10 November 1997
The Oil Daily
Jareer Elass
Administration Tries to Cool Sanctions Fever
Oil industry opponents of the unilateral sanctions weapon -- being wielded with increasing frecuency by sanctions hawks in Congress -- may be winning some friends in high places.
Annoyed at being painted into a corner by sanctions advocates and confronting global outrage at its potential enforcement of secondary sanctions on non-U.S. companies investing in Iran, Libya and Cuba, the Clinton administration is arming itself with reports warning of the boomerang effect of unilateral embargoes.
A State Department task force charged with examining economic sanctions is promoting a much more cautious approach to the issue, while both the State Department and the National Securites Council are conducting seperate internal reviews on where the government has been effective in employing sanctions and where it hasn't.
And even some members of Congress are having second thoughts, introducing a bill that effectively says, "Look before you leap."
The bill -- the Sanctions Reform Act -- concurs with the task force in suggesting that lawmakers should wait before rushing to enact unilateral or extraterritorial sanctions on countries accused of sponsoring state terrorism or with poor human rights records.
Both say economic sanctions should be used as a last resort after diplomatic initiatives have failed. They also would require extensive studies to be carried out on an embargo's economic impact on the target country as well as on the U.S. firms dealing with the country.
Congressional sources said the task force is finishing up a report that includes several controversial points. One is that appropriations committees -- increasingly active on the embargo front -- don't have the expertise to generate trade sanctions; another is that state and local governments should refrain from interfering in foreign policy by enacting their own embargoes.
The sanctions reform bill -- which was introduced by Reps. Philip Crane (R-Ill.) and Lee Hamilton (D-Ind.) in the House Ways and Means Committee on Oct. 23, and will be introduced by Sen. Richard Lugar (R-Ind.) in the upper chamber in January -- is sure to draw heat from sanctions advocates on Capitol Hill.
But it has already won backing from USA Engage, the broad-based industry coalition formed in April to fight econiomic sanctions that hurt U.S. businesses.
A recent report conducted on USA Engage's behalf by the Institute for International Economics says unilateral sanctions cost U.S. firms $15 billion - $19 billion in exports in 1995, affecting 200,000 - 250,000 export-related jobs.
In a report this June, the President's Export Council stated that 75 countries -- or more than half the world -- are subject to, or threatened by, one or more U.S. sanctiuons. The council, not surprisingly, suggested that "the negatrive economic impacts of unilateral sanctions could be substantially reduced ... by more thoughtful consideration of optional approaches and better design and implementation of sanctions."
The study called on the president to establish guidelines for selecting and implementing unilateral sanctions and to consult with Congress on adherence to the guidelines, placing the primary authority on the chief executive's shoulders.
Under the Crane-Hamilton bill, sanctions would terminate after two years unless Congress or the president decided otherwise. While the legislation wouldn't affect existing sanctions, it would protect existing contracts between U.S. firms and the embargoed regime.
Congressional and industry advocates of the "look before you leap" appraoch believe the bill is unlikely to be passed until late next year, given that it will have to run a gauntlet of committees and also will face opposition from sanctions hawks such as Rep. Ben Gilman (R-N.Y.) and Sen. Alfonse D'Amato (R-N.Y.).
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