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Sanctions, USA Engage, Clinton, New

Subject: Sanctions, USA Engage, Clinton, New Republic

In view of the cuerrent China visit to Washington, have you read this?
on Burma
from the net. "USA*Engage and its business members have been quite
successful at lobbying
the Clinton administration to kill sanctions....Then there is Burma." 

"The Burmese State Law and Order Restoration
Council--which operates that billion dollar pipeline with Unocal--is not
just a government but a business operation. When USA*Engage decries
unilateral sanctions against Burma, it is not just seeking business. It
actually pushing for Washington to adopt a friendly policy toward the
junta itself because, without such a relationship, access to Burma's
remote mineral, oil, and timber resources would be denied. Since Burma
not exactly a mecca of free enterprise, U.S. firms supply technological
know-how and cash to the slorc, keeping it, so to speak, in business."

The New Republic                                           
May 25, 1998
By Jacob Heilbrunn

The corporate takeover of foreign policy.

As President Clinton prepares for the upcoming June Sino-American
he and national security adviser Samuel R. Berger are working overtime
neutralize the domestic human rights lobby. 

First, the administration
declared that China would soon sign a new United Nations covenant on
rights. Then, it touted the release of dissident Wang Dan as a victory
its policy of constructive engagement. Most recently, Clinton met with
Christian evangelical leaders at the White House to attack the Freedom
from Religious Persecution Act, which would cut off subsidized loans and
"non-humanitarian" aid to countries that systematically harass religious

Clinton, unaware that Elaine Sciolino of The New York Times was
present, pointed to sanctions laws against Russia, Cuba, and Iran as
examples of the dire consequences a China bill might have: 

"What always
happens if you have automatic sanctions legislation is it puts enormous
pressure on whoever is in the executive branch to fudge an evaluation of
the facts," said the president.

Ever since the passage of the Helms-Burton Act in 1996, which Clinton
resisted but hastily signed after Havana shot down two unarmed planes
piloted by anti-Castro Cuban-Americans in international waters, the
administration has been caught between two policies of appeasement. 

The first policy is to use economic ties to transform dictators into
democrats; the second is to placate the domestic constituencies that
advocate unilateral sanctions against those same dictators. So far, the
administration has acceded on paper to measures such as Helms-Burton or
the Iran-Libya Sanctions Act and then employed national security waivers
to prevent them from actually taking effect. 

Are Canada and the European
Union doing business with Cuba or Iran? Then fudge. Is China illegally
buying advanced missile technology from American companies? Fudge again.

But, with the proliferation of sanctions legislation, the administration
is becoming apprehensive. The persecution bill, for instance, would
establish an independent White House monitor who would simply declare
that, yes, blatant religious persecution is taking place in a particular
country or, no, tolerance prevails. 

There is no room for fudging.

The stakes are anything but minor. The thrust of foreign policy itself
at issue. President Clinton and Berger have always viewed trade as a
of creating a peaceful and democratic global order. Trade, so it is
supposed, can bind nations such as China, or even North Korea, into
international structures that will encourage them to observe liberal
of behavior. 

On Secretary of State Madeleine Albright's recent trip to
Beijing, the most important member of her delegation was Trade
Representative Charlene Barshefsky--who tried, unsuccessfully, to secure
Chinese commitments to human rights that would smooth the path for
membership in the World Trade Organization.

The belief that interdependence brings peace dates back to Montesquieu.
may work among democracies. But "constructive engagement" of
dictatorships? During the cold war, proponents of engagement with the
Kremlin argued that trade would lead to freedom inside the Iron Curtain.
But, if anything, the denial of high technology to the Soviet Union and
its East European satellites, which sought to evade restrictions on
supercomputers and other goodies, helped bring them down. Sanctions also
had a devastating effect on apartheid in South Africa. Now, as states
China, Cuba, and Burma seek to attract foreign investment and the moral
approbation that comes with it, the lessons of the cold war may well
acquired a fresh relevance.

The Clinton administration, however, has drawn a different lesson.
the cold war, Sandy Berger and company maintained that economic
was crucial. Now they seek to apply that approach to all repressive
countries. To do this, the Clinton administration has fought sanctions
Congress, and it has fudged when the time came to enforce them. More
recently, it has gone a step further and encouraged the creation of a
and potent business lobby--whose aim is to portray unilateral sanctions
undesirable, unworkable, and, above all, un-American.

"Unilateral Sanctions--They Hurt U.S.," reads the red-white-and-blue
boomerang distributed by the leading lobbying group against sanctions,
USA*Engage. The organization was first organized by a powerful
insider: Anne L. Wexler, the lobbyist and former aide to President Jimmy
Carter. Since its founding in April 1997, USA*Engage has amassed over
members--including multinationals such as IBM, Unocal, Boeing, and
Its chairman is William C. Lane, a business executive at Caterpillar and
member of the Executive Committee of Americans for Humanitarian Trade
Cuba. Frank Kittredge, the vice chairman, is president of the National
Foreign Trade Council. Its legal team includes Sandy Berger's old firm,
Hogan & Hartson.

To defend American business involvement in dictatorial countries abroad,
USA*Engage promotes an upbeat message. USA*Engage, as the name suggests,
seeks to equate trade with internationalism, unilateral sanctions with
isolationism. It doesn't oppose multilateral sanctions; it simply
want the U.S. to go it alone, to find itself isolated, losing business,
antagonizing its allies. Its officials go on to argue that, far from
avaricious supporters of dictatorships, corporations are the last
internationalists--nothing less than a new advance guard for democracy.

The idea is simple: Economic ties can lead to freedom. In a full-page ad
in the January 16 Wall Street Journal, for example, USA*Engage used the
occasion of Pope John Paul II's visit to Cuba to urge an end to the
island's economic isolation. "The United States," the advertisement
"has an opportunity to demonstrate leadership through engagement....
Engagement can be a powerful force when pursued at all
diplomatic, economic, charitable, religious, educational, and cultural."
One official at USA*Engage says, "We try to be as careful as possible to
talk about engagement. Business has developed an argument that goes
pure self-interest, that represents the national interest." The flurry
sanctions passed by a Republican Congress alarmed business. "We decided
create a business coalition to try to change the climate in the summer
1996, a year and a half after the Republican Congress took over, to go
the offensive," says the official.

In the beginning, there was oil. A former congressional trade staffer
that USA*Engage really began as a front group for Unocal, which has been
the target of protest because of its alleged use of forced labor in
where the company runs a natural-gas pipeline in tandem with the

"When I look at Unocal in Burma or Shell in Nigeria or
Occidental Petroleum, which got a waiver from sanctions against Sudan,
this raises the question whether they are really complaining about
sanctions," the former staffer says. "Really, it's oil barons who want
operate without regard to human rights or labor practices."

But USA*Engage has worked hard to project a less self-serving image,
stressing the toll unilateral sanctions might take on the U.S. economy. 

In March, for example, William C. Lane testified before the Senate that
sanctions have hurt Caterpillar--and, by extension, American workers. In
the 1980s, he said, sanctions against the Soviets cost Caterpillar
to the Soviet tractor market, and Japanese competitors quickly moved in.
Not only did this effectively move 12,000 man-years of work from
to Japan, he said, but Caterpillar came to be seen as an unreliable
supplier, giving Komatsu of Japan a leg up elsewhere in the world. 

Today, the U.S. government discourages firms from exporting products for
construction of the Three Gorges Dam in China because the massive
will uproot tens of millions, destroy precious historic sites, and
the environment. This stance prompted Lane to ask why Congress was, in
effect, preventing U.S. firms from getting a piece of the world's
construction job. The U.S. has sanctions against the Sudan and Cuba; the
Sudan, Lane said, would make for a lucrative export market and thus
more jobs and better pay at home. (In March, Caterpillar executives met
with Fidel Castro to discuss bulldozers; Mobil and Texaco, not to
USA*Engage members, were official guests of Castro as well.)

To give its crusade some intellectual heft, USA*Engage has also reached
out to think tanks such as the Institute for International Economics,
which issued a report on sanctions at USA*Engage's April 1997 press
conference. The report said that sanctions cost the American economy
between $15 billion and $20 billion and resulted in 250,000 jobs lost in
1995 alone. Writing in Mother Jones, Ken Silverstein reported that the
National Association of Manufacturers, a USA*Engage member, funded a
by Georgetown University law professor Barry Carter that described, in
association's words, the "steep price tag for U.S. commercial
The Heritage Foundation has weighed in against sanctions as well. And,
June, the Cato Institute will hold a conference titled "Collateral
the Economic Cost of U.S. Foreign Policy." One of the main speakers will
be William C. Lane. USA*Engage has also wooed religious organizations,
such as the National Council of Churches, which opposes Arlen Specter
Frank Wolf's bill on religious persecution.

Are these efforts paying off? 

In 1996, one USA*Engage official points out,
23 sanctions were put in place; in 1997, only two countries, Sudan and
Colombia, were sanctioned. "This year," the official says, "there were
reverses. Sanctions were lifted against Colombia and Vietnam, and there
a recognition that there is a bias toward engagement toward Cuba.... You
could see some China sanctions lifted in June" when Clinton visits

One of the instruments that USA*Engage hopes to use to blunt unilateral
sanctions is a bill sponsored by Lee Hamilton and Richard Lugar. The
would not prevent a president from imposing sanctions, but it would
require, among other things, that the economic costs for American
and agriculture be calculated. It also contains a "sunset provision"
would require the president to renew sanctions every two years, or they
would lapse automatically. Andrew Semol, a senior adviser to Lugar,
"What I particularly find attractive about the exercise is that it's a
pro-engagement policy. We can impose sanctions on really egregious
countries, but there is an implicit philosophy that through engagement
we're likely to have as much influence as disengagement."

The bill is unlikely to pass anytime soon, since enactment would mean
ceding congressional foreign policy prerogatives to the president. But
USA*Engage and its business members have been quite successful at
the Clinton administration to kill sanctions in other ways--thanks in no
small part to the influence of Undersecretary of State Stuart Eizenstat.
(According to several leading human rights advocates, Eizenstat was
involved in the creation of USA*Engage. Eizenstat's office denies this.)

One Eizenstat initiative came in September 1997 in the form of a newly
created "sanctions working group" of the State Department's Advisory
Committee on International Economic Policy. The group issued a report
asserting that sanctions "often are imposed rapidly and reactively,
without adequate deliberation and understanding of either the potential
impact on the target's behavior or the domestic, foreign, and economic
costs of sanctions." The document came with the standard disclaimer that
it did not represent the official views of the State Department. Who
the advisers on the committee? Boeing, DuPont, General Electric, United
Technologies, and a number of other companies. The afl-cio, also a
issued a lonely dissent. The advisory called for a sanctions review
committee, within the National Economic Council and the National
Council, which has since been established and is reviewing every
law passed by Congress.

Testifying before Congress in October 1997, Eizenstat invoked the
committee's report. According to Eizenstat, the "illustrative matrix of
foreign policy tools" devised by his advisory committee offered a
road map to sanctions. Eizenstat said that sanctions "should be used
when carefully considered by both the executive and legislative branches
as to their effectiveness, after all benefits, costs, and consequences
analyzed...." The State Department has attempted to put this approach
action when it comes to various sanctions, whether it is the Sudan or
Cuba. Eizenstat's deputy, Bill Ramsay, says Washington lobbyist
Bolton was key in negotiating with the Europeans to stave off a
confrontation over Helms-Burton. Bolton puts it this way: Ramsay
"understands the complexities better than anyone in the administration."

Currently, the main preoccupation of sanction opponents is the Religious
Persecution Act. The administration wants the Senate to back a
bill by Don Nickles that would allow the White House much more
in making determinations about persecution. But, of course, the Clinton
administration must tread carefully. Religious persecution is a
issue. That's why USA*Engage is so helpful--it has more freedom to
the arguments of human rights advocates.

And, indeed, USA*Engage has taken a more public stand against sanctions.
It is, in a very real sense, the administration's bad cop. USA*Engage
worked closely with religious groups and leaders that oppose the bill
the National Council of Churches and Billy Graham. (The council's
associate general secretary, Albert M. Pennybacker, declared in 1996
acts which might be seen as "persecution" could really be an attempt to
"preserve authentic religious and cultural traditions.") And USA*Engage
has campaigned directly against the Religious Persecution Act; a
9, 1997, letter to Frank Wolf signed by Frank Kittredge and other
leaders spelled out the logic behind USA*Engage: "Just as missionaries
cannot accomplish their goals by withdrawing from the mission field,
America cannot expect to be an influence for religious freedom and human
rights by removing itself from a country.... Our stepping out of this
increasingly interconnected world and erecting sanctions will have
or no impact on those who wish to persecute others. It will, however,
a significantly negative impact on the United States."

To be sure, unilateral sanctions can multiply crazily. Many cities and
states, for example, now have their own sanctions. Chicago and New York
are considering divesting their pension funds from Switzerland because
the Swiss banks' treatment of Holocaust accounts. Takoma Park, Maryland,
boycotts Burmese goods because of human rights violations. Heavily
Cuban-American Dade County, Florida, has a selective purchasing and
investment law against Cuba.

USA*Engage is planning to sue Massachusetts over its anti-Burma law--and
it may have a case. The constitutionality of these measures is dubious.
"If we are to be one nation in any respect," wrote James Madison in
Federalist 42, "it clearly ought to be in respect to other nations."
Indeed, under the supremacy clause and the doctrine of preemption,
nonfederal organizations cannot pursue measures contrary to federal
policy. The Supreme Court has upheld vast powers for the federal
government in the foreign sphere, most notably in 1968, in Zschernig v.
Miller, a case that struck down an Oregon probate law on inheritances in
the East Bloc.

But what about the larger argument against unilateral sanctions? Are
invariably costly and self-defeating? The answer is: It depends. No
sanctions carry economic costs; they pose an impediment to the global
system of free trade that the U.S. has championed since World War II. On
the other hand, sanctions clearly have an effect on target nations. One
thing that sanctions against Iran and Libya and Cuba have accomplished,
for example, is to create a more uncertain business climate. The
may not bring these malignant regimes down single-handedly, but they can
create higher costs for them. Otherwise, why would they fight against
sanctions? America remains the prime purveyor of high technology, and
countries remain desperate for access to it. The mere threat of
may also be enough to induce a country to reconsider its course; Clinton
could have considered using them against the Serbs when they stirred up
trouble in Kosovo. So, when the Institute for International Economics
declares that the U.S. has lost up to $20 billion in trade, it is not
taking into account the costs to the regimes that are the targets of
sanctions or the benefits of bringing disruptive countries to heel.

The flip side of this argument is the theory, propagated by USA*Engage
its supporters, that business is an avatar of democracy. This is a far
from the bad old days, when the Eisenhower administration staged a coup
Guatemala on behalf of United Fruit, ITT helped topple the freely
but Marxist, Allende government in Chile, and American businesses were
active in countries such as South Africa. Now, in Foreign Affairs,
Business School professor Deborah L. Spar argues that U.S.
are actually on the side of the angels: "They bring jobs, capital,
technology, know-how, management techniques, labor relations, and
administrative structures that are unlikely to depart too dramatically
from U.S. standards." Writing in the December 1996 Cardozo Law Review,
Peter Spiro observes that pressure exerted by Human Rights Watch,
International, and other organizations has been beneficial: "Whatever
motivation, the corporate response is plainly transcending mere public

But are corporations functioning as closet human rights agitators? Or
they mainly interested in political stability? A staffer on the Senate
Foreign Relations Committee points out that, on a recent visit to
Suharto's Indonesia, she challenged an American company to explain what
does to protect its workers when they are harassed by the government.
response? Nothing. Similarly, in 1994, Chrysler Corporation threatened
fire one of its workers for absences; it turned out he had missed work
while detained by the Chinese government on political charges. (When
rights groups intervened, Chrysler decided to take no action against the
worker.) If anything, repressive regimes have the upper hand on American
companies since they can always threaten to confiscate their assets.
an inherent conflict of interest and a logical tension as well.

Business is also unwilling to acknowledge that, in countries ruled by
dictatorships, no distinction between regime and economy exists. They
one and the same. Doing business in Indonesia usually means doing
with the Suharto family. Put otherwise, Suharto is really running a
business empire. Or take Cuba. Fidel Castro is Cuba. He controls the
government, and the government controls any economic activity on the
island. Canadian, Spanish, and Italian firms that engage in tourism or
mining activity there are funneling large percentages of their payroll
directly to Castro's government; in return, they receive a docile,
state-selected labor force. If these firms refused to play along, they
would instantly lose their privileges or be kicked out. How on earth
this kind of "engagement" benefit ordinary Cubans? Contemplating access
this corrupt "market," American businessmen offer self-serving
Frank Kittredge told Congress that "last week over fifty U.S.
traveled to Cuba to meet with top Cuban officials. The American
saw firsthand the harmful effects of a society isolated from American
influence. It's time to completely overhaul America's policy toward
What Kittredge saw "firsthand" were the disastrous results of 40 years
a Soviet-style command economy.

Then there is Burma. 

The Burmese State Law and Order Restoration
Council--which operates that billion dollar pipeline with Unocal--is not
just a government but a business operation. When USA*Engage decries
unilateral sanctions against Burma, it is not just seeking business. It
actually pushing for Washington to adopt a friendly policy toward the
junta itself because, without such a relationship, access to Burma's
remote mineral, oil, and timber resources would be denied. Since Burma
not exactly a mecca of free enterprise, U.S. firms supply technological
know-how and cash to the slorc, keeping it, so to speak, in business.

Ultimately, these regimes crave the moral imprimatur that only
can confer. Maureen Ang-Thwin of the Open Society Institute's Burma
Project observes that sanctions and disapprobation are a useful club.
Burmese, she emphasizes, devote enormous time and resources to
to polish their reputation in the U.S. and at the United Nations. "Why
they do this?" she asks. "The Burmese need our approval. They can't
back into their shell."

Certainly one reason the Clinton administration opposes new sanctions
is that--just like previous administrations--it is wary of congressional
encroachment into foreign policy-making. But the Clinton team has gone
further than its predecessors. Like USA*Engage, it says that corporate
interests are the national interest. This has resulted in a new human
rights coalition, particularly on the issue of China.

Something similar occurred during the 1970s with the Jackson-Vanik
amendment. Congress passed the law to deny the Soviet Union Most Favored
Nation trade status until Soviet Jews were free to emigrate. Richard
and Henry Kissinger opposed it in favor of a detente that focused on
economic ties as a way of effecting change in the Soviet Union. But
detente went nowhere; the important thing was the system's loss of
political legitimacy, which was accomplished both through the denial of
normal relations with the West and through the dissidents who rejected
system. China, Burma, Libya, and Cuba don't represent the same global
threat to the U.S. as did Moscow, but their contempt for human rights is
no different, and denying them undeserved international legitimacy is
as urgent.

Consider the results of the religious delegation Berger and Clinton sent
to China in February. The members--Donald Argue, president of the
Association of Evangelicals, Reverend Theodore E. McCarrick, and Rabbi
Arthur Schneier--met with President Jiang Zemin, visited a model prison
Tibet, and issued a report that lauded the "dialogue" with Beijing.
According to Nina Shea of Freedom House: "We've seen more arrests since
the trip. They were actually detaining believers during the trip so they
couldn't meet with them."

As part of the Clinton administration's all-out battle against the
Religious Persecution Act, Secretary of State Madeleine Albright
a speech in October at Catholic University. "If we are to be effective
defending the values we cherish," she said, "we must also take into
account the perspectives and values of others. We must recognize that
relations with the world are not fully encompassed by any single issue
set of issues." But if America, as Albright has declared, is the
"indispensable nation," then religious rights cannot be buried in a heap
of relativistic qualifiers.

Sanctions are a tool that can help America keep faith with people
struggling against tyrants. They may cost America business. They may
to change fundamentally a regime's behavior. But they do deny the moral
approbation that the world's thugs crave. Until the Clinton
stops trying to propitiate these regimes, it will keep selling democracy

(Copyright 1998, The New Republic)