction, and be authorized to suspend or terminate
the application of such a sanction based on a national
interest determination.  Congress should have a role
here.  Thus, we could consider the inclusion of
expedited procedures to allow Congress to pass
legislation disapproving the President s decision
within a certain number of days. We would support
applying this waiver authority to all existing and
future legislation.

A number of recent cases underscore the importance of
providing the President with this type of flexibility
so that he can decide how best to achieve U.S.
objectives.  But I think that the contrasting examples
of the Glenn Amendment and the use or promise of
waiver authority in the cases of ILSA and Helms-Burton
underscore this point.  Using the waiver authority in
ILSA, we were able to achieve significant, enhanced
cooperation on our Iran-related concerns with the
European Union.  Even though cooperation was already
at a high level, the EU has further tightened its dual
use control system with respect to Iran and other
countries.  We also made significant progress with
Russia, which put into place for the first time the
legal framework and detailed regulations for a "catch-
all" export control system.  We used Title III waiver
authority in Helms-Burton to encourage the EU in late
1996 to condition any improvements in relations with
Cuba on concrete changes in Cuba s human rights
policies.  Also, the prospect of an amendment to Title
IV helped the EU to agree on May 18th of this year to
new disciplines on limiting investment in illegally
expropriated properties worldwide, including in Cuba.
This Understanding with the EU establishes for the
first time multilateral disciplines among major
capital exporting countries to inhibit and deter
investment in properties which have been expropriated
in violation of international law.  In contrast, under
Glenn, we have no discretion, no waiver authority, and
no ability to lift sanctions absent legislation.  This
clearly complicates our ability to negotiate
acceptable solutions with the Indians and Pakistanis -
as the Senate has itself suggested with its recent
actions.

These achievements in ILSA and Helms-Burton would not
have been possible without appropriate waiver
authority.  We use waiver authority not as an excuse
to avoid sanctions, but as an effective means of
leverage to advance the purposes of the law.

During our informal consultations with staff, the
question arose as to whether we should not consider a
dual waiver standard.  For example, legislation
dealing with non-proliferation issues might be subject
to a national security waiver, other legislation to a
national interest waiver.  This is an idea worthy of
further consideration.  I want to emphasize, however,
that our very strongly held belief is that a broad
national interest waiver applied to all sanctions
legislation, is the most effective way to advance our
foreign policy goals.

As I said earlier, Congress and the Executive Branch
share responsibility for helping shape our foreign
policy. Comity between branches of government is
expressed in sanctions legislation through an
indication of Congressional interest along with the
inclusion of appropriate Presidential flexibility,
including broad waiver authority.  Congress speaks,
but ultimately only the President can weigh all the
foreign policy issues at stake at any given moment and
tailor our response to a specific situation.
Congress's power of the purse and of oversight are
more-than-adequate tools with which to help shape our
foreign policy.

Restrictions on Executive Branch

The LCH bill would also impose a number of specific
procedural and substantive restrictions on Executive
Branch imposition of new sanctions imposed under IEEPA
and all future unilateral economic sanctions laws.  We
would propose instead that the President would be
willing to issue an Executive Order that would set
guidelines--many of which are taken from the LCH
proposal--which would apply in two situations.
First, they would apply to all future sanctions
regimes under IEEPA.  Second, they would apply to
imposition of sanctions under future sanctions laws
passed by Congress, where appropriate.

LCH would impose many inflexible restrictions on the
President's imposition of sanctions, e.g., requiring
him to announce and publish his intent to do so 45 days in advance, and
specifying that all future
sanctions shall include, among other things, a cost
benefit analysis, a contract sanctity provision, and a
two year sunset clause.  We support the general idea
behind some constraints, but the simple fact of life
is that there are instances when such requirements
would prove unworkable and destroy the value of the
sanctions as a foreign policy tool.  For example,
telegraphing in advance our intention to seize the
assets of suspected terrorists, narcotics traffickers,
major international criminals, or indeed for any
foreign policy purpose would effectively rule out
asset freezes as sanctions tool.  Contract sanctity
provisions may be similarly unworkable and
counterproductive--for example, in dealing with front
companies in the narcotics area--particularly when
combined with the requirement for advance notice of
intent to impose sanctions.  They would encourage
businesses to negotiate quick deals to get in under
the wire and avoid the effect of sanctions.  Sunset
clauses tied to time rather than performance may also
often not be appropriate.  Many of the purposes for
which we may impose sanctions--non-proliferation, to
combat drug trafficking, to combat terrorism, to
encourage greater respect for human rights--are long
term; they are simply not time bound.  We should not
give the targets of such sanctions the ability to wait
us out.

What is the lesson?  Flexibility is an absolute
necessity.  In these as in all cases, the President
needs the flexibility to tailor our response most
appropriately to the specific situation.  LCH contains
differing waiver standards for these restrictions,
ranging from a national interest standard to a
national emergency standard to an armed conflict
standard, and specifies that some provisions would
never be waivable.  We need to modify such
requirements to protect the President's flexibility.

With such enhanced flexibility, the President would be
willing to sign an Executive Order that would include
the following particular guidelines according to which
the President should impose sanctions: a requirement
to analyze costs and gains to all relevant U.S.
interests; contract sanctity unless the President
determines that it would detract from the
effectiveness of the sanctions; a provision calling
for an annual review of future Executive Branch
sanctions under which the President must determine
that the sanctions are meeting certain criteria in
order for the sanctions to continue in effect; narrow
targeting; appropriate exemptions to minimize adverse
humanitarian impact; and prior consultations with
Congress, wherever possible.

Exceptions for Food and Other Human Necessities

As a general principle, as the President has said on
several occasions, the threat of starvation should not
be a tool of foreign policy, and restrictions on the
commercial export of food, medicines and other human
essentials should be excluded from economic sanctions
regimes absent compelling circumstances.  We were
pleased to note the recent Senate action in the FY 99
Agriculture Export Relief Act of 1988 adopting such
provisions.  In many cases, such sanctions hit
innocent civilian populations, who frequently have no
say in the policies of their governments.  To the
extent possible, our sanctions should target the
decision makers responsible for the objectionable
behavior who will likely be unaffected by restrictions
on the provision of food or medicine.  In signing the
Agricultural Relief Act which enabled U.S. farmers to
sell 300,000 tons of wheat to Pakistan, the President
urged the Congress to go further and provide waiver
authority to exempt food from sanctions, whenever
appropriate.

Of course, there will be cases where this general
principle may not apply and unilateral restrictions on
the commercial export of food and other human
necessities may be necessary--e.g., with countries on
the terrorism list.  Legislation should include
authority for the President to both impose or to waive
or not impose such restrictions, based on his
assessment of the national interest, to permit a
balanced approach to sanctions on food and other human
necessities.

At present, we have unilaterally prohibited the export
of food and medicine to only five countries:  North
Korea, Iran, Libya, Sudan and Cuba.  Given the
situation in those countries and the threat they pose
to U.S. interests and values, we do not at this time
support lifting or modifying sanctions on any of them.
Easing unilateral sanctions on food and other human
essentials, however, could be an appropriate first
step at the right time and done in the right way.

Multilateral Sanctions

Finally, we would propose that any sanctions reform
legislation and an executive order include a clear
statement that such guidelines apply only to
unilateral economic sanctions.  Such a statement would
note our strong preference for multilateral sanctions
and our view that sanctions imposed by the United
Nations Security Council reflect a collective judgment
that a situation is especially grave, warranting
imposition of global sanctions that are not time
limited and do not permit contract sanctity.  By
contrast, unilateral sanctions necessarily require a
different structure, taking into account, for example,
that the costs of implementing unilateral sanctions
tend to fall disproportionately on U.S. interests.
The statement could note that, for those reasons, our
approach to unilateral economic sanctions does not
bear on the imposition of multilateral sanctions.
This is important because multilateral sanctions, for
example, should not have some of the features, like
sunset provisions, which may be applicable to our
domestic, unilateral sanctions measures.

Opposition to Pending Bills

I would like to turn now to three pieces of
legislation of particular concern:  the Iran Missile
Proliferation Act of 1997, the Wolf-Specter Freedom
from Religious Persecution Act of 1998, and the
Nickles Bill.  As you know, the President vetoed the
Iran Missile Proliferation Act, even though it passed
both houses of Congress by a wide margin, because the
bill s indiscriminate and inflexible provisions would
undermine the credibility of U.S. nonproliferation
policy without furthering U.S. nonproliferation
objectives.  Taken together, its flaws -- including in
particular its unworkably low standard of evidence and
disproportionate sanctions -- risk a proliferation of
indiscriminate sanctioning worldwide.  Although of
global scope, the bill would have a particularly
negative effect on our ability to work with Russia on
issues of proliferation concern.  Russia now has in
place a catch-all export control regime, and its
recent actions against a number of Russian exporters
underscores its increasing willingness to enforce its
new regime.  These laws have been followed by legal
action against entities which we believe have been
exporting products which can be used in WMD programs
of countries on the terrorism list.

Similarly although we strongly support the goals of
the Wolf-Specter Bill, the President's senior advisors
have also said that they would recommend a veto if it
were passed in its current form, because it would
require automatic imposition of sanctions, create a
confusing bureaucratic structure, and establish an
inappropriate hierarchy of human rights violations in
U.S. law.  We believe that enactment of the bill would
undermine many of our important foreign policy
interests, including ultimately the bill's own goal of
helping those who face religious persecution.

The Senate is currently considering another bill
dealing with religious persecution -- the Nickles
Bill.  In his testimony before the Committee on May
12, 1998, Assistant Secretary Shattuck laid out our
principle concerns with that bill.  As currently
drafted the bill would require the President publicly
to single out certain individual countries which are
then subject to automatic sanctions.  Although public
condemnation may be appropriate and useful in some
cases, in many other cases it may be counterproductive
and actually impede the attainment of our common goal.
In many cases, it would also make it more difficult
for us to work together with other like-minded
countries to support religious freedom.

We believe that the same focus on religious freedom,
which is already a high priority for this
Administration, could be achieved through submission
of a single annual report covering all those countries
covered in the current annual human rights report.
Such a report would provide the Congress with
information on the status of religious freedom in
every country of concern and provide a detailed
listing of the steps the Administration has taken to
advance religious freedom.  This would give Congress
the opportunity to suggest alternatives or criticize
where appropriate.  We do not believe that it is
useful or productive, however, to be forced to
publicly stigmatize countries worldwide on an annual
basis.

We are also concerned, Mr. Chairman, with the bill's
narrow waiver authority - advancing the purposes of
the act or national security interest of the United
States.  We believe that such a standard would unduly
limit the President's ability to weigh a wide range of
other important national interests in addition to our
security concerns and decide in each specific case how
best to proceed.  As a general principle, we believe
that all sanctions legislation should contain national
interest waiver authority to give the President the
flexibility to tailor our response to specific
situations, taking into account all our national
interests.

The bill also requires a massive increase in our
reporting requirements on religious freedom issues
without providing additional resources.  These reports
are staff intensive and could obligate the Secretary
to cut back on or eliminate other human rights efforts
to provide for these unfunded mandates.  The ultimate
effect could be a reduction of the staff available to
work on other important human rights initiatives,
including those that promote religious freedom.

Conclusion

By working together, respectful of each other's duties
and responsibilities in the foreign policy area, we
believe we can develop a bipartisan consensus on
economic sanctions as a foreign policy tool.  This
will make us more careful in our use of sanctions,
ever mindful of the costs as well as the gains, and
will make those sanctions we do employ more effective
in accomplishing our national goals.


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