free trade, unilateral and economic trade sanctions

12 February 1997
Houston Chronicle

Conoco's Chief Blasts Sanctions

Conoco - the Houston oil company barred by Washington from doing business with Iran - is calling on the oil industry to launch a major political push to change the American habit of unilaterally imposing trade sanctions.

Conoco Chief Executive Archie Dunham, speaking Tuesday at the Cambridge Energy Research Associates' annual energy conference, argued that U.S. companies, not rogue regimes, are the ones that suffer when the United States imposes economic sanctions without first lining up allies' support.

""Sometimes it seems as though sanctions have become virtually the only tool in our foreign policy kit,'' Dunham told a crowd of about 1,300 gathered for the event in Houston.

Dunham took the surprising step of raising the issue publicly Tuesday, despite misgivings within his own company. Some Conoco managers feared Conoco was ""radioactive'' on the trade sanctions issue following an embarrassing misstep two years ago, when the DuPont subsidiary agreed to spend $1 billion to develop two offshore oil and gas fields for Iran's state oil company, only to have the Clinton administration force it to give up the contract.

Dunham's comments are shared by many others in this industry hampered by these policies, but his speech stood out as a rare call to arms by an industry leader.

Dunham also revealed he had raised the issue last week with newly appointed U.S. Secretary of State Madeleine Albright, during a meeting with Houston business leaders.

""I can't think of any time when unilateral (sanctions) are effective,'' Dunham told reporters Tuesday.

The United States already has sanctions in place against 10 different countries and is considering actions against another six, including Burma, Nigeria and China, Dunham said.

The issue is of particular importance to the energy industry, since numerous oil companies operate in countries that are rich in oil reserves but are shunned by Washington and lambasted by human rights groups.

American companies complain that when the U.S. government acts alone and bars them from doing business in a particular country, the companies merely lose business to competitors from other countries.

When Conoco was blocked from going into Iran, for instance, French-owned Total took its place.

Conoco kept a low profile on the issue during the presidential campaign. But now, Dunham believes, the industry has a two-year window of opportunity to get some changes in sanctions policy in Washington.

What the industry lacks in Washington is an obvious political ally on the issue. Traditionally, the industry has turned to the Republicans for support, but GOP heavyweights such as New York Sen. Alfonse D'Amato and North Carolina's Jesse Helms have been key sanctions backers.

Dunham argued Tuesday that trade sanctions should be used only as a last resort. They say they do not object to sanctions if they are imposed by a number of nations, as in the case of Iraq.

""If sanctions are deemed unavoidable, we should try everything in our power to make them multilateral, rather than unilateral,'' Dunham said. ""It's joint pressure from many countries that is most likely to bring meaningful results.

Dunham believes sanctions should be reviewed periodically, with their effect on jobs, the economy and the nation's security fully analyzed.

Texaco Chief Executive Peter Bijur echoed Dunham's concerns Tuesday.

""I'm not sure what we gain and what our government gains,'' Bijur said.

Daniel Yergin, president of Cambridge Energy and author of the Pulitzer Prize-winning history The Prize: The Epic Quest for Oil, Money & Power, argued that ""history shows that sanctions have to be applied sparingly and used in a sparing, focused way.''

Texaco has been criticized repeatedly for doing business in Burma - or Myanmar as it is called by the ruling military junta.

Opposition leaders there have accused the government of resorting to slavery. Bijur and other Texaco officials long have argued they can be more effective in facilitating change in the country by operating there, demonstrating American business practices and principles and keeping open the lines of communication.

Such a strategy, known as ""constructive engagement,'' is more effective at prompting change than isolating a country from the rest of the world, Texaco officials have argued.

While that logic has gained wide acceptance in the Oil Patch, it is not universally accepted.

Richard Dicker with the New York-based Human Rights Watch contends that countries such as China and Indonesia demonstrate that quiet diplomacy and economic development do not necessarily result in more open political regimes.

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