U.S.-TRADE: Clinton Administration Backs Libya/Iran Sanctions

By Jim Lobe Reprint | | Print |

Jim Lobe

WASHINGTON, Jul 24 1996 (IPS) - In a new blow to U.S.-European relations, President Bill Clinton looks set to sign into law a bill that will require him to impose far-reaching sanctions against foreign companies with significant investments in Iran’s or Libya’s energy sectors.

“This is a measure that will bring economic pressure to bear on both Libya and Iran, and the president believes it’s very much justified,” White House spokesman Mike McCurry said Wednesday.

He was speaking less than 24 hours after the House of Representatives voted unamimously to approve a Senate version of the bill which was much tougher than one passed by the House itself earlier this year.

Analysts said that last week’s crash of TWA flight 800 in Long Island Sound, in which terrorism is widely suspected, ensured that the Senate version would sail through.

But the bill, which is designed to curb investment in the two countries’ energy industries, is expected to draw a strong reaction — and possible retaliation — from the countries of the European Union (EU) which are meeting this week in Brussels to plan a continental response.

“The European Union is now considering counter-measures in order to defend its citizens and industries,” Hugo Paeman, European Commission Ambassador to the U.S., said late Tuesday.

“Any attempt to impose policy unilaterally, under the threat of trade and investment sanctions, only disturbs international trade and investment relations without bringing us close to our shared political objectives,” he added.

The White House endorsement of the bill, which was originally sponsored by New York Republican Senator Alfonse d’Amato, came just a week after Clinton tried to finesse a similar trans- Atlantic dispute over a law punishing foreign investors in Cuba.

In a bow to Cuban-American and Republican pressure, Clinton agreed to implement the so-called ‘Helms-Burton’ bill beginning Aug 1. But, in a bid to lessen the blow to U.S. allies, he suspended for six months the right of former U.S. property holders to sue foreign companies which “traffic” in that property.

The EU, Canada, Mexico, and other U.S. trading partners had denounced the bill as an illegal extension of U.S. jurisdiction over foreign companies operating abroad. They had also begun preparing retaliatory measures against U.S. business interests.

Clinton’s decision to delay implementation of the lawsuit provision is likely to stall any immediate retaliation, according to foreign diplomats here.

But EU officials have described the d’Amato bill as much more theatening to European interests. EU members conduct more than 20 billion dollars a year in trade with Iran and Libya, compared to just a little more than a billion dollars a year with Cuba. In addition, EU members are reliant on the two countries for about 20 percent of their oil imports.

In contrast, the Clinton administration has outlawed all dealings by U.S. companies with Iran and Libya which U.S. officials routinely refer to as “rogue states” and as the world’s main sponsors of “international terrorism.”

Washington has long tried to persuade Europe to join it in isolating Iran which is seen as a mortal enemy of the U.S.-backed Middle East peace process.

Germany and France, on the other hand, have argued that their “critical dnalogue” with Teheran has helped to moderate the Islamic government’s international behaviour. In addition to large investments in Iran, European countries, especially Germany, are owed hundreds of millions of dollars by Teheran.

D’Amato’s initial effort, strongly backed by the hardline American Israeli Public Affairs Committee (AIPAC), was to sanction foreign companies in Iran only.

But Senator Edward Kennedy added Libya to the bill because of Tripoli’s failure to yield to U.N. demands that it turn over two suspects believed responsible for the 1988 mid-air bombing of Pan Am Flight 103 over Lockerbie, Scotland. All 270 people aboard the plane — almost all of them U.S. citizens — were killed.

“I understand that the reaction to this bill from many of our allies is very hostile,” d’Amato said Tuesday. “I can understand it because they want to do business with Libya and Iran, but it wasn’t their citizens who were murdered on Pan Am 103.”

Out of deference to European leaders, Clinton had originally hoped to have Libya omitted from the bill, but last week’s crash of TWA 800 — despite the total lack of evidence so far that it was deliberate act of terrorism — bolstered the anti-Libyan forces on Capitol Hill.

Under the bill’s provisions, Clinton would have to impose any two of six possible sanctions against foreign companies that invest 40 million dollars or more a year in Iran’s or Libya’s energy sectors.

Sanctions would also have to be imposed against foreign companies which violate a limited U.N. trade embargo against Tripoli.

Options include bans on imports from the offending firm or exports to it; on its eligibility for U.S. export subsidies; on U.S. bank loans of over 10 million dollars; on dealing in U.S. government securities; and on exporting sensitive U.S. technology.

Clinton may waive these measures on a case-by-case basis if he finds that to do so would serve the U.S. “national interest.” But most analysts here say he is unlikely to do so before the November elections, lest he leave himself open to Republican charges of going “soft” on terrorism.