1997 Congressional Hearings
Intelligence and Security

Testimony of William C. Ramsay
Deputy Assistant Secretary
for Energy, Sanctions and Commodities
to the
House Subcommittee on Crime
H.R. 748
June 10, 1997

Mr. Chairman:

Thank you very much for the opportunity to testify today on H.R. 748.

H.R. 748 would flatly prohibit virtually all financial transactions between U.S. persons and the governments of terrorism-list countries.

We fully agree with your views on the importance of taking unequivocal measures to compel state sponsors of terrorism to end such involvement. Fighting international terrorism is one of this Administration's top priorities. Economic sanctions are an important tool in this effort.

The United States is the world's leader in using these pressures. In fact, the U.S. has the most stringent set of laws of any country in imposing trade and other sanctions against state sponsors of terrorism--an extensive package of sanctions which bites when the Secretary of State formally designates a country as a terrorist-list state. We forbid the export of dual-use items which could be used to support military or terrorism ends. We suspend military sales, foreign aid, and Ex-Im credits. We deny them GSP. We oppose loans to them in international financial institutions. We deny U.S. persons tax credits for taxes paid to such countries. These sanctions are all relevant to a state's support for terrorism. They are designed to deter further support by depriving terrorist list states of the means for that support, and by increasing their isolation from the international community.

Beyond that, additional sanctions on each of the terrorist-list states--up to and including full embargoes-- reflect our individualized responses to the behavior of these of these states (which varies); to their economic and military pressure points; and to our relationships with each of them.

Each country has a different set of potential vulnerabilities and circumstances. Thus, our sanctions are tailored for maximum impact.

But in order to have that impact, we need flexibility-- flexibility to ratchet up the pressure, at the best time, and in new ways, or to ease it, if there is improvement--to offer inducements, as well as threaten punishments. We need flexibility to target vulnerabilities, which vary from country to country. And we need flexibility, including the timing of implementation, to enlist, wherever possible, the participation of our friends and allies in a sanctions regime. - 2 - Flexibility in designing specific measures is vital to the success of sanctions. We have significant concerns with H.R. 748 because it is not inherently adaptable.

Because it severely limits our ability to focus sanctions measures so they are aimed at each regime's vulnerabilities, we believe that H.R. 748 will have significant unintended consequences that might divert and detract from our intended focus on combatting terrorism.

The following recitation is a partial list of the problems we believe the bill will cause if enacted as written.

o U.S. nationals could not receive payment for claims from terrorist-list governments, such as Iran, Iraq, and Libya, even if the payments were compensation for terrorist acts;

o The intellectual property rights of Americans might be jeopardized, if U.S. nationals are not permitted to engage in transactions necessary to register and maintain these rights in the targeted countries;

o U.S. media and American journalists, who work to publicize conditions in these countries, could no longer pay government fees, such as transmission charges, necessary to work within terrorism list countries;

o we might not be able to provide aid or assistance in support of democracy in these countries;

o the repatriation of MIA remains from North Korea might have to cease, along with our involvement in the current freeze and dismantlement of North Korea's nuclear weapons program;

o US participation in UNSCOM inspections in Iraq might have to stop, effectively ending UNSCOM's mission of detecting and destroying Iraq's Weapons of Mass Destruction programs;

o US participation in UNIKOM, which monitors the Iraq-Kuwait border, could end;

o US participation in activities to resolve POW/MIA issues related to the Gulf War could end;

o U.S. participation in the implementation of UNSC Resolution 986 (Iraqi oil for food) might have to cease;

-3- o our Interests Section in Havana could be forced to close, since it is not clear that it would fall within the scope of "routine diplomatic relations" as provided for in H.R. 748.

o The orderly, legal, and safe migration of Cubans to the United States, one of the key elements of our Cuba policy, may be hampered if monitoring of returnees is not deemed to be a "routine diplomatic function."

o It is unclear whether the "Support for the Cuban People" provisions, including humanitarian assistance, as authorized by the 1992 Cuban Democracy Act would continue to apply. The 1992 legislation is a key element in U.S. efforts to build a civil society and lay the groundwork for a peaceful democratic transition in Cuba;

o donations of food, medicines and medical supplies, payments for telecommunications services and facilities, and direct mail to Cuba might have to cease;

o the ability of the U.S. to host international sporting events such as the Olympics could be jeopardized if teams from terrorist-list countries could not participate;

o ordinary transactions by U.S. citizens living in terrorist-list countries, including religious missionaries and employees of humanitarian organizations, could become criminal acts--for example paying a telephone or electricity bill to a state-owned utility;

o the U.S. could no longer be able to serve as an effective intermediary between Israel and Syria in their pursuit of a peaceful resolution of their differences;

o H.R. 748 could bar the USG from funding or directing humanitarian assistance programs in countries like Sudan, Iraq, and North Korea. Since 1988, the USG has been the leading contributor of humanitarian assistance to Sudanese civilians suffering from civil war and natural disasters. Most of this assistance is provided through UN agencies and operations;

o the law could bar U.S. commercial airlines from making payments to terrorism-list governments for use of commercial air corridors, thus requiring route alterations or relocation of airline operations, and creating potential risks to air safety;

-4- o U.S. citizen travel to terrorism-list countries, if it involved payment of visa fees or other taxes, user fees or charges incidental to normal travel transactions, could become illegal;

o students from terrorism list countries might not receive government stipends for study in US institutions (potentially leaving them unable either to return to their countries or continue their studies).

As Secretary Albright has said, there is no "cookie cutter" approach to foreign policy -- there is no uniform template by which we shape or mold our relations in precisely the same pattern for each country.

Our interest in combatting terrorism is a constant and basic objective shaping our policy. But while our goals and principles remain constant, our tactics must be flexible to be effective. The differing interests we have in each country and the differing circumstances of each country must necessarily shape the practical measures we use to combat terrorism.

There are many ways to impose sanctions on a country without causing the foreign-policy consequences I described. To use sanctions in an effective way, we must resort to them only when there is a compelling need and after we have carefully assessed the benefits and costs. Specifically, we weigh the impact we hope the sanction will have on the behavior or policies of the targeted country, against the identifiable costs to U.S. interests--including our trade and investment, international obligations, and overall economic competitiveness.

The Administration's policy is to enlist other nations to support us in imposing sanctions against a targeted nation whenever possible. A multilateral approach can serve two objectives: to maximize the effectiveness of the sanctions by making them as universal as possible, and to distribute the costs of sanctions among other nations to achieve more equitable burden-sharing.

Country policies are subject to review in light of the changing conditions and vulnerabilities of the target country--and in fact, our policy toward Sudan, for example, is the subject of a current review. And when changes are necessary in an economic sanctions regime, we already have the legal tools we need to do the job.

Mr. Chairman, as we examine ways to make our sanctions policy more effective in deterring state support for terrorism, we pledge to consult closely with you and other members of the Committee, in pursuit of a common position that is best for the United States.

That concludes my remarks and I would be happy to answer or take any questions you may have.