Archie Dunham
President and CEO, Conoco Inc.

Speech to the National Foreign Trade Council luncheon
March 31, 1998
Westin Galleria Hotel
Plaza Ballroom
Houston, Texas

Thank you very much, Frank, for those kind remarks, and thank you also for your tremendous leadership in the beltway. I also want to thank Bill, I think he's given part of my presentation, but he did it so well, I thought maybe I'd just take questions...But, thank you for your leadership, and George, I just want you to know that all the speakers have agreed that we're going to send you copies of our speech so that you can work with the Greater Houston Partnership and maybe we can have some enlightened decisions to come out of that body. We greatly appreciate their co-hosting this forum this morning.

Welcome to Houston. Those of us who call Houston home are very proud of this outstanding city, it's an exciting, progressive, highly diverse city, fourth largest in the United States, obviously it's the hub of the energy business and it's one of America's great centers of international business. So I think it's quite appropriate when the National Foreign Trade Council selected Houston to host it's first regional sanctions seminar, they couldn't have made a better choice.

This morning I want to share my perspective on the sanctions issue: where we've come from, where we are today, and where I think we need to get to in the future. About a year ago, Dan Yergin asked me to speak at the annual Cambridge Energy Research Associates conference here in Houston, and we were kind of thinking about, well, what would be a good topic for Conoco to address? And of course, it was about this same time that we were still reacting to what happened to us in Iran, I'm sure all of you are aware of the agreement that Conoco signed with the National Iranian Oil company in early 1995, and about the time we were ready to implement the agreement after having eighteen meetings with our government on three different continents, the President chose to issue an Executive Order preventing us from implementing it.

And to make things worse, within weeks after Conoco had signed the agreement, Total, the chairman of Total, had the opportunity to tear the front page off our agreement, tear one page off the agreement, replace our signatures with their signatures and of course they received the opportunity and it's going to be coming on-stream sometime this year. So the issue of sanctions was clearly on my mind. It was also on my mind because of the continuing use of unilateral sanctions, and they seem to be really spinning out of control. The Iran-Libya Sanctions Act had just been passed a few months earlier and the act upped the ante on sanctions by imposing penalties on non-U.S. companies doing business in Iran and Libya. And a variety of other well-intentioned but ineffective sanctions were also established or proposed.

So we decided that I should address the issue of sanctions at the Sierra conference. And my message was very simple: most Americans agree with the goals of promoting human rights, stopping terrorism, drug trafficking and weapons proliferation. But the use of unilateral economic sanctions seems to be the only tool in our foreign policy kit. And too often unilateral sanctions work like a huge sledgehammer, when what we really need is a precision machined tool. And while the message was straightforward, the reaction to it was overwhelming. The speech generated a tremendous outpouring of agreement and support; I think we received more letters from that speech than from just about any other speech that I'd given as CEO. And this convinced me that the atmosphere surrounding unilateral economic sanctions was ripe for change, this was early 1997. And of course I wasn't the only one on the soapbox at the period. Other business leaders, such as Don Fites of Caterpillar, Dick Cheney of Halliburton, and more recently, Lou Noto of Mobil were speaking out against unilateral economic sanctions. And then, in last year, as Bill said, USA*Engage was formed.

In the last twelve months, under the leadership of Frank and Bill, the coalition has grown enormously. It's been more successful, I think, than any of us ever dreamed it would be a year ago. Now one reason is the quality of the public information campaign, which I think is one of the most effective in Washington. Among the excellent features of the campaign is an outstanding website, Bill talked about that this morning, it's filled with very useful information. I have a son who's an opera singer in California, he gets on the computer, on the Internet and actually dials in to USA*Engage. Each month the site draws about 10,000 visitors, which is absolutely incredible. And over the last year, USA*Engage has been joined by many others in raising awareness of the sanctions issue. The Center for Strategic and International Studies in Washington and numerous academics and think tanks have joined in this effort.

The case against unilateral economic sanctions generally comes down to three issues: first, the unilateral sanctions don't achieve their intended foreign policy goals, whether the goal is to promote human rights, or to stop terrorism. In today's global economy, there are many non-U.S. suppliers ready to step into the gap left by blocked-out U.S. companies, so America's attempt to modify the target country's behavior almost always fails. A much better way is to engage the targeted country in dialogue, and to draw it into the international community. A second concern is that Americans pay an enormous price for unilateral sanctions. A study last year by the Institute for International Economics discovered that in 1995, American companies lost at least 15 billion dollars in export business to foreign competitors in the 26 countries that were targeted by U.S. sanctions. For American workers, that meant the loss of 200,000 jobs. A third concern is that when sanctions fail, America's influence in the world is eroded. Consider Cuba: when Congress passed the Helms-Burton act, which tried to stop other countries from doing business with Cuba, the U.S. chose to go it alone in the world, and we all know what the result was. Essentially, zero impact in changing the behavior of the Cuban government, and the U.S. has managed to alienate some of its oldest and closest friends and allies, countries like Canada.

The bottom-line for me is that when sanctions don't work, it looks as though America has failed. And when America fails, it loses it's ability to influence, yet alone lead. And as an American citizen, I hate to see that happen. Looking beyond business and economic considerations, I want the United States to have a foreign policy that is respected and effective. The public and their elected representatives have begun to warm up to the idea that the government's policy on sanctions needs to be changed. And just look at the positive developments over the last year. First, not a single new unilateral sanction was enacted by the United States Congress in 1997, compared with 23 in the previous year. And only 2 sanctions were implemented, against Sudan and Burma, as Bill said. And those were the result of Executive Orders. Second, the enactment of sanctions at the state and local level, which has been a major problem for all of us in recent years, has been sharply scaled back. And third, public opinion is shifting, many editorials, including the one on the front page of the New York Times this morning on sanctions have appeared in major newspapers, and the vast majority have supported engagement rather than isolation.

And in a welcome development, several of the most respected Members of Congress have stepped forward to sponsor reform legislation. Congressmen Phil Crane and Lee Hamilton are sponsoring the Sanctions Reform Act, now working its way through the House, and Senator Richard Lugar has introduced a parallel bill in the Senate. I'm delighted that several of their staff are here today to talk about that legislation. If it becomes law, and I recognize that it's an uphill battle, the act will finally bring common sense to the Federal government's use of unilateral sanctions. It would require every sanction to meet several test before being imposed. The sponsors would have to make a persuasive case that the sanction will actually be effective, as we all know, that's very difficult to do. Alternatives will have to be explicitly identified. Independent studies of cost and benefit will need to be conducted, and there will be a two-year sunset provision on each new sanction, meaning that it will expire if not renewed. These are all signs of healthy change.

I've also been encouraged by the steps taken by President Khatemi of Iran to impose the rule of law in that country, and by his recent comment that Iran will not oppose a Middle East peace settlement if it's acceptable to the Palestinians. Sandy Berger, the National Security Advisor to President Clinton, has described the advice the President receives on Iran in this way, and I quote, "You need to dance, but dance slowly" end quote. My response to Mr. Berger is that you can't dance if you don't get on the dance floor, and tiptoeing through the tulips is not going to encourage engagement. What we need is an good old-fashioned Texas square dance, where you take your partner by the hand and do some serious do-si-dos together. Let's meet and talk with the Iranians and find areas of mutual support and cooperation where we can both talk about doing things in the future together. The time has come to get serious about improving relations with Iran. The warm reception received by the United States wrestling team in Iran last month is just one indication, I believe, that on a people-to-people level, strong feelings of mutual admiration and respect still bind our two countries. And this weekend the Iranian wrestling team will pay a return visit to the United States, in a tournament at Oklahoma State at Stillwater. We need to build on the positive feelings between Iranians and Americans if we ever hope to have an influence on Iran's political and economic systems.

Now while these comments on building bridges have been focused on Iran, the same argument can be made for a number of other countries. Fortunately the Clinton Administration seems to be coming to the same conclusion that engagement works better than confrontation, at least as far as sanctions policy is concerned. A State Department Task Force under the leadership of Stuart Eizenstat has made a good start in re-evaluating Washington's use of economic sanctions.

So in many ways, as 1998 unfolds, a great deal of progress has been made. But we still have very much to do. At the national level, it's absolutely critical to get the Hamilton-Crane-Lugar Sanctions Reform Act passed into law, and we'll hear more about that in the next discussion. We need to roll-back sanctions already enacted by state and local government and head off those that are being proposed. And we must stop the proposed Specter-Wolf Act which targets religious discrimination, and the proposed McCollum-Schuman Act which targets terrorism. Both of these proposals are well-intentioned, but in both cases, sanctions are inappropriate. To achieve results in Washington, we also have to get outside the Beltway, and energize the public at the grassroots level. And that's why we're here today. To start spreading the words to grassroots America. To average citizens and opinion leaders in cities and towns all over the United States. It's important for Americans to recognize that the problem of unilateral economic sanctions involves more than just oil and gas companies eager to do business in the Middle East or South East Asia. It involves more than just selling nuclear reactors to China or grain to Russia. Our nation's use of unilateral economic sanctions has had profound negative impacts on the American economy. These impacts may not always capture the headlines, but they reach very deep into our economic system.

Unilateral sanctions threaten a wide variety of industries. They threaten working people and communities all over the United States. Here in front on the podium is a poster listing each of USAĞEngage's 661 members. Now, you're going to need a magnifying glass to read that, but I'd encourage you to come up and take a look at the variety of agriculture organizations, business associations, and companies large and small representing every region of the United States and all parts of our national economy. There are 170 members in Texas alone, from major oil companies with thousands of employees to small export companies here in Houston with only a handful of workers. These businesses have one thing in common: their economic livelihood depends on free, foreign trade. As does the livelihood of their employees and their communities.

In 1996, Texas companies exported nearly 19 billion dollars in goods and services to countries threatened by federal, state or local sanctions. These companies employed about 300,000 workers. The jobs of many of these workers will be at risk if sanctions are imposed. So it's important that the American people and their elected representatives understand this reality: overhauling our government's policy on sanctions is critical to Main Street America, as well as corporate America.

But the issue of what to do about economic sanctions has an even broader dimension, and this is the final point I will leave with you today, and in some ways, it's the most important point. When people debate sanctions policy, they need to recognize that the issue involves more than just insuring that U.S. businesses have access to foreign markets. What's more important is the contribution business enterprises make in improving the quality of people's lives all over the world. As Americans, we share the desire to extend democracy and raise standards of living globally, and I believe very strongly that the best hope we have for achieving these goals is continued growth in trade and investment, opening of markets, and the creation of new businesses and new jobs in the United States and globally. For any who doubt the power of trade and investment to improve lives, all they have to do is to travel to a part of the world where government-controlled sanctions have given way to capitalism and open markets. Whether its Latin America, Asia-Pacific, Central Europe, even Russia, the progress is undeniable and unbelievable. We live in a global community, and policies based on confrontation and isolation are doomed to failure. On the other hand, engagement, as we know, works.

But it's not enough for you and me to understand this and believe it. The average American citizen and policymakers at all levels of government must understand and believe it to. And that's why I'm grateful to the National Foreign Trade Council and it's co-sponsors for organizing this seminar. It gives us an opportunity to learn more about the issues and to develop a common understanding of what the next steps should be. By working together we can further energize the public and promote engagement rather than confrontation. To do that, we should broaden support for all these groups, like USAĞEngage and others, that are working so hard to make the world a better place through sensible application of foreign policy tools.

I'm very proud of Conoco's association with USA*Engage, and I hope all of you are members and contributors. If not, please join and contribute today. I appreciate very much your participation in this seminar; it's really an important step toward finishing the job of changing U.S. sanctions policy.

Thank you very much.

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