Jesse Helms and Fidel Castro have finally found something they can agree on: Neither likes the deal President Clinton cut with Europe to water down the American embargoes of Iran and Cuba.
The powerful chairman of the Senate Foreign Relations Committee says it "condones thievery and dishonesty." The long-reigning Communist leader of Cuba calls it "unclear, contradictory and unethical."In essence, Clinton exempted the 15-nation European Union from two American laws - the Helms-Burton Act and the Iran-Libya Sanctions Act - that have caused a transatlantic trade row.
The Helms-Burton Act empowers our government to penalize foreign-based multinationals that buy or invest in properties seized by the Cuban regime from those who fled Castro's takeover in 1959. The Iran-Libya Sanctions Act requires the administration to penalize companies that invest more than $20 million a year in the oil or gas industries of Iran and Libya. Violators can be excluded from bidding on U.S. government contracts, blocked from using American export credits and, in some cases, denied American visas.
Clinton agreed to waive U.S. penalties on European firms investing in Iran's energy sector - but not Libya's - clearing the way for a wave of foreign investments in the Islamic republic. In return, EU countries pledged to step up cooperation against terrorism and tighten controls to prevent Tehran acquiring weapons of mass destruction.
The most immediate beneficiaries are Total SA of France, Gazprom of Russia and Petronas Dagang Bhd of Malaysia, which no longer face sanctions for signing a contract to develop an Iranian gas field.
Again, Congress may not approve. Our lawmakers are great believers in sanctions, even though they rarely achieve the desired result.
Sanctions have not made Cuba, Iran, Iraq, Sudan, North Korea or Myanmar (formerly Burma) better behaved. The threat of sanctions has not stopped Russia and China from selling arms and military technology to so-called "rogue" regimes. It did not stop India from nuclear testing, and it will not stop Pakistan from retaliating in kind.
Jeffrey Garten, dean of the Yale School of Management and former under secretary of commerce in the first Clinton administration, says sanctions always backfire because the rest of the world never joins in while American companies suffer. The cost: up to $19 billion a year in lost export sales and some 250,000 jobs.
Likewise, congressional efforts to impose U.S. laws on foreigners are doomed to failure. The Europeans had already challenged the "extraterritoriality" of Helms-Burton and the Iran-Libya Sanctions Act in a lawsuit before the World Trade Organization. They only suspended it to give Washington a way out.
The compromise announced in London is the best Clinton could have hoped for. The United States would almost certainly have lost if the case had gone before the WTO, undermining our leadership of that body and our claim to being a champion of free trade.