Economic sanctions should not be the first response to acts of irresponsible behavior by rogue states, but they do have value, says Stuart Eizenstat, U.S. under secretary of state for economics, business, and agricultural affairs.

Rising use of sanctions is a consequence of the end of the Cold War; U.S. use of unilateral sanctions results from unique leadership responsibilities, he says. According to Eizenstat, the United States tries to make sanctions multilateral when possible, and to impose unilateral sanctions in ways that maximize the pain for targeted countries and minimize the pain for U.S. business and U.S. allies.

Eizenstat criticizes challenges by the European Union (EU) in the World Trade Organization (WTO) of the Helms-Burton Act, which aims at foreign companies doing business in Cuba, and of a Massachusetts state law that aims at foreign companies doing business in Burma.

He describes Clinton administration objections to bills pending in Congress for eliminating the president's discretion in imposing sanctions and expresses interest in proposals for reforming the way Congress acts on sanctions.

This interview was conducted by USIA Economics Writer Bruce Odessey.

Question: What is the Clinton administration's general policy about using foreign policy-related economic sanctions?

Eizenstat: Economic sanctions are an important foreign policy tool intermediate between diplomacy and the use of force. They are used when other measures are insufficient and when their imposition is likely to change the behavior of the offending state. They should be used when traditional diplomatic and other efforts at persuasion have failed, not as a first order of action. They generally should be targeted only at rogue regimes that act contrary to international norms.

Sanctions are not a one-size-fits-all foreign policy tool. If the administration has the requisite flexibility in applying sanctions, it designs the sanctions regime to target effectively the vulnerability and offensive behavior of the sanctioned country while minimizing damage to U.S. interests.

Sanctions are intended to highlight misconduct by rogue regimes, to alter the behavior that threatens our national interests and the stability of the international community. Sanctions address misconduct in human rights, terrorism, narcotics, weapons of mass destruction, and other areas where such conduct is considered unacceptable by world standards.

In order to maximize the effectiveness of sanctions when we do use them, we prefer sanctions that have multilateral support and participation. Multilateral sanctions are more likely to be effective against a targeted country by showing unity of international purpose and by including a maximum number of business and commercial interests around the world. Also, multilateral sanctions minimize damage to U.S. competitiveness by distributing the burden across responsible countries.

At the same time we are prepared to use unilateral sanctions when we cannot get a multilateral sanctions regime together and when important national interests are at stake. These sanctions should be shaped in ways that are consistent with our international obligations and that reflect cost-benefit analysis. Presidents should be given flexibility in utilizing such unilateral sanctions, as Title III of the Helms-Burton Act does.

It's important for our friends and allies to recognize our feeling that trade doesn't occur in a vacuum. Prosperity also depends on a stable and secure world where nations respect common rules of behavior. Business as usual with rogue regimes can often strengthen their capacity to harm not only U.S. interests, but also the interests of our friends and allies as well.

The measures that we've adopted are designed to maximize pressure on rogue regimes and encourage behavior that respects common, basic principles and values that underlie the entire multilateral system.

Q: What are the reasons for more frequent U.S. use of sanctions in the 1990s?

Eizenstat: I believe that it has to do with the change in the international environment. With the end of the Cold War a whole host of other challenging issues has arisen. And with the United States as the preeminent, predominant world power, we have an obligation to lead on these new issues, which often get one directly into sanctions -- issues like drug trafficking, lack of respect for basic human rights, terrorism, nuclear proliferation. These have always been important, but they tended to take a back seat to Cold War concerns. Now they're in the front seat.

And it is often rogue regimes that are most involved in these areas of international misconduct. Sanctions are a logical way of trying to deal with these particular situations although, again, they ought not to be our first order of business, and we should exhaust other diplomatic and political avenues before resorting to them.

Q: How do you respond to opposition by U.S. business and foreign allies to unilateral sanctions, as well as to critics who argue that sanctions usually fail to work?

Eizenstat: We recognize that certain types of sanctions are opposed both by our allies and our business interests. We always strive to use sanctions in ways that maximize pressure on the targeted regime while minimizing tensions with our allies and friends and doing the least damage possible to our business interests.

We recognize particularly that unilateral sanctions have a cost to U.S. economic interests. For example, abandoned exports mean lost exports and lost jobs, not just for the initial sales but often for years of after-sales service, particularly in a competitive or emerging market. Sanctions can also severely damage U.S. relations with the targeted country and disadvantage businesses in non-sanctioned sectors. U.S. components can get designed out of products, and U.S. companies can get frozen out of consortia.

Multilateral sanctions are the ones most likely to be effective in furthering our interests. At the same time, short of a full multilateral embargo, the loss of a U.S. market or access to U.S. capital can inflict costs on a targeted country. A logical policy option, therefore, is to deny this access to a rogue state.

Now let's look at instances where multilateral sanctions have been generally effective. While they took time, multilateral sanctions against South Africa clearly were a factor in ending apartheid. They were clearly a factor in bringing Serbia to the negotiating table in Dayton. Sanctions have limited the damage Iraq and Libya could do to the peace-loving countries of the world.

For sure, unilateral sanctions face greater challenges to their effectiveness. But there are times when it's important for the United States to stress certain values for which we stand strongly, even though their immediate effectiveness may be attenuated. And we always try to balance the responsibilities we have to lead, to project U.S. values, to protect U.S. and world interests in areas like terrorism and drug trafficking and proliferation against what we know to be the costs both to relationships with our allies and to our business interests. This is a delicate balance. It's not an easy one.

Q: How does the administration respond to allies' complaints about extraterritorial provisions in the Helms-Burton and Iran-Libya acts?

Eizenstat: First let me say that the Helms-Burton Act deals only with foreign companies that are profiting from the use of confiscated U.S. property. By any elemental amount of due diligence they could determine the property was in fact confiscated because the State Department maintains a claims registry. So it's hard to see how the act is doing anything other than legitimately protecting the property rights of U.S. citizens.

World Trade Organization agreements do not address the issue of sanctions directly. We realize the concerns about these sanctions, and that's why we try to maximize the pressure on targeted regimes and minimize friction with our allies. We believe the actions we have taken are consistent with our international obligations, we are prepared to defend those actions, and we strongly believe that the European Union is incorrect in bringing what are essentially political disputes into a trade forum.

There has been no challenge to the Iran-Libya Sanctions Act. And the challenge to Helms-Burton was suspended after the April 11 agreement allowing the United States and the EU to try to develop an international discipline that, if implemented and adhered to, could lead to an amendment to Helms-Burton Title IV.

Q: What is the state of play in your negotiations with the EU?

Eizenstat: We have worked very hard with the EU over several negotiating sessions to begin to develop international disciplines for deterring investment in confiscated property worldwide. I think that, while many obstacles remain, we have begun to make some progress. Both sides are negotiating in good faith.

At the same time, we've begun a genuine dialogue with Congress with the view of obtaining an amendment providing the president with waiver authority for Title IV if those disciplines are negotiated and if they're adhered to. We've had a very transparent process with Capitol Hill, with leading senators and congressmen, to inform them as to where we are.

And we think this is the way to resolve these issues -- not by bringing to a trade panel what essentially are political disputes. That will only weaken the WTO; it will hold it up to unnecessary criticism and opprobrium in the Congress. The WTO is not the appropriate forum for resolving political differences, but rather for traditional trade disputes. No one really can contend that, for example, the Iran-Libya Sanctions Act or Helms-Burton were imposed as a trade protection device. Rather, they were imposed to advance foreign policy agendas with no intention of benefiting U.S. business at the expense of businesses elsewhere in the world.

Q: What's your view of proposed legislation for eliminating the president's six-month waiver authority in Title III of Helms-Burton?

Eizenstat: This would be a very serious mistake because we've been able to utilize the discretion in Title III to achieve the broadest multilateral coalition of interests in promoting democracy and human rights in Cuba that we've had in the 37 years that Castro's been in power.

The European Union's action in December on a common position conditioning any improvement in political and economic relations on specific changes in the human rights and democratic conduct of Cuba, the actions by our Latin friends in the Ibero-American summit, actions by European nongovernmental organizations and by European business interests -- all of these have been possible because of the discretion provided by Title III.

If you take that flexibility away, it will lead, I think, to a substantial impairment of the progress we've made and act directly contrary to the efforts that this Congress shares with the administration in obtaining cooperation from the broadest number of countries in isolating Castro and in pressing for changes in Cuba on human rights and democracy. It would be a very, very serious blow and a very serious mistake.

Q: Does the administration have a policy in general on sanctions measures imposed by U.S. state or local governments, or in particular on the Massachusetts law imposing sanctions on companies doing business with Burma?

Eizenstat: In general, it is best to allow the president and the secretary of state to conduct foreign policy. At the same time we recognize the reasons, the moral and human rights concerns, that led Massachusetts to act and led other states in other instances to act.

Here again we're disappointed that the European Union requested WTO dispute-settlement consultation when we were working in good faith to resolve the matter. It's another instance of using the WTO on a measure clearly not motivated by trade protectionism.

This is especially the case given the strong interest that the United States and the European Union share in improving the human rights situation in Burma. And, by the way, the European Union has taken steps -- more so than I think many recognize. For example, they cut off economic aid to Burma. They don't participate in fora with Burma.

In light of this and in light of the unanimous resolution by the European Parliament calling on the European Commission to refrain from addressing the Massachusetts law in the context of a WTO panel process, it makes it all the more surprising that the EU would have acted in this way.

Since we're facing potential litigation, I'm not prepared to go into our view of the allegations on the law's effects, and it would be premature to discuss our legal strategy. But we'll continue to consult with officials from Massachusetts and the European Union to try to reach a mutually satisfactory resolution.

Q: What is your view of the bill sponsored by Representative Bill McCollum and passed by the House of Representatives for eliminating the president's discretion in imposing sanctions against State Department terrorist-list countries Syria and Sudan?

Eizenstat: I've talked with Congressman McCollum, who is sincerely interested in trying to deprive states on the terrorist list from perpetrating acts of terror, and we greatly respect his motives. We do have some concerns with the breadth of the legislation and with its impact on certain countries like Syria. We're trying to engage Syria in a peace process that would mitigate the very terrorist activities that the congressman is legitimately concerned about. We are trying to work out those differences with the sponsors on Capitol Hill. We're not there yet, but Congressman McCollum has assured me that he is willing to meet with us to discuss our concerns.

Q: What is your view of the Specter-Wolf bill for imposing unilateral sanctions against countries practicing religious discrimination?

Eizenstat: We're looking at this legislation. We feel very strongly, of course, about religious discrimination. The president and others in the administration, including the secretary of state, have spoken up very strongly against it. But we want to make sure that we are using the most effective devices to protect religious freedom.

Q: What is your view of suggestions from a few members of Congress about reforming the process by which Congress imposes sanctions, including tests for likely effectiveness as well as cost-benefit analysis?

Eizenstat: We've begun to follow this and to talk to people in the business community and others about it. It reflects the concerns business has about the growing use of sanctions. We will look at this legislation, now still in formation, and at the concerns of the business community in the weeks and months ahead, making sure that our sanctions policy is effective and that we have the maximum discretion and flexibility to use sanctions when we need to do so for national security reasons, but in ways that minimize damage to our own business interests and to relations with our allies. Creating that correct balance is something we have an interest in achieving.