Mr. Chairman:
Thank you for this opportunity to testify on the use and effect
of unilateral economic sanctions and on HR 1244, the “Enhancement of Trade, Security, and Human Rights Through Sanctions Reform Act.”
I will take these two related but separate matters in sequence. Unilateral sanctions always have some impact, both on the United States and on the target country. U.S. sanctions have clearly weakened the economy of Cuba, slowed investment in Libya and Iran, and hurt Pakistan, which, prior to sanctions, received substantial U.S. economic and military assistance.
But it is also important to contemplate the side-effects of unilateral American sanctions. These consequences transcend lost American exports, profits and jobs. In the case of Cuba, U.S. sanctions may have made it easier for the Castro regime to maintain control over the Cuban economy and society. There and elsewhere (including Iran), American sanctions have been exploited as justifications for regime repression and excuses for regime incompetence. Sanctions may have had the perverse effect of weakening civilian rule in Pakistan and increasing its focus on nuclear weaponry.
As a rule, unilateral sanctions tend to be little more than statements or expressions of opposition except in those instances in which the tie between the United States and the target is so extensive that the latter cannot adjust to an American cut-off. Over time, economic sanctions tend to lose their bite. In a global economy, unilateral sanctions tend to impose greater costs on American firms than on the target who can usually find substitute sources of supply and financing. The impact of such sanctions can be offset by factors beyond our control, as in the case of Iran where increases in the price of oil more than compensated for any penalty introduced as a result of U.S. policy. Iran is also a textbook example of how unilateral American sanctions can be little more than a windfall for European companies who otherwise would have difficulty competing.
Even advocates of unilateral sanctions would admit that their impact is second best. The problem is that it is often extremely difficult to garner international support for particular sanctions. Prospects for succeeding in bringing others on board tend to reflect a range of factors, including commercial stakes, policy preferences, and the availability of funds to compensate lost revenues. Sanctions tend to work best when international political consensus exists and non-targeted countries who must bear an economic cost as a result of the sanctions are compensated. In most instances, other governments prefer no or minimal sanctions. Other countries tend to value commercial interaction more than the United States and are less willing to forfeit it voluntarily. In addition, the notion that economic interaction is desirable because it promotes more open political and economic systems is an argument that normally has more resonance in other capitals. Such thinking makes achieving multilateral support for sanctions less feasible than the United States tends to want. It usually takes something truly egregious—Saddam’s invasion and occupation of Kuwait, Libya’s support of terrorism such as at Lockerbie, the brazen rejection of Haiti’s election results and associated widespread human rights abuses—to overcome this anti-sanctions bias. And even in the case of Iraq, generous compensation for affected states, such as Egypt and Turkey, was a prerequisite for them to sustain support for sanctions.
Trying to compel others to join a sanctions effort by threatening secondary sanctions against those third parties unwilling to sanction the target can cause serious harm to a variety of U.S. foreign policy interests. This is what has happened with Cuba, Iran and Libya; in all three instances, sanctions now apply to overseas firms who violate the terms of U.S. legislation. This threat has had some deterrent effect on the willingness of certain individuals and firms to enter into proscribed business activities, but at a significant political price. It has increased anti-American sentiment, stimulated challenges that have the potential to jeopardize the future of the World Trade Organization, distracted attention away from the provocative behavior of the target governments, and made Europeans less likely to work with us in shaping policies to contend with post-Cold War challenges.
Multilateral support for economic sanctions should normally constitute a prerequisite for their introduction by the United States. (This is especially true for export sanctions. If sanctions are considered desirable, the United States might want to give thought to import controls, which can distribute the cost of the sanction within the United States yet still send a message to the target.) Such support need not be simultaneous, but it should be all but certain and likely to follow with little delay. Unilateral sanctions should be avoided except in those circumstances when the United States is in a unique situation to derive leverage based on the economic relationship with the target. Implementing this guideline will require intense, often high-level diplomatic effort and even then may not succeed. If this is so, then the task for policymakers is to compare what can be achieved by weaker sanctions to an alternative policy course, including both the use of incentives linked to improved behavior on the part of the target and the application of military force.
One instrument that can increase compliance is the provision of assistance to third parties in order to offset the economic cost of implementing sanctions. Arrangements to compensate countries whose support for the sanctions is central can thus be critical. This was the case with the Iraq sanctions; it is possible that sanctions against Haiti might have proved stronger had the Dominican Republic been more cooperative. Greater use should be made of Article 50 of the UN Charter, which sets forth a means by which third party states hurt by sanctions aimed at another state can approach the Security Council for redress. In addition, Congress might consider establishing a fund for this purpose within the U.S. foreign assistance budget. Given the current assistance budget, this money should be additional rather than come out of already underfunded aid accounts.
A call for greater multilateralism is not identical to a requirement to seek UN Security Council backing. Indeed, the United States should be careful about bringing sanctions to the UN Security Council. Although UN endorsement can buttress international compliance and complicate the task of any party seeking to ease sanctions—Iraq comes to mind here—it can also place the United States in the difficult position of having to choose between continued compliance with a policy judged to be no longer desirable or acting unilaterally in defiance of the Security Council, a step the United States is understandably reluctant to take as it could create precedents easily abused by others
Let me now turn to HR1244. I want to say at the outset that I am sympathetic to HR1244 and would welcome its passage. It would introduce much needed transparency and oversight into a process that has often lacked both.
Several of the principles embraced by the legislation are worthy of specific mention and endorsement. Sanctions should be targeted as narrowly as possible on the entities involved in the activity that we oppose. As a rule, humanitarian trade ought to be exempted, again to limit the collateral damage of sanctions. Clarity of purpose is always desirable, as is giving the president the authority to adjust or waive sanctions in the interest of national security. Such flexibility is essential if the executive is to have the necessary flexibility to conduct foreign and defense policy and if sanctions are to contain exit strategies that can provide incentives to targets to change their ways. I would similarly welcome the many reporting requirements contained in the legislation for both the executive branch and the Congressional Budget Office at the time a sanction is initiated and at regular intervals thereafter; the more details contained in such reports the better.
Let me end with a few questions and suggested modifications of the proposed legislation. I am uncomfortable with the “sunset” provision that would terminate any unilateral sanction after two years except where Congress acts to reauthorize. This is reminiscent of War Powers, and here, like there, I think it wrong to place the burden on those who would continue policy. I also worry about regular high-profile debates that could make it more difficult to modify existing policy. I would instead put the emphasis on transparency and a requirement for serious reporting by the executive branch and congressional support agencies both prior to congressional action and at regular intervals thereafter. The proposed waiver authority also introduces needed flexibility into the policy process.
Second, it is possible that the legislation’s approach to waivers would prove too “anti-sanction” for some members. In order to increase prospects for passing reform legislation, it might be useful to introduce some mechanism by which Congress can challenge a waiver, possibly by joint resolution which, if vetoed by the President, could then be made to stand by an override.
Third, it is not obvious why compensation should be limited to the agricultural sector. Why not consider extending to firms and workers in other realms?
Fourth and last, I would add the DCI to the Sanctions Review Committee as intelligence community assessments are sure to be central to the debate over projected and actual effects.
Thank you for this opportunity to appear before you and share my thoughts on this important set of policy issues. I look forward to any questions you might have.
Commentary
TestimonyUse and Effect of Unilateral Trade Sanctions
May 27, 1999