Remarks of William Lane

Chairman USA*ENGAGE & Washington Director of Caterpillar

Before the French Institute of International Relations

I very much appreciate the opportunity to discuss the issue of economic sanctions before such an influential audience. For the past four years I’ve been closely associated with the public policy effort known as USA*ENGAGE. Today, I’d like to talk about that effort – with specific focus on the lessons we’ve learned during what has turned into a rather remarkable campaign.

USA*ENGAGE was organized in reaction to a disturbing development: for much of this decade the United States has embraced an outdated policy tool—unilateral sanctions—to influence foreign governments. In fact, the U.S. has imposed sanctions with such vigor that by 1997 over half the world's population was the target of some form of economic punishment at the hands of the United States.

Recognizing that such sanction policies rarely work, are often counterproductive and almost always costly to other national objectives, U.S. business and agriculture felt compelled to challenge the wisdom of a sanctions-based foreign policy. Organized as USA*ENGAGE, the four-year-old effort has had a definite impact on how America’s policymakers now view sanctions.

To appreciate the lessons learned, it is best to recall the scope of the problem. Put bluntly, with the end of the Cold War, many U.S. policymakers embraced the simplistic view that sanctions were the perfect compromise between doing-nothing and taking military action.

So the United States sanctioned. It sanctioned South Korea and Saudi Arabia over labor rights; India and Pakistan for nuclear testing; Colombia for narcotics; and China for human rights abuses and environmental concerns. Citizens of Canada and Israel were sanctioned for doing business in Cuba. Egypt and Germany were threatened with sanctions because of concerns about religious persecution, as were companies in Russia, Malaysia and France for investing in Iran's petroleum sector.

How many sanctions were imposed? In 1997, the President's Export Council found that the U.S. was targeting unilateral sanctions against 73 countries, while the Congressional Research Service cited 125 measures authorizing unilateral sanctions.

Did the sanctions work? The Institute for International Economics concluded that less than one in five unilateral sanctions resulted in anything close to the desired result. However, the one thing unilateral sanctions have clearly done is to hurt U.S. interests—annually costing as many as 250,000 high-paying American jobs and reducing U.S. exports by about $19 billion.

From our perspective, sanctions also ran counter to the reality that in many developing countries American business represents one of the most progressive elements of society. By encouraging trade and investment abroad, America not only helps create jobs and higher living standards; it also promotes values that encourage political freedom, the rule of law, and respect for human rights. From better schools and health care to improved infrastructure and housing, commercial engagement can make a positive difference in the lives of millions.

At the same time, the positive contribution made by the many non-governmental organizations (NGOs) cannot be underestimated. While we recognize there are no guarantees in foreign policy, we’ve learned that for engagement to work, it needs to be pursued at many levels -- political, diplomatic, economic, charitable, religious, educational, and cultural. Rather than view each other as adversaries, business and the NGO communities would be well served to be supportive of common objectives.

So, the strategy of USA*ENGAGE was to engage friend and foe alike in the sanctions debate. Our original hope was that 100 companies would join us. Clearly, this was an issue of great concern for the business community, as our membership quickly swelled to 675 companies.

Moreover, we engaged the academic community and think tanks. We engaged non-traditional business allies ranging from religious and humanitarian organizations to human rights groups. We engaged the Congress and Clinton Administration. We worked with the media and aggressively used the Internet to engage the public – building a web outreach program that was receiving 140,000 hits per month at its peak. With our encouragement, the sanctions issue even became the national college-debating topic.

To be frank, our message evolved with time. Initially we stressed what our experience told us was true:

1. Unilateral sanctions don’t work and can be costly;
2. Engagement -- when pursued at all levels -- can be a strong force for positive change;
3. Isolating a country from positive values and means of influence rarely gets results;
4. Multilateral actions are almost always more effective than unilateral ones.

As the public debate continued, our views coalesced around one overriding theme: the United States cannot conduct an effective foreign policy on the cheap. Unilateral sanctions are not only the lazy man’s foreign policy, but a symptom of a larger problem: a lack of recognition of the broad array of foreign policy tools—ranging from carrots to sticks—that are available.

Sanctions—even unilateral ones—at times may be necessary, but other foreign policy tools must be part of the equation. These include the Foreign Service. USAID, military and intelligence agencies, as well as multilateral institutions like the UN, World Bank, IMF and WTO. But for these tools to work, U.S. leadership, commitment, and funding is essential.

The problem with unilateral sanctions is that they often cut off American influence and hurt the very people the U.S. is trying to help. We don't think it is an accident that the countries the United States has attempted to isolate the most – Cuba and North Korea -- have changed the least over the past 40 years.

The efforts of USA*ENGAGE have prompted a reexamination of many U.S. sanction policies. Sanctions have been lifted against Colombia, Vietnam, and both South and North Korea. The U.S. has rejected sanctions against Mexico, Indonesia, Russia, Malaysia and France and waived sanctions against India and Pakistan. Earlier this week, the U.S. Supreme Court, in a rare unanimous vote, ruled that state and local sanctions are unconstitutional. There has even been movement toward engaging Cuba, with legislation now moving in the Congress that would open the door to U.S. shipments of food and medicine.

While a few new sanctions -- Burma and Sudan -- have been imposed in recent years, it is clear that policymakers view unilateral sanctions in a more critical light. It is important to note that last year, and so far this year, the United States has not imposed any unilateral sanctions of note. This is a far cry from 1996, when USA*ENGAGE was organized. In that year alone, according to the National Association of Manufacturers, the U.S. imposed 23 unilateral sanctions, including two measures – the Helms-Burton Act and the Iran-Libya Sanctions Act – that were unusually onerous in that extraterritorial sanctions were authorized.

For our part, business now sees value in supporting issues that it previously ignored – such as encouraging America to pay its UN arrears and ensuring that the IMF and Foreign Service are adequately funded.

Under the leadership of foreign policy and trade experts like Senators Lugar, Kerrey and Hagel and Representatives Crane, Dooley and Manzullo, there is a serious effort in Congress to enact legislation that would put in place a more deliberative process to use when the U.S. considers new unilateral sanction proposals. Known as The Sanctions Process Reform Act, this common sense legislation is a good bill and should be enacted.

While this legislation is important, it won’t be new laws that stop policymakers from adopting new unilateral sanctions rather than pursuing more effective multilateral actions. Nor will new laws ensure that our leaders recognize the full power of engagement and the risks associated with isolation. That is why we must continue to be vigilant and keep U.S. foreign policymakers on a path that included multilateral solutions to international problems.

What will ultimately change America’s sanctions-base foreign policy will be Americans who—armed with the facts—demand a more effective foreign policy. To that end, the ultimate success of USA*ENGAGE will depend on whether the lessons learned are reinforced by a commitment from our leaders to refrain from conducting foreign policy on the cheap.

As a conclusion, I’d like you to note that perhaps the most telling event to illustrate the evolution of U.S. sanctions policy took place earlier this week. The decision this week by President Clinton to drop many of the U.S. sanctions that have been in place against North Korea for nearly a half a century was indeed profound. What better way to mark the 50^th anniversary of the Korean War than to finally make significant progress towards ending the Cold War on the Korean Peninsula?

The United States should now further follow the lead of South Korea, as we too face an opportunity to ease tensions with a hostile neighbor. America can learn from the Koreans by opening a dialogue with the government of Cuba. Engagement is working throughout the world – it can work in our backyard too. Perhaps that will be the greatest lesson we have yet to learn.

Thank you.