Economic Sanctions and U.S. Foreign PolicyVictor Comras, Foreign Service Officer, Retired
Remarks to the Open Forum
February 25, 2002
Mr. Lang, what a great pleasure to be here. It is for me a little bit of a homecoming both to the Department of State and to the Open Forum which I think has served over its long span a very, very important role of giving an opportunity for people to come in and talk about foreign policy. Not always from the Bible, not always from the line that the Administration wants to hear, not always from the philosophy that the building expects but from perspectives that we need to take into consideration to think about as we work as foreign policy professionals. So Iím going to try to talk a little bit about that today.
Back in 1993 I was working on the Serbia Sanctions and trying to get our friends and allies to take some new steps to make them work. The Russians had gone along with the sanctions resolutions in the UN Security Council, but were proving reticent in enforcing them. Russian oil was flowing to Serbia and Russian banks were giving cover to Serbian Banks and financial transactions.
I was sent to Moscow--along with Rick Newcomb of OFAC--to see what we would and could do to win better support from the Russian government.
We had had, we thought, very successful discussions at a very high level. Full cooperation seemed at hand. It was near the end of the day and we were meeting with the Deputy Foreign Trade Minister, a polite gentleman who spent some time articulating Russian Government Policy. He seemed to understand our position and our concerns. Then, the Minister looked at his watch. He announced that it was now 5:00. The official business day had ended. He was now on his own time -- not on the governmentís time -- So now he was going to tell us want he really thinks about our terrible and stupid sanctions!
Well, here I am retired -- finally on my own time -- so I will tell you now what I really think about sanctions.
Sanctions are about the most misunderstood and misused tool in U.S. Foreign Policy. We use them but we here in the State Department donít really take them seriously or do all that we should to make them work. Let me make it clear. I am talking about the State Department, not the various domestic agencies--Commerce, Treasury, Customs -- that are charged with enforcing our own trade controls and sanctions regulations. They do a great job. They take the regulations seriously.
How many times did I hear my State Department colleagues tell me:
Sanctions can and should be one of the most valuable tools in our diplomatic arsenal. We need them. The United States, more than any other country in the world, needs them.
We are the worldís primary player in international affairs. We have the greatest economic and military clout. We are the most likely to be called upon to deal with regional and international crisis. We must, and we will, take the lead in the war on terrorism. The options we have cannot be only military action or no action.
Like with any tools, we have to learn to use sanctions diplomacy appropriately and with skill. We need to teach our diplomats about sanctions and how they should and should not be used. We need to improve our role as advocates for sanctions -- when they are in the U.S. national interests. But it's going to be extra hard to convince our allies if we, ourselves, remain so skeptical about the tool.
What are sanctions? They are a range of coercive diplomatic and economic measures -- steps that can be taken where mutual self interest, friendly persuasion, influence, embarrassment or inducement -- the other tools of diplomacy -- are not sufficient to motivate or change the conduct of other states. They are steps -- short of the threat or use of military force Ė that can give our diplomacy the teeth it sometimes needs to look after American interests.
They are a range of measures that can be molded to fit a particular crisis or problem. They can be targeted against persons or sectors. They can be tightened and they can be loosened.
Sanctions can offer a more domestic or internationally acceptable coercive option than military force. They can effectively demonstrate national, regional, or international approbation for actions taken by problems states when force is not feasible or warranted, and they can impose serious costs for such actions. They can raise the threshold for states as they evaluate the risks of violating or continuing to violate, acceptable international.
Sanctions can work. They proved critical to getting the Dayton Accords that ended the War in Bosnia . They convinced the Serbian Government to turn Milosevic over to the Hague for trial. They landed the Libyan terrorists al-Megrhia and Fhimah in a Scottish Court. They played an important role in restoring democracy to Haiti and Nicaragua, and in ending apartheid in Rhodesia and South Africa. During the critical days after Iraqís invasion of Kuwait, sanctions held Saddam Hussein at bay, stopping him from taking advantage of Kuwaiti oil or fortifying his military to resist the international coalition that was raised against him.
However, sanctions are not a panacea or cost-free means to deal with international problems. They are not always the right response, nor should they be used as an excuse or substitute for non-action, when other action is needed or wanted.
There is a lot of talk these days about "smart sanctions" -- sanctions that are shaped or targeted to accomplish specific objectives. We used such an approach after the Kosovo War to undercut Milosevic and get him to the Hague. Working with the European Union (EU) and other cooperating countries we targeted the sanctions against the Milosevic clique and a group of about 30 Serbian industries and businesses that provided him and his party critical financial support. We learned a lot of lessons from this experience. Itís a real shame they are not recorded somewhere -- or being taught to our current and future diplomatic practitioners. Something the Foreign Service Institute (FSI) ought to think about.
The paramount lesson that we learned from the Serbia Sanctions experience is that the more sophisticated the sanctions program, the more we have to organize ourselves to make it work.
Letís not kid ourselves into believing that all we need to do is get a UN Security Council Resolution calling for sanctions and that we can sit back and watch them work. Sanctions fail when the implementation system behind them fails.
Smart weapons donít come cheap. Effective weapons donít come cheap. You cannot have successful sanctions without an effective sanctions implementations strategy. That means monitoring and enforcement. That means international coordination and information sharing. That means effective border controls and inspections, and that means close scrutiny of financial transactions and transfers. And this is doable only if we invest in the necessary resources and structures, and develop, adapt and use the latest software and technology. This is doable only if we sell the concept to our friends and allies.
Its just amazing what can be done today to inspect cargo in bulk, to review millions of financial transaction, and to tag and trace sensitive equipment and technology. Smart sanctions are expensive -- but a damn lot less expensive that smart bombs.
Let's talk about the war on terrorism. According to the State Department, some 55 countries harbor or support terrorist groups. Weíre not likely to engage or even contemplate military action against most of these countries. But we insist that they halt their support for the terrorists and close them down. If they prove reluctant, what levers do we intend to use to get them to act?
There are a number of things that we can do.
The United States has long used its great economic leverage to secure its national security and foreign policy interests. This included controlling the export of our advanced technology, limiting access to our large domestic market, and encouraging or discouraging investment, and technical and financial assistance. Jointly with our OECD (Organization of Economic Cooperation and Development) partners in Western Europe and Japan, we have enormous clout, and can impose severe economic costs on those who provide cover or support for our enemies.
We have the opportunity now to reach out to an outraged world to work with us to pressure these states to stop their support of terrorism. We must make it clear that states who harbor terrorists will be ostracized by the international community and will face a second broad coalition of states no longer willing to trade with them, buy their products, invest in their industries, or provide them financial or other assistance. We should begin immediately to discuss with our NATO allies and others possible sanctions measures that might be applied to countries that continue to support terrorism or hamper our efforts against them. These should include such measures as:
We should also focus on stopping the flow of money that funds terrorism by working to enhance international banking cooperation and information sharing. The OECD has considerable experience in building cooperation on combating money laundering. It should now be asked to put together a new group on terrorism financing. This should include agreement to report suspicious transactions to a central clearing authority. Banks engaged in supporting terrorism should be identified and cut-off from the normal correspondent banking and clearing relationships. President Bush already has authority to prohibit U.S. banking facilities to such institutions, and to block their accounts in U.S. banks. The mere knowledge that discussions of such actions and sanctions are proceeding could have a chilling effect on those states that continue to harbor or support Al-Qaeda or other terrorist groups.
Special efforts should be placed anew on re-energizing the sanctions programs on Iraq. We cannot continue to ignore the open violations of the Iraq sanctions that fill Saddam Husseinís coffers and feed his chemical, biological and nuclear weapons programs, not his people. The result of our recent UN effort on these sanctions has not been to re-invigorate or reform them, but to allow them to disintegrate. Virtually no control is in place regarding financial dealings or trade with Iraq. The Oil for Food (OFF) program account has seriously diminished in importance as Saddam has increased his oil exports outside the UN system, and his revenues outside of UN control. This money is being used to expand and harden his military and weapons of mass destruction (WMD) programs.
We have to decide now whether to choose a military option or to seek some flexibility and time by cutting off, or at least slowing down Saddamís WMD development and deployment program. We do not need a new Security Council Resolution to do this. Existing UN sanctions resolutions give us more than enough authority to take the necessary steps.
The first step must be to inhibit Saddamís ability to obtain funds and/or conduct financial transactions outside the UN Oil for Food System. Saddamís financial network poses as much a threat to us as the Al Qaeda financial network.
Special attention should be focused on Iraqís Rafidan Bank, which has branches in Jordan, Syria, and Lebanon. Rafidan Bank is an Iraq Government-controlled entity. It has long been engaged in financial transactions in violation of UN sanctions. Nevertheless, Rafidan still enjoys correspondent relations with other banks in those and perhaps other countries, and continues to use these banks as channels to access to the international financial system.
We need to pressure Syria to stop acting as Iraqís surrogate for exporting oil outside the UN system. The Syria Kirkuk-Banias pipeline, which was re-opened last year, brings in more than 150,000 barrels of Iraqi oil per day. This is in addition to the Iraqi oil being trucked to Syria, Jordan, and Turkey every day outside the UN-administered program. These illicit exports bring the Iraqi regime an estimated $ 2 billion per year. Itís also time to place restrictions, or punitive measures on any international oil company that circumvents the OFF program and pays revenues directly to Iraq.
Our President has told us there is a real risk that Iraq, Iran, and North Korea are developing weapons of mass destruction and that these weapons could fall into the hands of terrorists. Not since the Cold War have we heard such rhetoric and warnings. And, not since the Cold War has the debate become so intense on what we need to do about it.
The fact of the matter is that it has become all too easy for rogue states and others to gain access to advanced equipment and technology to assist in their weapons of mass destruction programs. Such programs in Iraq, Iran, and North Korea pose a particular threat and are advancing rapidlyóso much so that President Bush singled them out for a stern warning in his State of the Union Address. The consternation of our allies over the Presidentís words should be matched now with a greater willingness to accept the Presidentís call that we work together "to deny terrorists and their state sponsors the materials, technology, and expertise to make and deliver weapons of mass destruction."
During the Cold War, the United States, its NATO partners, and Japan worked together closely, in an organization called COCOM, to impede the flow of military relevant equipment and technology to the Soviet Union, China, and other adversaries. COCOM put in place sophisticated procedures for determining which equipment and technology should be controlled, and for granting exceptions when dual use items were destined for legitimate civilian purposes. When the Cold War ended, COCOM was deemed obsolete and was abolished. Instead, we relied on a series of loose agreements to consult on the sale (often, after the export) of equipment and technology useful for developing weapons of mass destruction and their delivery systems. These included the Wassanaar Arrangement covering military related equipment and technology, a separate Missile Technology Control Regime, numerous conventions related to chemical and biological warfare agents, and the Zanger Committee agreement on Nuclear Non-proliferation. These diffuse arrangements have not proved sufficient to deal with the threats posed and the attempts by rogue states and terrorist organizations to build or acquire such weapons.
The effectiveness of the Wassenaar Arrangement and the Missile Technology Control Regime has been under serious question for some time. The availability of such technology has helped accelerate Nuclear Weapon and Missile development program in numerous countries including China, India, Pakistan, Iran, Iraq, and North Korea. There is also a growing risk of further "secondary proliferation" as these countries make such technology available to other countries and possibly, to terrorist organizations. Private companies, scientists and engineers are also finding it easy to circumvent the controls now in place for ideological reasons or quick profit. In 1999, the Special Cox Congressional Investigation Committee concluded that work needed to be done now to put in place "new binding international controls" on the export of such technology. The War on Terrorism has made this task even more urgent.
There is much that we can learn from our COCOM experience. The first is need to develop a consensus on the items that must be controlled. The Wassenaar and Missile Control lists do not engender the same respect the COCOM control lists once did. We continue to argue with Russia, China, and some of our NATO allies on what ought to be controlled, even for Iraq. This debate has delayed agreement on new control measures to replace the broad, but non-observed, Iraq sanctions now in place. The list of controlled items should be short. It should concentrate on items that have substantial applications in areas of concern. We should also seek to unify the control lists as much as possible to avoid unnecessary duplication and confusion. There is just no way to control general dual use technology with only marginal application to chemical, biological, and nuclear weapons programs. Our attempts at such broad controls in the past produced unduly cumbersome procedures and long delays, alienated our allies, and disadvantaged our own exporters. We will need their support in this effort.
We must also agree on a strong presumption against exporting agreed controlled items to countries known to be actively pursuing weapons of mass destruction programs. Exceptions to these presumptions should be justified only on the basis of legitimate and transparent civilian use. Consultation should be required before licensing such exports, not after the fact. And participating countries should be allowed to question the legitimacy of each such transaction.
With plenary meetings only once yearly, and consultations irregularly pursued, the Wassanaar arrangement has not proved very effective for coordinating national controls. Those countries participating in a new mechanism should be willing to establish a standing committee, and a secretariat to deal with current and on-going control issues. This should include a forum for discussing export proposals, for linking customs and enforcement agencies, and for sharing information about transactions and possible violations. There must also be a commitment by each member to impose sufficient customs control and penalties to deter, catch, and punish violators.
We must get serious about negotiating, and working within, a new effective multilateral export control system. Letís start with our NATO allies, European partners, and other friends and work outwards to bring in all those countries who have the same vested interest we do in a free and secure world.
We must work more closely with our allies to define the core list of items that have direct relevance to WMD development and deployment. We must push for a greater willingness on the part of key exporting countries to adhere to new agreed control procedures. We must press the EU countries and others to assure that adequate penalties are in place, including the establishment of a "black list" of individuals and firms believed to be engaged in circumventing the new control measures. We must continue, through national means, to verify overall importance.
Our success will inevitably depend on our organizing ourselves to sustain interest in an enhanced WMD control program. We will have to constantly monitor, verify adherence, and pester and persuade other countries to take these control measures seriously.
Of course, there is the other option. We can rely solely on direct military action in Iraq, and perhaps elsewhere, to take down these WMD capabilities. But, this course will also have its own costs and consequences.
Question & Answer Segment
Mr. Lang: Mr. Comras, on behalf of the Open Forum, Iíd like to thank you for that insightful and compelling presentation. At this point Iíd like to open the floor to your comments and questions. As a courtesy, please identify yourself and state your organizational affiliation before posing your question.
Question: Iím with the Non-Proliferation Bureau. Let me start this on a slightly personal note. Mr. Comras was my first boss and that was a pleasant experience and it was the basis of a friendship which has endured throughout the years. Now Iíll make more of a significant comment. I believe he is an authority on controls and effective controls at that. I think itís a pity that he had to retire or chose to retire but I feel we shouldnít lose his experience. So I have two suggestions. One would be for him to write a book on effective controls, effective sanctions which I think would be a manual for people to study. As he pointed out himself much of this information particularly on his later jobs, the Balkans, is in danger of being lost. I think very few people realize the effective role they played there. The second thing I suggest would be for him to go on a lecture tour and explain sanctions to the American people because I really donít think the public understands what this is all about. Perhaps since Vic is a very effective speaker maybe he can broaden the public dialogue on this issue which would then make the administration more concerned about putting effective sanctions in place.
Mr. Lang: Thank you for those comments and suggestions.
Question: Iím not connected with any group. Iíd like to make a comment about the definition of sanctions. Sanctions and embargoes are viewed in a somewhat similar light by weak countries. They appear to be like a blockade. Blockades are generally recognized as a act of war. Iím not sure about the figures but I think we have sanctions against anywhere from twenty-five percent to thirty percent of the worldís population. So in effect we are technically at war. In their minds when they see a sanction they see an act of war. They see us as at war with 25 to 30 percent of the worldís population. A lot of this stuff is a matter of perception and if you are a willing to talk in those terms, I will be willing to accept it but a lot of people try to fudge their way out it by saying, "Well, sanctions are not an act of war." How would you address that?
Mr. Comras: Sanctions are a range of measures. They are used appropriately and inappropriately. They must be tailored to the circumstances. Haiti provides a case in point. In the early stages we applied broad sanctions against the whole island and its people, hurting everybody. Later we tried to compensate for some of the sanctions that we had in place. We got a little bit smarter as we went along and we began to apply those sanctions not against the people of Haiti but against the leaders of Haiti and their pocketbooks. When the sanctions got to them, when we stopped them coming into Miami and put Visa restrictions on them, when we froze their bank accounts and we made it hard for them we got more democracy for Haiti. We have to get smart about sanctions. Thatís the point Iím trying to make, not that sanctions are simply something you do. We go back to the old notion of the old blockade and try to just starve the other countries into submission. We think more carefully about how to tailor measures that are available to us as diplomats. We need to deal with crises in that whole range between doing nothing and military action. We got that void to fill. There are so many things that can be done if we develop tools and if we develop a little of the skills in training in our diplomatic corps.
Question: Iím an intern in the Office of Defense Trade Controls. This question might seem a little repetitive considering what you just said but Iíd like to hear you speak a little more specifically on how we might model future sanctions against Iraq, specifically to avoid any human rights violations. How do we overcome the fact that Saddam Hussein basically passes the burden of whatever sanctions we put against him to the Iraqi people?
Mr. Comras: There are a number of steps we can take. The first one is lets put some Ďuumphí behind the Oil For Food Program. The Oil For Food Program defines a list of items and a process by which the money is used for civilian goods, distributed on an equitable basis to each faction throughout Iraq. It was a system that was meant to deal with humanitarian issues in Iraq and at the same time to stop Saddam from getting enough revenue to do what heís doing now with the revenue heís getting. It has hardened his military capability and enabled him to fill his own pockets, keep his control in place, and develop his WMD programs. I might say supporting terrorism. Lets put it all back underneath that system. Thatís the first thing and that is very doable by putting pressure on the oil companies and particularly on Syria at this point to cut down the use of these alternative channels outside, and this is a proposal I know that the Secretary has put forth. Letís take the system that is in place to Syria and put it under the program. Letís get it all under the UN and then weíll be able to have some control about how this money is being used and assure that it is being used equitably within Iraq. The reason itís not put under the control program is because if you did Iraq would have no interests in shipping it out through Syria. Syria would lose a large part of its revenue that it gains from this. Thatís a cost they have to pay because that really is something that theyíre doing to circumvent the international controls in place. When it comes to control on the border of what is moving in, there are ways today with new technology and resources to allow for a semi-normalization of trade with Iraq in civilian goods and still be fairly good at filtering out or controlling items that you do not want to get into Iraq but you got to invest in the resources, in the control, and in the monitoring system. There are many of proposals that have been put out on the table. I had the opportunity when I worked here at State before retiring to help develop some of these ideas. These were all put on the shelf as we moved toward getting a new UN resolution in place. What Iím suggesting is, we donít need that new resolution, we ought to be pushing these ideas now with our allies, with the frontline states, and we ought to do so from the high ground and not wait until we get UN sanctions that are redesigned. Letís move forward now.
Mr. Comras: Iím going to interrupt at this point. Charlie, you mentioned about something about my being your boss and bringing you in. I have to say the guy whoís the real expert on export control, the fellow who taught me literally everything I know, if I can say that, he may not want to take credit for that, but itís this guy Bill Root who for so many years ran the Department of Stateís Export Control and Sanctions Program. So itís really a pleasure to see you here, Bill.
Mr Root: Thank you, Vic. Can you give us a little background on the debate between sanctions and military force that took place about eleven years ago, just before Desert Storm. This was perhaps the largest political impetus from the Congress at least from the Democrats to pose sanctions as an alternative to using military force. I had long since left the Department so I have no inside information. It looks as if, especially with your emphasis on Iraqi sanctions now, in looking for solutions to our problems with Iraq that we may be getting into this all over again. Can we learn from what happened and what didnít happen back in 1990?
Mr. Comras: I think there are many lessons to be learned from 1990. In that period, as you may recall, there were a number of proponents of the idea that rather than engage in military action to move in the Gulf War, we should impose broad international sanctions to convince Iraq to pull out of Kuwait and to move back to the status quo. There was a time when sanctions took center stage before we moved to military action, when the President engaged himself and was able to convince Congress that military action was the course that should be taken. There was a very large debate publicly at the time about whether sanctions could be effective. How long does it take for broad general sanctions to have a significant impact? I think in hindsight, too much was expected of sanctions in that context. That Saddam Hussein, given his character, given his control in Iraq, given his disregard for the cost to his people, would have maintained his presence and would have tried to wait out those sanctions. In the context that we were faced with, further steps were necessary and those further steps were taken in terms of military action. The sanctions did fill that period of almost a year between the time when we took military action, stopped him from moving forward, held him down and imposed limits on his movements on the region. How much harder would it have been for us to accomplish the objectives? How much revenues available in this period helped to harden and expand his own military capability and his threats in the region? The sanctions served that gap. They held him down. The sanctions stayed on for a number of other purposes. They proved inadequate for that. Over time for a number of reasons we lost our allies on this, even the French began to suggest that these sanctions had become stale. They were inappropriate. They were hurting the wrong people. They were in fact helping Saddam, particularly since he was still able to trade outside of the system and get everything that he wanted anyway, that I think gave rise to a new approach. If we canít use these sanctions that we have in place to do what we want to do, can we come up with other measures in todayís context that can garner international support and have an effect. The idea is can you still impose specific sanctions on the regime and itís leaders if you can tie up their financial resources, if you can control them through the UN program, if you can also control the flow of goods that are moving into Iraq to filter out those things of concern but allow for more of a return to normalcy on the civilian side, perhaps those are the types of sanctions that can be effective in this time frame and strengthen the levers at our disposal. We have to move forward on that. Now even the programs that are suggested fall short of some criteria. Theyíre not probably going to result in regime change. I donít know that we have found an appropriate formula for regime change in Iraq. What they do is provide us is further time. They have some impact. They give us some flexibility. Right now we have nothing. We kind of closed our eyes to whatís going on and weíve given them a free rein. The only thing on the table is the Presidentís threat in the State of the Union message. Thatís the only thing at play when it comes to Iraq today.
Question: I work over in Diplomatic Security. Do you have any philosophical and practical ideas about how the issue of time and sanctions work. It seems like over a period of time the parties that are suppose to enforce lose the will. I was just wondering are they meant for short periods or can they go a definitely if you can keep all the parties involved or does time ever factor into the equation?
Mr. Comras: I think time is a critical element in the equation. Itís not just one item. Weíve got to think about the crisis weíre dealing with, who are the characters involved, what are the possibilities, and how can we design effective tools? Thatís the critical element. How can we design a set of sanctions measures to deal with the issues at hand and direct it toward the objectives that we seek? If over time it proves that what weíve designed is not working there are two options: drop it or redesign it. In many cases we ought to drop it. In some cases we ought to redesign it. Iraq is one of those areas, I believe, where we ought to redesign it.
Mr. Lang: Mr. Comras, Iíd like to make a presentation. Iíd like to invite Ambassador Ferrand to come up to the stage and join us. Iíd like to present to you the Open Forumís Distinguished Public Service Award in recognition of outstanding contributions to national and international affairs and appreciation for your participation in the Open Forumís Distinguished Lecture Series. Congratulations. [Applause.] That concludes this session of the Open Forum.
Released on April 2, 2002