Gary Clyde Hufbauer & Barbara Oegg. Middle East Policy. Volume 10, Issue 2, Summer 2003.
Domestic interest groups in U.S. Sanctions policy
Special-interest groups—business associations, ethnic-based or religious groups—play a central role in the American political system. Organized for the purpose of exerting influence on policy makers in Washington, these groups not only aim to influence the government’s domestic agenda, but also to lobby Congress to have their interests abroad served. In fact, many scholars claim that American foreign policy in the twentieth century has increasingly been determined not by considerations of national interest, but by the economic and ethnic interests of vocal minorities. Likewise, U.S. sanctions policy in the twentieth century also reflects the importance of organized domestic interests in shaping foreign policy.
American Jewish organizations were instrumental in the passing of the Jackson-Vanik amendment to the Trade Act of 1974. Sponsored by Senator Henry Jackson and Representative Charles Vanik, the amendment denied communist countries most-favored-nation trading status and access to U.S. government credits and investment guarantees as long as they restricted the emigration of Jews and other dissidents. Primarily aimed at the former Soviet Union, the “freedom-of-emigration” amendment continues to hold U.S.-Russian trade relations hostage. While the American Jewish community has recently indicated support for removing the Jackson-Vanik requirements for Russia, it wants assurances that U.S. policy will continue to promote human rights in that country.
Economic sanctions imposed against South Africa in the 1980s also illustrate the success of interest-group lobbying. South Africa was a particularly instructive case study because it involved competing domestic interests: major multinational companies opposed economic sanctions, while African-American groups backed by a coalition of religious groups, labor unions and student activists favored them.
In 1985, in an effort to head off strong congressional action spearheaded by the Congressional Black Caucus, President Reagan imposed limited economic sanctions against South Africa. The executive order banned the export of U.S. computers and software to the official sector in South Africa, prohibited the export of nuclear goods and technology, and restricted loans to the South African government. A month later, President Reagan also imposed a ban on the import of krugerrands. However, in response to mounting pressure from Trans-Africa, a group founded in 1977 to lobby for African-American interests in African and Caribbean issues, and the Free South Africa Movement, Congress passed tougher sanctions legislation—the Comprehensive Anti-Apartheid Act—over President Reagan’s veto in October 1986. While business groups certainly opposed economic sanctions, the increasing domestic pressure in favor of economic sanctions coincided with a recession in South Africa, weakening business-group incentives to launch a forceful campaign against the proposed sanctions legislation.
Assuming that congressional involvement in U.S. sanctions policy reflects increased activism by organized interest groups, subtle differences between earlier decades and the post-Cold War era can be better understood. In the 1960s and 1970s, Congress mainly intervened to encourage the executive branch to impose sanctions in pursuit of broad norms and values such as human rights or nuclear non-proliferation. Sanctions legislation almost always allowed for executive discretion and did not mandate the imposition of sanctions. For example, amendments to the Foreign Assistance Act of 1961 passed in the early 1970s prohibit military or economic assistance to governments that engage in consistent patterns of gross violations of internationally recognized human rights.
By the same token, sanctions legislation rarely targeted specific countries; the Comprehensive Anti-Apartheid Act against South Africa discussed above and the mandatory economic sanctions imposed against Uganda in 1972 because of human-rights concerns are the exceptions.
The end of the Cold War allowed for a much wider spectrum of issues, many formerly considered the internal affairs of states, to become legitimate concerns of the international community. In an effort to “do something” about, for example, ethnic strife, civil wars and genocide, both the United States and the United Nations increasingly resorted to economic sanctions. They became the policy tool of choice to promote international peace and security. At the same time, freed from the constraints of Cold War politics, special-interest groups also became more active in the formulation of foreign policy, in particular U.S. sanctions policy.
The greater influence of special-interest groups in the 1990s is illustrated by the growth of country-specific sanctions legislation introduced in Congress, as well as the related growth of presidential executive orders intended to head off more severe congressional action. Under congressional pressure and to avoid the more severe economic restrictions proposed in the “Burma Freedom and Democracy Act,” President Clinton barred new U.S. investment in Burma in 1997. Likewise, Congress singled out Cuba, Iran, Libya and Sudan as targets for economic sanctions in the 1990s.
The American Israel Public Affairs Committee (AIPAC) played a leading role in the August 1996 decision by the Clinton administration to extend a full commercial embargo on Iran. AIPAC also played a role in assuring that Russian firms were penalized for helping Iran to improve its missile technology. Likewise, African-American groups successfully lobbied Congress and the executive branch to impose sanctions against Nigeria for human-rights reasons in the early 1990s.
During the Cold War, the concerns of organized social groups and the national interest often coincided; however, in the less ordered environment of the 1990s, this no longer seems so true. The Armenian diaspora successfully pushed Section 907 of the Freedom Support Act through Congress, barring foreign aid to Azerbaijan in retaliation for its embargo on Armenia in the conflict over Nagorno-Karabakh, despite the opposition of the Clinton administration. As a result, Section 907 severely constrained U.S. strategic interests in the Azerbaijani oil sector. In addition, sanctions compromised the role of the United States as an impartial mediator in the effort to reach a peaceful settlement of the Nagorno-Karabakh conflict. In 2002, only in response to Azerbaijan’s support for the U.S. war on terrorism was Section 907 lifted.
Special-interest groups and their supporters in Congress have also been involved in the imposition of secondary sanctions. The Iran-Libya Sanctions Act (ILSA) and the Helms-Burton bill targeting Cuba were strongly influenced by lobbying efforts of AIPAC and families of Pan Am 103 victims in the case of ILSA, and Cuban-American groups in the case of Helms-Burton. These two statutes threaten economic sanctions against firms in third countries that do not cooperate with U.S. sanctions against the target countries. Consequently, the laws strained U.S. relations with major trading partners and allies—the European Union, Canada and Mexico. While the executive branch has never enforced the sanctions provisions included in either of the statutes, ILSA and Helms-Burton continue to burden transatlantic relations. As part of an understanding reached between the European Union and the United States in 1998 to resolve the dispute, the Clinton administration agreed to seek changes to the Helms-Burton law to allow a permanent waiver for European companies. Thus far, no such amendment has been passed. In fact, Congress extended the Iran Libya Sanctions Act, which was also covered by the understanding, for five additional years in 2001.
Similarly, the Sudan Peace Act, sponsored by a coalition of religious groups, human-rights activists and the Congressional Black Caucus, would have prohibited foreign companies engaged in the development of the oil and gas sector in Sudan from raising capital in the United States or from trading its securities in any capital market in the United States (U.S. companies are barred from investing in Sudan under separate legislation). Passed by an overwhelming majority in the House of Representatives in early 2001, the bill was put aside only when Sudan offered to cooperate in the war on terrorism.
As these examples illustrate, in the absence of a clear consensus on what constitutes the national interest, narrow constituency groups have gained unprecedented influence over the formulation of sanctions policy, often to the detriment of other U.S. foreign-policy objectives.
Non-State Actors as Targets of Economic Sanctions
Not only have special-interest groups become more active, but the targets of choice of economic sanctions have also changed in the post-Cold War era. As a consequence of the spreading view that internal conflicts are a legitimate concern for the international community, targets of economic sanctions have changed from countries to internal actors. Economic sanctions are now increasingly targeted, not at states but at actors inside the nation-state. U.N sanctions against Angola, for example, are targeted at one particular internal actor, the rebel movement UNITA.
The greater concern with the internal affairs of states goes hand in hand with a growing emphasis on the individual accountability of those in power for the unlawful acts of states (highlighted by the Pinochet case and the Bosnian war-crimes trials). Reinforced by concerns about the humanitarian impact of comprehensive economic sanctions (especially in response to the U.N. experience in Iraq), these developments led to the increased reliance on targeted sanctions. Targeted sanctions such as arms embargoes, travel bans and asset freezes are intended to focus their impact on leaders, political elites and segments of society believed to be responsible for the objectionable behavior.
Apart from the comprehensive sanctions imposed against Iraq and Yugoslavia, all U.N. sanctions initiated in the 1990s were limited in scope and frequently targeted against internal actors. In the case of U.S. and U.N. sanctions against Haiti, not only were imports of oil and arms prohibited, but sanctions were also aimed directly at the members of the military junta and their families. Overseas bank accounts and other financial assets of people involved in the coup were frozen, private flights to and from Haiti were banned, and visas of military-junta leaders and their families were revoked.
As mentioned above, U.N. Security Council actions in Angola focus on one particular international actor: UNITA. When UNITA renounced U.N.-supervised elections and resumed military activities in 1993, the United Nations placed an arms and oil embargo on UNITA. The initial embargo was followed by a travel ban for senior officials of UNITA and their families in 1997, and finally a ban on all financial transactions with UNITA, a mandated freeze of UNITA financial assets, and an embargo on imports of diamonds not certified by the Angolan government. In the case of Afghanistan, too, U.S. and U.N. economic sanctions where specifically targeted against the Taliban regime, Osama bin Laden and al-Qaeda.
In some cases, the United Nations initially imposed economic sanctions on the entire country and then excluded the government (or party) that the Security Council wanted to support. This was the case in Sierra Leone, where the government was excluded from sanctions one year after they had been imposed. In fact, the United Nations passed a resolution explicitly reinstating the arms embargo and travel ban on the rebel movement RUF and members of the former military junta. Similarly, the Rwandan government was excluded from the 1994 arms embargo in 1995.
The European Union went a step further and not only used targeted sanctions, but also targeted incentives to support democratic forces in the former Yugoslavia. At the same time that members of the Milosevic regime were barred from traveling and saw their visas revoked and financial assets abroad frozen, the EU agreed to exclude two Serbian cities controlled by opposition parties from the oil embargo and supply $5 million in oil under a program called “Energy for Democracy.”
One U.S. unilateral initiative is the “Specially Designated Narcotics Traffickers” (SDNT) program, designed to identify and incapacitate Colombia’s drug cartels by denying access to the U.S. financial system and trade with U.S. firms. “Specially Designated Terrorists” and “Foreign Terrorist Organizations” programs are modeled along the same lines. Most recently, the Bush administration, following the lead of the European Union, froze the assets of President Robert Mugabe of Zimbabwe and other members of his government who are undermining the democratic process in Zimbabwe. President Mugabe and senior members of his regime had already been banned from entry into the United States in 2002.
Targeted sanctions operate at a level of intervention and discrimination in the internal affairs of states that was unknown in previous decades. No longer is the state seen as a single-purpose unitary actor. Instead it is seen as a geographic location of discordant groups. Setting aside the question of the effectiveness of targeted sanctions in reaching their stated goals, these measures also constitute a departure from the traditional sanctions philosophy that civilian pain leads to political change. Because targeted sanctions focus on certain groups and individuals within the targeted country, they assume that the leaders do not represent the population and can actually be separated from them.
Non-state Senders
Over the past decade, not only has Congress taken a more active role in the formulation of foreign policy, but state and even local governments have also felt freer to shape the U.S. foreign-policy agenda.
The success of the anti-apartheid movement in the 1980s, when 23 states and 80 cities used economic boycotts to protest racial segregation in South Africa, prompted states and municipalities in the 1990s to target countries such as Burma, Nigeria and Indonesia because of their human-rights violations. Using pension funds and public purchasing regulations, state and local governments have tried to influence the behavior of foreign governments through secondary boycotts of firms doing business with these governments. A survey conducted by the Organization for International Investment (OFII) in 2001 showed that 33 state and local selective purchasing laws were enacted in the 1990s (many are now suspended; some were never enforced).
In November 1999, the U.S. Supreme Court decided to examine the constitutionality of such practices when it agreed to review whether Massachusetts had exceeded its power by requiring state agencies to boycott firms doing business in Burma. In this lawsuit filed by the National Foreign Trade Council (NFTC) against the State of Massachusetts (Crosby v. National Foreign Trade Council), the Supreme Court held that the Massachusetts law was preempted by federal law. The court’s decision, however, focused narrowly on the specifics of the Massachusetts law and its overlap with federal sanctions against Burma. The Court stopped well short of prohibiting states and local governments from taking economic actions with foreign-policy implications. The ruling, therefore, leaves states free to pursue various methods to sanction a target country, such as requiring public pension funds to dispose of shares in offending companies. Contrary to the hope of business groups, the court did not issue a broad decision holding such practices unconstitutional.
In other cases, lower U.S. courts have increasingly been called upon to decide cases that affect U.S. foreign-policy interests. In a case that combines local sanctions with litigation, a class-action lawsuit was filed against three Swiss banks over the dormant accounts of Holocaust victims in 1996. New York City and New York state officials threatened to bar Swiss banks from underwriting municipal pension funds or doing business in the city to pressure them to deal with Nazi gold looted from Jews and dormant accounts of Holocaust victims. The sanctions threat was dropped when the Swiss banks reached a settlement with the class-action plaintiffs. Similar class-action Holocaust and slave-labor suits filed against German companies and banks were also settled out of court.
Foreign Sovereign Immunities Act
U.S. courts have also been called on to settle the claims of private citizens against state-sponsors of terrorism under the Foreign Sovereign Immunities Act (FSIA) of 1976. In 1996 Congress passed the “Antiterrorism and Effective Death Penalty Act” amending the Foreign Sovereign Immunities Act to allow for suits against a foreign state designated as a state sponsor of terrorism by the secretary of state. The amended Act allows U.S. citizens to seek monetary damages for personal injury or death
that was caused by an act of torture, extrajudicial killing, aircraft sabotage, hostage taking or the provision of material support or resources … for such an act if such an act or provision of material support is engaged in by an official, employee or agent of such foreign state while acting within the scope of his or her office, employment or agency…
The first case under the FSIA amendment was brought against Cuba for the shooting down in 1996 of two civilian aircrafts operated by a group of Florida-based Cuban exiles known as “Brothers to the Rescue.” The U.S. district court awarded the plaintiffs a default judgment of $187.6 million in compensatory and punitive damages. Since then, there have been a growing number of cases.
The case that perhaps received most publicity involved a college student, Alisa Flatow, killed in a 1995 suicide bombing on a bus in the Gaza strip. The U.S. courts awarded $247.5 million in damages, including $225 million in punitive damages, to Ms. Flatow’s father against the defendants, the Islamic Republic of Iran, the Iranian Ministry of Information and Security and three Iranian officials. Iran, again, was the defendant in a case involving three hostages taken during the 1980s in Lebanon (the court awarded $65 million). These awards pale in comparison to the suit brought by Terry Anderson, the last hostage in Lebanon to be released. The federal judge ordered Iran to pay $324 million in damages to Terry Anderson, an additional $10 million to Anderson’s wife and $6.7 million to his daughter.
Neither Cuba nor Iran has responded to any of the suits filed against them and have shown no intention of paying damages. The Flatows and other plaintiffs have tried unsuccessfully to collect the judgments by seizing diplomatic property and frozen assets of these countries in the United States. The Clinton administration blocked the seizing of these assets because of concerns for overall U.S. foreign-policy interests, the sanctity of U.S. diplomatic property abroad and, in the case of Iran, legal obligations under the Iran-U.S. Claims Tribunal.
Because the original legislation did not explicitly permit the seizing of blocked assets or diplomatic property of state-sponsors, Congress further amended FSIA in 1998 (in the Treasury Department Appropriations Act, 1999) to allow victims to enforce these judgments. The legislation included a waiver provision that President Clinton immediately used on the grounds that it was against the U.S. national interest to attach frozen assets of terrorist states. In response, Congress introduced the “Justice for the Victims of Terrorism Act” in 2000, which would have prevented the president from waiving the law. The Clinton administration and Congress eventually agreed on compromise legislation (PL 106-386) regarding the payment of certain antiterrorism judgments. In the case of Iran, where a major concern of the administration had been its obligations under the Iran-U.S. Claims Tribunal, the administration agreed to pay several million dollars in compensatory damages from the U.S. Treasury and assume responsibility for collecting the claims from Iran. The total amount of damages is capped at $400 million, the amount held by the Department of Defense for military equipment paid for by the former shah of Iran but never delivered. Frozen Cuban assets will be used to pay $49.9 million in compensatory damages to the families of the “Brothers of Rescue” shot down by Cuba.
In the case of Libya, U.S. officials have repeatedly stated that Libyan acceptance of responsibility and settlement with families of the victims of the Pan Am 103 tragedy is a precondition for the permanent lifting of U.N. and U.S. economic sanctions. U.N. sanctions were suspended after two suspects in the Pan Am bombing were delivered to The Hague. In ongoing negotiations between lawyers of the family members and the Libyan government, Libya has allegedly offered to pay $2.7 billion in compensation payments—$10 million per victim.
The most recent case, filed in a U.S. District Court by more than 600 relatives of U.S. servicemen killed in a 1983 bombing of marine barracks in Lebanon, alleges that Iran was responsible for designing and carrying out the attack. More such suits involving large damage awards against countries designated as state-sponsors of terrorism—currently Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria—seem likely in the future.
By asking the judiciary to take responsibility for bringing hostile foreign states and terrorists to justice, these amendments to FSIA in effect give the courts an important role in shaping U.S. foreign policy. The long-term negative implications of such judicial involvement are obvious. The judgments will most certainly complicate U.S. efforts to normalize relations with these countries if and when their governments change. More moderate foreign governments, eager to renew ties with the United States, could easily be burdened with paying the awards. Using frozen assets to pay the awards likewise diminishes leverage the executive branch could use in the normalization process.
Alien-Torts Claims Act
A related development is the recent revival of the Alien-Torts Claims Act (ATCA) of 1789, which enables U.S. courts to adjudicate tort claims for alleged violations of international law. ACTA was largely unused until 1980, when the Second Circuit Court of Appeals ruled in favor of plaintiff Joel Filartigo, a citizen of Paraguay, who sued Pena-Irala for the torture and killing of his son (Filartigo v. Pena-Irala). Over the last two decades, foreign plaintiffs have invoked ATCA in a rising tide of litigation. The cases can be divided in two major categories: those that involve aliens suing state actors and those involving private actors as defendants.
In the cases involving state actors—such as foreign governments, government officials or state entities—the Foreign Sovereign Immunities Act (FSIA) creates a formidable legal barrier to ATCA suits. With the exception of a few circumstances, the most important one already discussed above concerning state-sponsors of terrorism, FSIA provides foreign states with sovereign immunity from U.S. lawsuits.
Because of FSIA, the majority of ACTA cases initiated in the past few years seek damages against private parties—individuals or corporations. In these cases, aliens sue private defendants for their own alleged violations of international law or for acts committed by a foreign state, alleging that multilateral corporations “aided and abetted” the foreign government or were “joint actors” with the foreign government and therefore equally liable.
While some ACTA cases involved individuals, for example, Kadic v. Karadzic, a case involving alleged atrocities committed by Bosnian-Serb military forces under command of Radnan Karadzic, the majority of suits seek damages from multinational corporations. ATCA plaintiffs have claimed that multinational corporations were to some degree responsible for the following acts: summary execution; disappearance; torture; cruel, inhuman or degrading treatment; arbitrary detentions; violations of rights to life, liberty and security of person; violations of the right to peaceful assembly; forced labor; racial discrimination; environmental harm; violations of cultural, social and political rights.
In Doe v. Unocal, Burmese class-action plaintiffs alleged that Unocal was liable for human-rights abuses by the Burmese military in conjunction with the construction of a gas pipeline. The plaintiffs argued that the knowing participation in a commercial venture with the Burmese military, which had a proven record of human-rights abuses, was sufficient to establish liability. The district court awarded a summary judgment in favor of Unocal in August 2000, but in 2002 the Ninth Circuit remanded the case for a trial on the merits. Meanwhile, the plaintiffs have also sued Unocal in a California state court.
While no suit against a corporate defendant has yet been adjudicated in favor of the plaintiffs, the potential for economic and political damage to U.S. relations with developing countries is apparent. ACTA lawsuits aimed at corporate defendants have so far targeted activity in the following countries: Saudi Arabia, Abu Dhabi, Indonesia, Nigeria, Ecuador, Burma, Papua New Guinea, India, Guatemala, Colombia, Egypt, South Africa, Japan and Germany. If companies find themselves punished for simply doing business in a developing country, firms could decide to disinvest on a large scale (as happened in the early 1990s following sanctions against South Africa) or not to invest at all. ATCA suits might increase to such a degree that U.S. trade and financial ties with the targeted countries are also severely curtailed. In short, at the same time that foreign-policy sanctions are becoming more narrowly targeted, private ATCA suits could, for all intents and purposes, impose broad-ranging sanctions against economic transactions with a long list of countries.