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NIXON CENTER PERSPECTIVES

Volume 3, Number 3

by Lee H. Hamilton

July 20, 1998

(Congressman Hamilton (D-IN) is ranking minority member of the House International Relations Committee and a member of The Nixon Center Advisory Council.)

The United States emerged from the Cold War as the world's pre-eminent power. Its enhanced status puts this country in a position in which it can lead or it can take actions that are seen as willful. In this era we have seen the rise of economic sanctions as a preferred instrument of American foreign policy. In the last five and one-half years we have imposed or threatened sanctions on more than 70 nations with more than half the world's population. That is rather ironical for a nation that professes to advocate freer trade in a globalized international economy.

In addition to joining other nations in imposing sanctions on obvious aggressors, we have in this era witnessed a veritable explosion of unilateral American economic sanctions. These appear to be a costless way of expressing our disapprobation of the behavior of other governments without incurring the risks of military action. For this reason, sanctions have become a weapon of first rather than last resort for many in Congress and the Administration eager to send a message to those governments whose actions we disapprove or, at least equally importantly, to satisfy the demands of the ever growing number of single-issue domestic interest groups.

Not surprisingly, unilateral sanctions particularly when we seek to compel others to follow our lead have stirred resentment and a growing backlash abroad. Here at home the effectiveness and appropriateness of unilateral sanctions are increasingly questioned. Though not necessarily visible to the voting public, their costs to the American economy are substantial. Far more important, the indiscriminate use of sanctions is undermining America's ability to lead internationally.

Perhaps no one is better qualified to analyze the impact of unilateral sanctions on U.S. foreign policy than Congressman Lee Hamilton. Since his election in 1964 he has been one of the shining lights in the House of Representatives. Responsible and judicious, he has been one of the most thoughtful analysts of international affairs in the Congress. Currently the Ranking Democrat on the Committee on International Relations, he is a past Chairman of that committee as well. He has long been an advocate of the belief, now an increasingly rare sentiment in American political life, that politics should stop at the water's edge. He has been a devoted and tireless servant. After 34 years in the House, Mr. Hamilton has regrettably decided to retire at the end of this term. Though he has surely earned a respite, it is the nation's loss, and we shall sorely miss him.

Sanctions have been a hot topic - maybe the hot topic - in U.S. foreign policy in recent months, so this discussion, initiated by The Nixon Center, is timely.

First, I will describe some of my concerns about economic sanctions. Then, I will briefly discuss the sanctions reform bill that Senator Lugar and I introduced last fall.

Let's start with some definitions.

There has been a lot of discussion of sanctions in recent months, but I have the impression that different people have been talking about different things.

The sanctions that concern me - the ones that we try to address in our bill - are restrictions on commerce that the United States, acting alone, imposes on foreign countries or companies for foreign policy purposes.

I am not concerned about trade sanctions - economic penalties the United States imposes in retaliation for unfair foreign trade practices.

I am not talking about cuts in U.S. foreign assistance. Those are economic penalties, to be sure, but they involve cuts in U.S. government expenditures, and they don't substantially interfere with private commerce.

Finally, I am not talking about multilateral sanctions - for example, measures imposed by a UN resolution or an international agreement.

The U.S. needs economic sanctions in its foreign policy tool kit. Sanctions can be a useful option between diplomacy and sending in the troops.

Unilateral sanctions have been important tools of U.S. foreign policy for decades. Sometimes the conduct of another country has been so abhorrent or dangerous that we have felt compelled to apply economic pressure, even when other countries wouldn't join us.

Prior to 1980, several laws authorized the imposition of sanctions for foreign policy purposes. Those laws gave the President a lot of flexibility to decide when and how to impose sanctions. During the past two decades, however, and especially since 1990, U.S. sanctions policies have changed substantially.

The way we use them today, I believe that unilateral sanctions are, on balance, damaging U.S. interests.

First, we impose sanctions much more frequently. We have imposed foreign policy sanctions 100 times since World War II, but more than 60 times just since 1993. Seventy-five countries are now subject to, or threatened by, U.S. sanctions.

Second, we use a wider variety of measures to target a wider range of foreign conduct. U.S. laws authorize 21 different sanctions targeting 27 different kinds of foreign conduct. Sanctions have become the policy tool of choice. They define U.S. relations with Cuba and Iran. They are used to achieve our objectives in many areas, including non-proliferation, human rights and the fight against international crime and drug trafficking.

Third, during the past two years, we have departed from longstanding policies and enacted two sanctions measures - the Helms-Burton Act and the Iran-Libya Sanctions Act - that penalize foreign firms for their activities in third countries.

Nearly every unilateral sanction measure of the past several years has originated in Congress.

Several factors account for the popularity of sanctions on Capitol Hill.

First, in our frustration with the conduct of another nation, we want to do something to express our displeasure. We are less patient with diplomacy, and we are less tolerant of friendly governments that won't follow our lead in pressuring bad actors.

Second, sanctions seem to offer an attractive, cost-free middle course between diplomacy and military action. Imposing sanctions allows Congress to take action on a given issue without committing itself - or the country - to a more forceful or risky policy.

Third, sanctions make Congress a player in foreign policy, where its powers tend to be limited. Congress particularly likes sanctions legislation that contains waivers, because the combination allows Members to express their displeasure on an issue without taking responsibility. We let the President bear the responsibility.

Fourth, the growth of sanctions has a lot to do with domestic politics. In recent years, single issue constituencies have risen in power. Congress wants to let domestic as well as foreign audiences know where it stands on foreign policy issues. Of course, one reason we like sanctions in response to constituent pressures is that, with the inclusion of a waiver in the legislation, we almost never have the responsibility to decide when and how to use them. We leave those tough calls to the President.

I have two broad concerns about the impact of unilateral sanctions.

First, unilateral sanctions harm our economy. They cost jobs, sales and profits.

The Institute for International Economics estimated last year that they cost us $15-19 billion in export sales annually.

According to the U.S. Department of Agriculture, the five countries currently under total U.S. trade embargoes -- Iran, Iraq, Libya, Cuba, and North Korea - together account for roughly 11% of world wheat imports. This means that 11% of the world wheat market is off-limits to U.S. farmers. But, of course, it doesn't mean those countries can't buy wheat.

Lost exports mean lost jobs. If unilateral sanctions reduce U.S. exports by at least $15 billion dollars annually, then our economy is also missing out on a couple hundred thousand export-sector jobs, which pay better than other jobs.

Even the best estimates of the direct economic impact of sanctions may substantially understate their long-term harm to our economy.

Our reputation for unilateral sanctions - and not just existing restrictions - costs potential export and investment opportunities. Many American executives have told me that foreign firms and governments are beginning to steer clear of U.S. companies when making procurement decisions. Some European firms now warn prospective customers that U.S. firms can't be counted on because of sanctions.

Second, unilateral sanctions harm American foreign policy.

While economic considerations are important, we all agree that U.S. foreign policy objectives sometimes justify the sacrifice of corporate profits - and even some jobs.

I think an effective case can be made against unilateral sanctions on foreign policy - as well as economic - grounds. It has several parts.

Unilateral Sanctions Don't Work

The first part of the foreign policy case against unilateral sanctions is straightforward: unilateral sanctions simply do not work.

The most thorough study I know - conducted by the Institute for International Economics - found that unilateral and multilateral sanctions have together succeeded less than 20% of the time since 1990.

Unilateral measures have been especially ineffective. The reason is that the world economy has become too interdependent. When we deny a country access to our products or our markets, it has plenty of alternatives.

For environmental reasons, U.S. construction equipment manufacturers were barred from participating in China's massive Three Gorges dam project. Several hundred million dollars in contracts will now be taken by Japanese and other foreign firms. The impact on China's environment? None.

Last year's anti-narcotics decertification of Colombia prevented a U.S. firm from receiving Ex-Im Bank backing for its participation in a $165 million power plant project. A French company took the contract. The impact on Colombia's economy? None.

Foreign firms have received billions of dollars in contracts in recent years while U.S. firms have been barred for non-proliferation reasons from participating in the construction of Chinese nuclear power plants. The impact on China's nuclear industry? None.

I understand the importance of the foreign policy objectives at stake in each of these cases. We need to pursue alternatives to unilateral sanctions precisely because these objectives are so important. Because unilateral sanctions alone usually don't work, they are better if they are used in tandem with other foreign policy tools - for example, as part of a broader policy that conveys a credible use of U.S. power.

The second part of the foreign policy argument against unilateral sanctions is that unilateral sanctions - especially full trade embargoes - often inflict hardship on innocent citizens, while increasing the grip of the leaders we despise.

The purpose of sanctions is often to cause sufficient pain that the population of a country rises up and forces a change in its government's policies or leadership.

Most countries targeted by sanctions are ruled by authoritarian leaders who care little about popular sentiment, have effective means of containing opposition, and can insulate themselves from economic pain. In contrast to multilateral measures, which can bring greater pressure to bear, unilateral measures often inflict just enough pain to hurt innocent citizens without jeopardizing a government's status.

The third part of the foreign policy case against unilateral sanctions is that they often produce unintended consequences that are counterproductive to the very objectives they are designed to promote.

Governments targeted unilaterally by the United States are given a handy scapegoat for problems that are largely of their own making. In several well-known cases - Cuba, for one - U.S. pressure has sometimes increased, rather than decreased, popular support for a sanctioned government.

In Haiti, U.S. sanctions increased economic distress and produced a massive outpouring of refugees to the United States, which increased domestic pressure on the President to become more involved in that crisis.

A fourth part of the foreign policy case against unilateral sanctions is that they often cause collateral damage to other U.S. foreign policy interests.

U.S. interests in any country are multifaceted. But unilateral sanctions often force the President to conduct American foreign policy toward countries on the basis of a single standard.

The frequent use of unilateral sanctions - for every cause, to every country - erodes U.S. leadership. They prompt a reaction against American leadership. Because they don't work, we look weak. And, besides, they often irritate our allies.

Mandatory, automatic sanctions sharply restrict the President's ability to conduct American foreign policy. They deprive the President of the ability to determine when to condemn - and how to deal with - offensive policies. Unilateral sanctions legislation often conveys the message that there is only one way to deal with a problem, and that is to apply sanctions. Foreign policy is not that simple.

A good example of the damaging impact these automatic, unilateral sanctions can have on U.S. foreign policy are the sanctions the President is required to impose on India and Pakistan under the 1994 Nuclear Proliferation Prevention Act, known as the "Glenn Amendment."

Because Pakistan's economy is in far worse shape than India's, U.S. sanctions - which the President may not adjust - will hit Pakistan much harder than they hit India. The U.S. will be perceived throughout South Asia as favoring India - certainly not what Congress intended. It also means Pakistan's economy will be in danger of defaulting. Nothing could be more threatening to this region's stability than a political and economic crisis in Pakistan.

Another bill that would require the President to impose a rigid list of sanctions in response to unknowable future circumstances is the House-passed Freedom from Religious Persecution Act.

If this bill were to become law, a friendly country that engages in economic persecution of a religious community would be hit with the exact same sanctions as a hostile country that slaughtered a religious group. The Administration would have no discretion, and U.S. national interests would suffer.

The collateral damage caused by unilateral sanctions is apparent in third-party measures like the Helms-Burton and Iran-Libya Sanctions Acts, which have caused serious problems for American foreign policy.

There is no convincing evidence that either law has promoted change in the policies or regimes of targeted countries. Yet there is clear evidence that both laws have harmed U.S. foreign policy interests well beyond Cuba, Iran, and Libya. They have:

Several weeks ago, the United States was able, at least temporarily, to resolve the principal disputes caused by these laws. These diplomatic achievements must still gain the support of Congress.

On ILSA, the Administration's decision to waive sanctions against three foreign firms was clearly in the U.S. national interest. Sanctioning this deal would have jeopardized the achievement of several extraordinarily important foreign policy objectives. It would have:

Undermined U.S. efforts to maintain a multilateral coalition to contain Iraq;

Reduced multilateral cooperation on Iran;

On Helms-Burton, the United States and the EU reached tentative agreement on measures that will restrict investment in illegally confiscated property world-wide. For this deal to be completed, Congress will need to approve a Presidential waiver for the immigration restrictions of Helms-Burton. We should do so, because this agreement is too valuable to pass up. It will:

Increase protection for the property rights of Americans worldwide;

Resolve a dispute with our most important allies and trading partners;

Reduce investment in properties that were illegally confiscated in Cuba.

The U.S.-EU agreement on Helms-Burton deserves the support of Congress. It represents an unprecedented step forward for global property rights. It ends a major dispute with our allies. And it will make it easier for us to cooperate with them on steps to promote democracy in Cuba.

The third reason to be concerned about the increased use and scope of unilateral sanctions is that they are easy to approve, but hard to lift.

Unilateral sanctions are a blunt instrument. Congress uses them to make a statement about its foreign policy views, but once they become law, Congress has no control over their timing or their use.

Sanctions laws that contain waiver provisions allow the President to ease sanctions restrictions with little or no input from the Congress.

Sanctions laws that are mandatory require another act of Congress and approval by the President to reduce or prevent their negative impact.

Just last week, the Congress did act to modify Section 102 of the Arms Export Control Act - commonly referred to as the Glenn amendment - to permit financing and credits to support the sales of food, agricultural products (including fertilizers), medicines, and medical equipment to India and Pakistan.

In taking this unusual step, the Congress acknowledged that the original language of the Glenn amendment was too broad and sweeping in its coverage.

It was indiscriminate in its targets.

It contained no termination date.

While none of these issues is unique to the sanctions contained in the Glenn amendment, Congress' action to modify that law is unusual. Rather than relying on those occasions when there is a bipartisan, bicameral consensus to reverse the negative impact caused by unilateral sanctions, Congress should have better information about the likely impact of sanctions legislation before it becomes law.

When we consider the economic costs, the foreign policy costs and the ineffectiveness of unilateral sanctions, it is alarming to note how poorly informed we are about the likely impact of proposed sanctions.

Remarkably, no U.S. law requires an assessment of the impact of foreign policy sanctions before or after they are imposed. The bill Senator Lugar and I have introduced - the Sanctions Reform Act, S. 1413 and H.R. 2708 - would change that.

It would require a committee reporting a unilateral sanctions bill to request an analysis by the President of the bill's likely impact on U.S. foreign policy, economic, and humanitarian interests, and an analysis by CBO of its impact on the private sector. The President would be required to prepare a similar analysis of sanctions he wanted to impose.

H.R. 2708 also establishes some guidelines for future sanctions. It would require that they expire after two years, unless reauthorized; protect existing contracts; be targeted narrowly on responsible actors; and minimize interference with the work of private humanitarian organizations.

H.R. 2708 would not impact any sanctions currently in effect or prohibit any future sanctions. It would not limit the President's ability to impose sanctions in emergencies. It would not affect any sanctions imposed under U.S. trade, arms export, health, or safety laws, or under multilateral agreements on proliferation, the environment, or other international issues.

I view H.R. 2708 as a "yellow light" for sanctions, not a "red light." It would ensure that, before we impose sanctions unilaterally, we have in hand better information on their potential costs and benefits. And if we chose to act unilaterally, H.R. 2708 would strengthen U.S. sanctions by reducing their domestic cost and minimizing their harm to innocent citizens.

In summary, I conclude that:

First, sanctions are an important instrument of U.S. foreign policy;

Second, multilateral sanctions, under the right circumstances, can sometimes achieve our goals. Whenever possible, the United States should seek international support for its sanctions policies, because unilateral sanctions are rarely effective;

Third, because they are particularly damaging to U.S. foreign policy interests, we should be extremely wary of third-party sanctions, such as those called for by the Helms-Burton and Iran Libya Sanctions Acts. They do not bring about multilateral support for sanctions;

Fourth, sanctions can cost jobs, exports, and profits, and be very expensive to American producers and workers.

Fifth, sanctions should be crafted to target the rulers for their offensive behavior, and should try to avoid the pain they inflict on the innocent, who are, of course, not our enemies;

Sixth, sanctions should not be focused on a single issue. Our relationships with other countries are multi-faceted and should not be held hostage to the concerns - however valid - of single issue constituencies;

Seventh, to minimize their negative, unintended consequences, sanctions should include humanitarian exemptions, provide for discretion and flexibility by the use of a Presidential waiver. They should also be of short duration;

Eighth, to ensure that U.S. foreign policy speaks with one voice, states and local entities should be prohibited from imposing unilateral sanctions; and

Finally, before acting, the Executive branch and Congress should have a clear assessment of the costs, benefits and risks of imposing unilateral sanctions. They are easier to impose than to lift.

Thank you.