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Mr. Chairman, I welcome this opportunity to share with you the Administration's views on the use of economic sanctions as a foreign policy tool. This hearing is a welcome initiative and can make a lasting contribution in developing a consensus in this important area of policy where both the Executive Branch and the Congress have clear responsibilities. As a representative of the Executive Branch, I want to assure you that the Administration stands ready to work with you in the days and weeks ahead to seek an agreed approach on sanctions that will advance the full range of American national interests. The very cooperative and productive process we are currently engaged in with your staff on the Serbia Democratization Act in particular, Mr. Chairman, is a good example of the kind of dialogue that should exist generally between the Administration and the Congress on sanctions issues. It contains some of the elements of Presidential flexibility that are important to the Administration, such as national interest waiver authority. In this spirit, let me also mention another important area where working in bipartisan way we have been able to advance important U.S. goals. I am pleased to refer to the report which the Department of State is delivering today that was requested by you and this Committee, Mr. Chairman, on implementation of the OECD Anti-Bribery Convention. This Convention was a critical step sought by the U.S. for over 2 decades. Your leadership and the Senate's swift action to give advice and consent to ratification and to assure passage of U.S. legislation were essential in this achievement. We believe this report will make a contribution to ensuring that implementation of the Convention is vigorous and meets our objectives in advancing international anti-corruption goals we share. I have testified numerous times on sanctions reform including before the House Ways and Means Committee on October 23, 1997, the House International Relations Committee on June 3, 1998, the Lott Bipartisan Working Group on Economic Sanctions on September 8, 1998, the Senate Agricultural Committee on May 11, a second time before the Ways and Means Committee on May 27, and, most recently, on June 9 before the House Agriculture Committee. A number of bills involving economic sanctions have also been introduced into both Houses of Congress. These include broad legislation such as the Sanctions Policy Reform Act, S.757, and its House counterpart, the Enhancement of Trade, Security, and Human Rights through Sanctions Reform Act, H.R. 1244, and the Sanctions Rationalization Act of 1999, S.927. Others are narrower in scope, addressing food and medicines, targeting specific countries or issues, such as the Export Administration Act. The Administration has a clear position, Mr. Chairman, on the role of economic sanctions. Properly designed, implemented and applied as a part of a coherent strategy, sanctions--including economic sanctions--are a valuable tool for enforcing international norms and protecting our national interests. At the same time, sanctions are a blunt instrument. They are not a panacea nor are they cost free. Indeed, used inappropriately, they can actually impede the attainment of our objectives and come at a significant cost to other U.S. policy objectives. We face two fundamental issues in any discussion of this issue. First is to achieve an agreed definition of economic sanctions. Second, there is no common measure by which we can assess success. Some, drawing on broad definitions of sanctions, charge that there has been an explosion in both our individual application of this tool as well as in the number of laws mandating their imposition. The National Association of Manufacturers in 1997, for example, estimated that the U.S. has applied sanctions for foreign policy purposes a total of 115 times since World War I, 104 times since World War II, and according to the count of the President's Export Council, 61 times since 1993. Others, for example in your recent article in Foreign Affairs, Mr. Chairman, use a narrower definition, reject this charge and cite only the comprehensive U.S. embargoes on North Korea, Iran, Iraq, Sudan, Libya, Cuba and, more recently, Yugoslavia as real sanctions. Permit me to say, Mr. Chairman, that the issue on which we should focus is how to use this tool of foreign policy most appropriately and effectively. With respect to what constitutes a sanction, Mr. Chairman, there is no uniformly applicable legislative definition, but when I speak of a sanction, I have in mind the use of economic tools to address conduct by foreign governments or entities that is harmful to U.S. foreign policy interests. I do not include, for example, trade-related retaliation under our trade laws. During today's testimony, I will speak to the full range of measures that are sometimes placed within the rubric of "economic sanctions." Some include, for example, the denial of a normally available benefit, such as access to the U.S. market on an NTR basis, or the right to purchase U.S. goods or services or to attract U.S. investment. The broad trade embargoes on Iran, Cuba, North Korea, Libya, Sudan and Yugoslavia are undisputed examples. Some might also include decisions about whether to offer U.S. support in International Financial Institutions or conditions on U.S. aid that are imposed to advance U.S. foreign policy objectives. Just as there are differences over the definition of what we mean by economic sanctions, neither do we have an agreed standard by which to measure success. Some sanctions measures, such as denial of U.S. Government aid or other positive benefits to countries that violate international norms of behavior, can be relatively non-controversial. As we move toward unilateral restrictions on exports of private sector products, whether agricultural or industrial, widely available from a variety of supplier nations, they become more controversial. We employ economic measures to pursue a broad variety of goals--national security, non-proliferation, human rights, environment, to combat the scourge of narcotics, to enforce international trade rules are but a few examples. None of these is a simple issue. The costs and gains cannot be measured in dollars and cents on a spreadsheet. Nevertheless, the American people do have a right to expect generally that when we use economic sanctions, the specific sanctions measures will have a significant impact on those targeted, that they can be effectively implemented and enforced, that they will not cause more collateral damage than the wrong they are trying to remedy, and that due consideration is given to the potential adverse impact on other U.S. interests. One example should suffice. Sections 101 and 102 of the Arms Export Control Act (Glenn Amendment) provide for the mandatory denial of credits, credit guarantees or other financial assistance by U.S.G. agencies to any non-nuclear-weapons state testing a nuclear device. Non-proliferation is undeniably a critical and central goal of U.S. foreign policy. In this particular case, however, the application of that sanction to Pakistan would have cut off U.S. Government guarantees related to grain sales, hurting innocent Pakistani consumers, and harming an already hurting U.S. farm sector. In this particular case, the Congress reacted by exempting USDA guarantees from the application of the Glenn Amendment. The use of economic sanctions almost invariably involves a trade off between interests. We believe that our use of sanctions should be governed by a number of common sense principles and that any prospective legislation should be measured against these same standards. First, effectiveness should be our watchword. In fact, used ineffectively, they can even make it more difficult to attain our goals and come at a significant cost to other U.S. policy objectives. At the same time, our emphasis in effectiveness should not lead us to expect instant results or deter us from acting alone when important U.S. interests are at stake. Indeed, this is why presidential flexibility is essential. Second, unilateral economic sanctions should not be a first resort to conduct by a foreign government which negatively affects our interests. We should first aggressively pursue other available diplomatic options. These can range from symbolic measures like withdrawing an Ambassador, reducing embassy staff, to denying visas to target figures, entering into security arrangements with neighboring countries, to military intervention and everything in between. In general, we should turn to sanctions only after other options have failed or have been judged inadequate or inappropriate. Third, sanctions are most effective when they have broad multilateral support. The history of our use of unilateral sanctions shows that by themselves in the majority of cases they fail to change the conduct of the targeted country or, at best, are a contributory but probably not a decisive factor in securing the changes of behavior or policy that we seek. Multilateral sanctions in contrast maximize international pressure on the offending state. They show unity of international purpose. Because they are multilateral, these sanctions regimes are more difficult to evade or undermine. They minimize the damage to U.S. competitiveness and distribute more equitably the cost of sanctions across countries. It was multilateral sanctions that helped end apartheid in South Africa, that have isolated Saddam Hussein in Iraq, that brought Serbia to the bargaining table in Dayton. When considering sanctions legislation, we believe that the Congress could include provisions urging the President to make maximum efforts to develop multilateral cooperation with other countries having similar interests in addressing the concern which the sanctions are intended to address. Nonetheless, if we are unsuccessful in building a multilateral regime, and important national interests are at issue, we must be prepared to act unilaterally. To maintain its leadership role, the U.S. must sometimes act even though other nations are not compelled to do so. Fourth, flexibility of application is absolutely essential if we are to use sanctions effectively. The fundamental principle underlying our approach is one of symmetry between the two branches--Congress, in short, should be no more prescriptive of the Executive Branch than it is of itself. Our foreign policy is most effective when it reflects cooperation and consultation between the Administration and the Congress. The decision to apply economic sanctions--or to lift or waive potential measures or those already in place--should reflect a relationship of comity between the Executive and Legislative branches. We must respect the particular role that each branch plays in making foreign policy. The Congress shares with the Executive Branch the responsibility for helping shape our foreign policy. In the realm of economic measures, Congress has a clear role that we respect. At the same time, the President is responsible for conducting the nation's foreign policy and for dealing with foreign governments. Thus, sanctions legislation needs to take into account these respective responsibilities. Sanctions legislation should set forth broad objectives but should allow the flexibility to respond to a constantly changing and evolving situation and give the President the necessary authority to tailor specific U.S. actions to meet our foreign policy objectives. Legislation which seeks to codify and mandate existing sanctions regimes which have been imposed under existing authorities, however well intended and however carefully drafted, can not anticipate changing situations and thus inevitably limits the President's flexibility and unnecessarily complicates our efforts to deal with the situation which led to the imposition of those sanctions. As Secretary Albright has said, there can be no "cookie-cutter," no "one size fits all" approach to sanctions policy. In any sanctions reform legislation we support a single national interest waiver standard applicable to all future sanctions legislation. Our experiences with the Libertad Act (Helms-Burton) and the Iran-Libya Sanctions Act (ILSA) underscore the importance of flexibility to achieving the purposes of those acts. In the case of Helms-Burton, the exercise of Title III waiver authority led the EU, in December, 1996, to enact and restate each 6 months its Common Position on Cuba, tying concrete improvement of its relations with Cuba to fundamental changes in respect for human rights and fundamental freedoms in Cuba. The EU has spoken out more forcefully in support of democracy and human rights. It has established a special Human Rights Working Group among its Embassies to reach out to dissidents and has condemned the arrest of the dissident working group. Similarly, the prospect of an amendment to Title IV that would authorize a waiver led the EU to agree to an Understanding to limit investment in illegally expropriated properties worldwide, including in Cuba. Mr. Chairman, when I set out to negotiate this Understanding, I was mindful of your long-held personal goal of strengthening the protection of U.S. property rights abroad, a goal that is shared by the Administration and, I know, by others on this Committee. The pathbreaking Understanding that we reached with the EU on May 18, 1998, will, for the first time, establish multilateral disciplines among major capital exporting countries to inhibit and deter investment in properties that have been expropriated in violation of international law. These new restrictions will discourage illegal expropriations and chill investment in Cuba, warning investors to keep "hands off." Castro has railed against the Understanding, precisely because he understands its potential impact on Cuba and because he sees that it embodies the principles underlying Helms-Burton. We recognize that some in the Congress have concerns about European implementation of the Understanding. We believe that the Understanding itself, coupled with a detailed letter from Secretary Albright to you, and the recent letter from Sir Leon Brittan (the EU trade commissioner) to Chairman Gilman (Representative Benjamin Gilman, chairman of the U.S. House of Representatives International Relations Committee), should go a long way toward addressing these concerns. But we are not asking Congress to leave to chance the question whether the Understanding will work. We have in mind an amendment that would authorize waiver of Title IV for countries that are implementing the Understanding but that would require revocation of the waiver if implementation is inadequate. Secretary Albright has committed to you that she would not hesitate to exercise this revocation authority. We want to work with the Congress to craft an amendment to Title IV of the Libertad Act that will implement the United States commitment under the Understanding in a manner that instills confidence in the Congress. Mr. Chairman, there is no other international instrument that does for U.S. property rights what this Understanding would do. The Administration and the Congress must work together towards an appropriate amendment of Title IV so that our 1998 U.S.-EU Understanding can go into effect. If we do not, we will lose this historic opportunity to hand a defeat to Mr. Castro. Similarly, the flexibility included in ILSA--the ability to decide whether to impose or waive sanctions--was central to our ability to advance the objectives of that law. In developing ILSA, Congress was motivated by its deep concern about the proliferation of weapons of mass destruction (WMD) and terrorism and expressed its deep concern about Iran. We used the Act's waiver authority to help consolidate the gains that we had made with the EU and Russia on strengthening international cooperation to oppose Iran's dangerous and objectionable behavior. For example, the EU strengthened its already good export controls on dealing with Iran. It helped us avoid a major dispute with allies that would not have served the Act's objectives and would have heavily strained our cooperation with our allies across the board. With these general principles in mind, we have suggested an approach to sanctions reform that we believe would be productive in achieving improved discipline on the use of sanctions by both the Congress and the Executive Branch. We have proposed appropriate and flexible guidelines that the Executive Branch would be willing to apply to future imposition of sanctions under IEEPA as well as discretionary sanctions under future sanctions laws passed by Congress. First, we believe that flexibility accompanied by national interest waiver authority applicable to all future unilateral sanctions legislation is the single most essential element. The President should be authorized to refrain from imposing, or taking any action that would result in the imposition of, any unilateral economic sanction, and be authorized to suspend or terminate the application of such a sanction based on a national interest determination. We agree that Congress should also have a role to play in this decision. Thus, we have suggested that the President would notify the Congress of his decision to exercise a national interest waiver and that the Congress would have an opportunity to disapprove of the exercise of the waiver using expedited procedures. Second, it is important to prevent excessive procedural constraints from hamstringing the Executive Branch, for example, advance public notice of sanctions which could allow a target country or entity to rearrange its assets in advance of U.S. action. We have expressed our willingness to work with the Congress on appropriate requirements. We cannot accept excessively prescriptive procedural constraints on the President's flexibility to impose sanctions. In general, Congress--which as a legislative body can always override previous legislation in the sanctions area--should be no more prescriptive of the Executive Branch than it is of itself. At the same time, we acknowledge certain key issues of concern to sanctions reform supporters, particularly including requiring that the Executive Branch conduct (and report to Congress) a rigorous cost/gain analysis before sanctions are imposed, and requiring some sort of sunset provision for sanctions measures. The Administration agrees that such a cost/gain analysis should be conducted, though there would need to be flexibility in deciding how to proceed in any particular case. Sunset clauses tied to a set time period rather than a measure of a sanction's performance are not be appropriate. Many objectives of particular sanctions may not be achievable within a pre-ordained time period. I know no member of Congress would want to give the targets of sanctions the ability to wait the United States out by imposing time bound sanctions in every instance. As an alternative, Mr. Chairman, we have suggested instead that the President could annually review our specific sanctions measures and, depending on his review of the continued effectiveness of such measures, determine whether they should terminate. If Congress does not approve of the President's decision, it could enact legislation of disapproval. Let me turn briefly, Mr. Chairman, to the question of sanctions on food, medicines, medical equipment and other human essentials. Many of the bills proposed would impact on the President's ability to impose sanctions on such items. On April 28 the President announced that the Administration will generally exclude agricultural commodities and products, and medicines and medical equipment from future discretionary unilateral sanctions regimes, and will extend that same principle to existing regimes where we have the discretion to do so. We were particularly gratified, Mr. Chairman, for your own expression of support for these changes. At the time of that announcement, the Administration noted that there may be compelling circumstances where this would not be appropriate: for example, where the offending regime is using import of foods and medicines as an internal political tool, where a regime or its officials derive unjustified economic benefit from such imports, or where we or our allies are engaged in armed conflict. The President must be given the flexibility to tailor and use sanctions--including sanctions on food and medicine--as appropriate in any particular situation. We believe that any of the bills dealing with this issue should conform to the principles I have just outlined. We do not believe that those narrower bills should substitute for or divert attention away from the broader issue of overall sanctions reform. In sum, if our policies are to be effective, we must work together--Administration, Congress, at the state and local level, as well as the business community, including NGOs--to see that our use of sanctions is appropriate, coherent, and designed to attract international support. We hope to work with those in the Senate and in the House with interest in this matter to craft an effective sanctions reform package in 1999. Thank you. [end of document]
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