Turkey Defies Iran Sanctions

by Shirl McArthur

“This provocative act, less than a full week after the signing of the Iran-Libya Oil Sanctions Act, is a direct challenge to our policy of economically isolating Iran…I urge you in the strongest of terms to seek a dialogue with Turkey…and prevent this deal from going forth, or place sanctions on Turkey, as called for in the legislation.” Thus spoke Senator Alphonse D’Amato in a letter to Secretary of State Warren Christopher upon hearing of Turkey’s $23 billion, 20-year agreement with Iran for the supply of Iranian gas to Turkey.

Although regulations implementing the Iran-Libya sanctions law have yet to be written, it is clear that the deal, as described, does not fall under the law. It is a trade arrangement, involving no Turkish investment in Iran. Furthermore, Turkey can argue, and has, that the deal predates the sanctions law, since it was initialed by Prime Minister Tansu Ciller last year.

Any deal is a violation if the president says it is.

However, under the law any deal is a violation if the president says it is. The president can “determine” that a person or company is in violation of the Act. Furthermore, although it is unlikely that any president would capriciously misuse this authority, that person or company has no recourse and cannot challenge the determination in court. (We wonder about the constitutionality of this rather amazing provision, and would be interested to hear from any civil-rights lawyers among our readers.)

In addition, D’Amato’s sputtering raises the question of whether he or others in Congress who see Iran and Islamism as the main threats facing the world might try to pass even tougher legislation in the 105th Congress. While it is far too early to predict with any certainty, the feeling on Capitol Hill seems to be that the present law caused such an outcry among U.S. allies, and will be so difficult for any administration to implement, that Congress will take no further action at this time.

Europe Prepares Retaliation Against U.S. Sanctions

After months of threatening retaliation if the U.S. Congress proceeded with its plans to extend its political agenda to the rest of the world by imposing secondary boycotts, the European Union Commission has begun to back up its threats with actions.

U.S. trading partners and various international trade and business organizations lobbied strongly to convince President Bill Clinton to veto both the Cuba sanctions act (the “Helms-Burton” bill) and the Iran-Libya sanctions act. However, by signing both bills into law, Clinton showed that in an election year, relations with domestic political blocs, the Cuba lobby in Florida, and the Israel lobby, are more important than relations with U.S. allies.

Shortly after President Clinton signed the Cuba sanctions act in mid-July, the EU Council of Foreign Ministers announced a series of counter-measures, including anti-boycott legislation, the establishment of a “watch list” of U.S. companies benefitting from the U.S. measures, possible visa restrictions, and a promise to request a dispute settlement panel in the World Trade Organization. Then, in late July, the European Commission approved a draft anti-boycott regulation that would prohibit any European person or company from complying with the U.S. Cuba sanctions legislation and would enable any European company damaged by the legislation to sue in a European court any U.S. company or subsidiary benefitting from the legislation.

Those Cuba-related counter-measures did not deter Clinton, who proceeded to sign the Iran-Libya sanctions act in early August, prompting EU Commission Vice President Leon Brittan to say that the act “establishes the unwelcome principle that one country can dictate the foreign policy of others.” He made it clear that Europe intended to “defend its rights and interests.” The EU’s spokesperson in Washington said that the draft EU anti-boycott regulation would be expanded and modified to cover the Iran-Libya legislation.

Final EU Commission action on the regulation is expected this fall, perhaps as early as the Oct. 1 formal session of the EU Council. The regulation must have the unanimous approval of all 15 members of the Council, but this is not expected to be a problem. Only the U.K. has expressed some reservations. Since U.K. officials are as outraged as the rest of Europe over the U.S. legislation, however, in the end they are expected to go along with the rest of the Council.

The European Commission also took steps to implement the establishment of a watch list of U.S. companies or citizens benefitting from the U.S. sanctions legislation. As a first step, the Commission published a notice inviting parties to submit any information that they consider relevant to the compilation of the watch list. In addition, the Commission began studying ways to deny certain U.S. company officials (presumably officers of companies on the watch list) entry into Europe.

Finally, there reportedly already is consensus among European officials to take the matter up before the World Trade Organization. The EU’s challenge in the WTO probably will be based on the international services rules, claiming that the U.S. legislation nullifies those rules. However, the EU also could claim that the U.S. legislation violates various articles of the General Agreement on Tariffs and Trade (GATT).

In spite of brave words from Clinton administration officials that the U.S. sanctions legislation does not violate either the WTO or NAFTA agreements (Canada and Mexico are challenging Helms-Burton on the grounds that it violates NAFTA), many observers expect that, ultimately, the U.S.’s only recourse will be to request an exemption on national security grounds.

General Counsel Jennifer Hillman of the Office of the U.S. Trade Representative told a U.S. Senate Foreign Relations subcommittee that, because the U.S. does not believe the legislation violates either agreement, the U.S. has not claimed a national security exemption during consultations with its WTO and NAFTA trading partners. However, she would not close the door on the possibility, saying that if Canada, Mexico, or the EU requests a dispute settlement panel under either trade agreement, “the U.S. would have to look at whether it would be appropriate to assert a national security exemption.”

To claim such an exemption would be a significant move. It would confirm to the world that the Clinton administration is prepared to sacrifice the world trading system on the altar of domestic political expediency. All major trade agreements contain a “national security” escape clause which, for all practical purposes, cannot be challenged. However, the clause is seldom invoked because of the precedent that it establishes. One source said that for the U.S. to claim a national security exemption in this case would “gut the GATT.”

In effect, then, the Republican Congress and the Democratic administration have combined to set up an international game of chicken. By signing both bills, Clinton set the stage for confrontation.

Clearly Clinton is betting privately that the Europeans will blink. Many trade experts agree, saying that the Europeans will threaten but ultimately will back away from formally requesting a dispute panel in the WTO out of fear of the likely consequences on the international trading system.

Perhaps. But for now, the Europeans’ resolve does not appear to be weakening, and they appear ready to pursue the matter before the WTO. When asked about the possibility of the U.S. invoking the national security clause, the EU spokesperson said, “What can I say—if they use it, they use it.”

Congress Investigates Dhahran Bombing

The U.S. press, in its reporting of congressional inquiries into the bombing of the U.S. military compound in Dhahran, indulged in some sensationalism and scapegoating. Some reports managed to imply that 19 U.S. service personnel would not be dead except for U.S. intelligence shortcomings and excessive American official deference to Saudi sensibilities.

Senate Armed Services Committee hearings and the House National Security Committee staff investigation, however, provide a deeper look at the situation, although at least some of the American investigators seemed unable to work either with the Saudis or with each other.

The House staff investigators interviewed only U.S. military personnel in Saudi Arabia. This was partly because they arrived on a Wednesday and left the following Saturday in a country where neither Thursday nor Friday are working days.

In addition to not interviewing any Saudi officials, they also were unable to interview FBI investigators on the scene, who said they could not give any information to the congressional investigators because it might “compromise the integrity of their ongoing investigation.”

Attorney General Janet Reno also tried to muzzle military personnel, sending a letter to Defense Secretary William Perry saying that any disclosure of information should be made only “through authorized agency channels.” The Pentagon obviously chose to ignore this letter. (The House staff investigators attached a copy of Reno’s letter to their report, without further comment.)

Within those limitations, however, the staff report presents a more balanced picture than that presented in the press. For example, the press made much of reports that a mid-level U.S. officer twice asked Saudi security forces for permission to extend the perimeter fence an additional 300 feet and both times was “rebuffed.”

In fact, the staff report shows that when a U.S. Army colonel made such a request in November 1995 and March 1996, his Saudi counterpart did not deny the request, but replied that since the property was owned by Saudi government ministries, he did not have the authority to approve the request on his own and would have to refer it to higher authorities. In an effort to be responsive in the meantime, the Saudi security official offered to increase Saudi security patrols and run checks of suspicious license plates.

Extension of the perimeter fence was not among 39 recommendations included in the most recent (January 1996) vulnerability assessment, however, indicating that U.S. commanders in Dhahran placed higher priority on implementing those recommendations and did not elevate the matter of the perimeter fence up the chain of command.

Some of the staff report’s conclusions and recommendations revealed less about the situation on the ground in Saudi Arabia than about the lack of realism and the 20-20 hindsight often displayed on Capitol Hill. For example, the report criticizes U.S. military intelligence and commanders in the field for not being prepared for a bomb the size of the one that caused the Dhahran explosion.

Apparently, a bomb the size of the one that caused the Riyadh explosion the previous summer had been taken as the new “base line.” The report also criticized the U.S. and Saudi intelligence services for not having enough specific information on possible terrorist activities.

While these criticisms seem valid in retrospect, the fact is that no intelligence service feels it has “enough” information about its adversaries, and security planning cannot encompass all contingencies. You build a 10-foot wall, and the next thing you see is a mob with a 12-foot ladder.