By Eviscerating Economic Sanctions, Clinton Leaves
No Policy Choice Between Inaction and Military Strikes

(Washington, D.C.): Yesterday, President Clinton personally — and, if he has his way,
permanently — deep-sixed economic sanctions imposed on Iran, Libya and Cuba
pursuant to U.S.
law. He did so in response to whining and threats of retaliatory action by America’s “allies” in
Europe, Russia and Japan and importuning by the international business community.
Unfortunately, the price of this act of appeasement will not only be to open the
floodgates to
life-support for three of the most odious and dangerous regimes on the planet. It also
threatens to undermine one of the most important diplomatic/national security tools
remaining in the U.S. policy kit-bag.

Propping-Up Authoritarians

Thanks to President Clinton’s decision, the green-light is now on to investment in Iran and
Libya.
Total and Petronas — the French and Malaysian companies
that are teamed in a joint venture
with Russia’s Gazprom to develop Iran’s South Pars natural gas deposits — are
permanently
shielded from U.S. economic retribution. For its part, Gazprom is given a limited waiver,
contingent on further actions by Moscow to curtail the proliferation of weapons of mass
destruction. (Since the Clinton Administration is manfully ignoring evidence of such proliferation
now, it is hard to believe this marker will be taken seriously by the Russians or result in future
sanctions under any foreseeable circumstances.)

Such an action is all the more extraordinary given that even the Clinton State
Department
concluded, according to the U.S. Information Services’ “Washington
File,” that the Total-Petronas-Gazprom “deal did violated the 1996 Iran-Libya Sanctions
Act (ILSA), making
[the companies] subject to sanctions.” Secretary of State Madeleine Albright decided,
as part
of the newly brokered deal, to recommend a waiver on “national interest” grounds. She said the
waiver “would be more effective than sanctions — which will not stop the project — in achieving
ILSA’s objectives.”⁽¹⁾ Worse yet, she broadened
the exemption by advertizing that any
future cases involving the development by EU companies of Iranian oil and gas would
“result in like decisions with regards to waivers.”

Precisely what, it might be asked, did the United States get for this extraordinary and
portentous
retreat? Yet more promises by the EU and Russia to enhance multilateral
cooperation on
export controls and otherwise redouble efforts to curb proliferation and terrorism. Such
promises come on the heels of statements made last week by Russian officials averring Moscow’s
determination to press on with nuclear cooperation with Iran. And neither the EU nor Russia
were willing to provide “multilateral cooperation” in response to India’s nuclear power play.

Helping Castro, Too

Fortunately, the President was unable to undercut the Helms-Burton
(a.k.a. LIBERTAD)
legislation as fulsomely as the way he did ILSA. While he promised
indefinitely to waive the
LIBERTAD statute’s Title III — which governs American citizens’ right to sue over property
expropriated by Castro’s regime — Mr. Clinton was unable to waive the requirement to
deny
U.S. visas to foreign persons trafficking in such property, the subject of Title IV. This
will
require legislative relief. The President did, however, promise to seek such relief and,
in the
meantime, agreed to implement the understanding as “a matter of policy.” href=”#N_2_”>⁽²⁾

Once again, the quid pro quo was paltry. The Europeans did not pledge
to stop their
companies from providing life-support to the Castro regime, even while operating on
confiscated U.S. property. They simply promised to stop employing government
credits and
loan-guarantees to support such activities. It remains an open question as to
whether
government insurance schemes are included in this deal. One thing is certain: EU
governments
will find a way to offer risk coverage to their companies bent on doing business in Castro’s
Cuba.

What is more, the Europeans have made fulfillment of even their limited pledge
conditional upon
the U.S. Congress amending Title IV of the Helms-Burton act. Such relief is unlikely to be
forthcoming according to Senator Jesse Helms, Chairman of the Senate Foreign Relations
Committee and principal Senate sponsor of the LIBERTAD bill. He responded to the President’s
deal with the pronouncement: “To our European friends, I say this: No
deal. It will be a
cold day in you-know-where before the EU convinces me to trade the binding restrictions
in the Helms-Burton law for an agreement that legitimizes their theft of American property
in Cuba.”

The Bottom Line

At the risk of profoundly understating the case, this has not been a good week for U.S.
prestige,
influence and diplomacy around the world. From India to the Middle East to Cuba, the Clinton
Administration has compromised — if not created precedents that may preclude — the effective
use of economic sanctions as a tool of American policy.

This is particularly ominous insofar as the alternatives that are left — passivity or war
— are
not acceptable in many cases. The United States simply cannot afford to deny itself
other
options, including economic sanctions, even if they must be exercised unilaterally.

Fortunately, thanks to its being the largest market in the world and the largest source of
capital —
both equity and debt — this country has enormous leverage if its leaders have the
political
will and strategic vision to use it effectively. Indeed, it was precisely because the ILSA
and
Helms-Burton sanctions could bite in this way, forcing a choice between doing business
with
actual or potential U.S. adversaries or doing business with us, that the Europeans and
others
were so determined to achieve their evisceration. The fact that the Clinton Administration agreed
to do such an evisceration, even though the very nature of import and visa controls contradicts
the charge of “extraterritoriality,” is a powerful indictment of its grasp of American interests, let
alone its stewardship in protecting them.

– 30 –

1. Presumably, the same logic would prompt the Clinton
Administration to give a pass to chemical
weapons plants as long as they were already under construction.

2. Congress is on notice that the President intends to resurrect the
wildly controversial
Multilateral Agreement on Investment (MAI) negotiations under the auspices of the Organization
for Economic Cooperation and Development in October, with a view to transforming this Cuba
understanding into legally binding commitments. For this and many other reasons, the MAI treaty
should not be completed and must be rejected by the Senate if it is. For more on this fatally
flawed treaty, see the Center’s Decision Brief entitled
Sovereignty Surrender Watch # 2:
Clinton Multilateralism Eroding American Interests, Rights on All Fronts ( href=”index.jsp?section=papers&code=98-D_37″>No. 98-D 37, 2
March 1998).