TRADING with the ENEMY

<body topmargin=0 leftmargin=0 marginheight=0 marginwidth=0> <table cellpadding=0 cellspacing=0 border=0><tr> <td valign="top" colspan=2 height=90 BGCOLOR="#C0DCC0" TEXT="#080000" bgproperties="fixed" background="04e60961excgdu.jpg"> <div> <FONT SIZE="5" COLOR="#000000" FACE="Arial" ><B>Democracy In America</B></FONT><FONT SIZE="1" COLOR="#006633" FACE="Arial" >  </FONT><FONT SIZE="1" COLOR="#660000" FACE="Arial" >  </FONT> |     <A HREF="index.htm" TARGET="_top" TITLE="Democracy In America"><U>home</U></A></div> <div> back to                                                    </div> <div> </div> </td> </tr><tr> <td valign="top" width=190 BGCOLOR="#C0DCC0" TEXT="#080000" background="04d12163.jpg"> <div> <IMG BORDER="0" SRC="1x1.gif" HEIGHT="14" ALIGN="BOTTOM" HSPACE="0" VSPACE="0" WIDTH="14">    <A HREF="id32.htm" TARGET="_top" TITLE="PERCENTAGE ELECTORAL METHOD"><U><IMG SRC="0500e0e0.png" border=0 width="14" height="14" ALT="previous" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></U></A>    <A HREF="id44.htm" TARGET="_top" TITLE="BLOOD SPORT"><U><IMG SRC="0510e0e0.png" border=0 width="14" height="14" ALT="next" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></U></A>    <IMG BORDER="0" SRC="1x1.gif" HEIGHT="14" ALIGN="BOTTOM" HSPACE="0" VSPACE="0" WIDTH="14"></div> <div> From some documents.  The economic traitors or traders!</div> <bR> <bR> <bR> </td> <td valign="top" height=390 BGCOLOR="#FFFFFF" TEXT="#080000"> <div> TRADING with the ENEMY</div> <div> 1996 Global Terrorism: Overview of State-Sponsored Terrorism Patterns of </div> <div>       Global Terrorism</div> <div>       1996</div> <bR> <bR> <div> Overview of State-Sponsored Terrorism </div> <div> The United States actively promotes international cooperation in condemning </div> <div> state sponsorship of terrorism and in bringing maximum pressure to bear against </div> <div> state sponsors. The Secretary of State has designated seven countries as state </div> <div> sponsors of terrorism: Cuba, Iran, Iraq, Libya, North Korea, Sudan, and Syria. </div> <div> Although US and international pressure has led to a decline in active state </div> <div> sponsorship of terrorism in recent years, more can and should be done to </div> <div> restrain those states that engage in terrorism themselves, or assist terrorists </div> <div> by providing sanctuary, arms, training, logistic support, financial backing, or </div> <div> diplomatic facilities. A range of bilateral and multilateral sanctions are in </div> <div> place to discourage these countries from continuing their support for </div> <div> international terrorism. </div> <div> Cuba no longer is able to support actively armed struggle in Latin America or </div> <div> other regions of the world because of its severe economic problems. Although </div> <div> there is no current evidence that Cuba was directly involved in sponsoring </div> <div> specific acts of terrorism in 1996, it continues to provide safehaven for </div> <div> several international terrorists and maintains close ties to other state </div> <div> sponsors. </div> <div> Iran, the most active state sponsor of terrorism today, continues to provide </div> <div> direction and support to terrorist groups, including Hizballah in Lebanon. Iran </div> <div> continues to assassinate dissidents abroad and also provides support to other </div> <div> terrorist groups that oppose Israel and the Middle East peace process. Iran has </div> <div> not withdrawn the fatwa against the life of Salman Rushdie. </div> <div> Iraq's ability to carry out terrorism abroad has been curbed by UN sanctions. As </div> <div> events during 1996 clearly demonstrated, however, Saddam Hussein's regime </div> <div> continues to murder dissidents throughout Iraq and target foreign and local </div> <div> relief personnel in the northern part of the country. </div> <div> Terrorism by Libya has been sharply reduced by UN sanctions imposed after the </div> <div> bombings of Pan Am Flight 103 (1988) and UTA Flight 772 (1989). Libya still </div> <div> evades its obligation to hand over those indicted for these crimes. </div> <div> Although North Korea cannot be conclusively linked to any international </div> <div> terrorist attacks since 1987, it continues to provide sanctuary to Japanese Red </div> <div> Army members. </div> <div> Sudan was not directly involved in any acts of international terrorism in 1996 </div> <div> and took some positive steps to distance itself from its past support for </div> <div> terrorism. At the same time, Sudan continued to serve as a sanctuary and </div> <div> training center for several international terrorist groups. Moreover, it has not </div> <div> complied with the UN Security Council's demand that it turn over the three </div> <div> suspects implicated in the 1995 assassination attempt against President Mubarak. </div> <bR> <div> There is no evidence of direct Syrian Government involvement in acts of </div> <div> international terrorism since 1986. The United States continues to urge Syria to </div> <div> banish terrorist groups that maintain a presence in Syria or in </div> <div> Syrian-controlled territory in Lebanon. Until Syria does so, it will remain on </div> <div> the list of state sponsors. </div> <div> Cuba </div> <div> Cuba no longer actively supports armed struggle in Latin America and other parts </div> <div> of the world. In earlier years the Castro regime provided significant levels of </div> <div> military training, weapons, funding, and guidance to numerous leftist </div> <div> extremists. Havana's focus now is to forestall an economic collapse; the </div> <div> government actively continued to seek the upgrading of diplomatic and trade </div> <div> relations with other nations. </div> <div> Although there is no current evidence that Cuban officials were directly </div> <div> involved in sponsoring specific acts of terrorism last year, Cuba is still a </div> <div> safehaven for several international terrorists, maintains close relations with </div> <div> other state sponsors of terrorism, and remains in contact with numerous leftist </div> <div> insurgent groups in Latin America. </div> <div> A number of Basque Fatherland and Liberty (ETA) terrorists who sought sanctuary </div> <div> in Cuba several years ago continue to live on the island. Some of the more than </div> <div> 40 Chilean terrorists from the Manuel Rodriguez Patriotic Front (FPMR) who </div> <div> escaped from a Chilean prison in 1990 also probably still reside in Cuba. </div> <div> Colombia's two main guerrilla groups, the revolutionary Armed Forces of Colombia </div> <div> (FARC) and the National Liberation Army (ELN), reportedly maintain </div> <div> representatives in Havana. </div> <div> Cuba also provides safehaven to several nonterrorist US fugitives. </div> <div> Iran </div> <div> Iran remained the premier state sponsor of terrorism in 1996. It continued to be </div> <div> involved in the planning and execution of terrorist acts by its own agents and </div> <div> by surrogates such as Lebanese Hizballah and continued to fund and train known </div> <div> terrorist groups. </div> <div> Tehran conducted at least eight dissident assassinations outside Iran in 1996. </div> <div> In May 1996 Reza Mazlouman, a government official under the Shah, was murdered </div> <div> in Paris by an Iranian resident of Germany with alleged ties to Iran's Ministry </div> <div> of Intelligence and Security (MOIS). The suspect was extradited to France by </div> <div> Germany. Seven other dissidents were assassinated by Iran in 1996 in Turkey and </div> <div> northern Iraq. Iran's primary targets are members of the regime's main </div> <div> opposition groups, the Mujahedin-e Khalq (MEK) and the Kurdish Democratic Party </div> <div> of Iran (KDPI), as well as former officials of the late Shah's government who </div> <div> speak out against the clerical regime. </div> <div> Iran continued to provide support-including money, weapons, and training-to a </div> <div> variety of terrorist groups, such as Hizballah, HAMAS, and the Palestine Islamic </div> <div> Jihad (PIJ). It continued to oppose any recognition of Israel and to encourage </div> <div> violent rejection of the Middle East peace process. For example, Iranian Vice </div> <div> President Habibi met with HAMAS leaders in Damascus and praised their successful </div> <div> efforts immediately following the February bombings in Israel. HAMAS claimed </div> <div> responsibility for two more bombings in Israel the following week. </div> <div> During a routine customs inspection of an Iranian vessel in Antwerp in March, </div> <div> Belgian authorities discovered a disassembled mortar-like weapon hidden in a </div> <div> shipment of pickles. The shipment was consigned to an Iranian merchant living in </div> <div> Germany. Iranian dissidents claim that the mortar was intended for use in an </div> <div> assassination attempt against Iranian exiles in Europe. </div> <div> Testimony in the three-year-long trial of an Iranian and four Lebanese for the </div> <div> Iran-sponsored killing of Iranian Kurdish dissidents in Berlin's Mykonos </div> <div> restaurant in 1992 concluded in late 1996. German authorities issued an arrest </div> <div> warrant in March for Ali Fallahian, Iran's Intelligence Minister. In the fall, </div> <div> former Iranian President Abolhassan Bani Sadr and two other witnesses testified </div> <div> against Iran. In final statements in late November, German prosecutors charged </div> <div> Iranian Supreme Leader Khamenei and Iranian President Rafsanjani with approving </div> <div> the operation. (Guilty verdicts for four of the accused were announced in April </div> <div> 1997.) </div> <div> Iranian leaders have consistently denied being able to revoke the fatwa against </div> <div> Salman Rushdie's life, in effect for nearly eight years, claiming that </div> <div> revocation is impossible because the author of the fatwa is deceased. There is </div> <div> no indication that Tehran is pressuring the 15 Khordad Foundation to withdraw </div> <div> the $2 million reward it is offering to anyone who will kill Rushdie. </div> <div> In addition, Iran provides safehaven to elements of the Kurdistan Workers' Party </div> <div> (PKK), a Turkish separatist group that has conducted numerous terrorist attacks </div> <div> in Turkey and throughout Europe. Although Turkey and Iran agreed to a joint </div> <div> operation in mid-October to remove the PKK from the border region, Iran </div> <div> reportedly failed to cooperate in a meaningful way. </div> <div> Iran's terrorist network in the Persian Gulf remained active in 1996. The </div> <div> Government of Bahrain announced in June the discovery of a local Hizballah group </div> <div> of Bahraini Shiites who had been trained and sponsored by Iran in an effort to </div> <div> overthrow the ruling al-Khalifa family. </div> <div> Iraq </div> <div> Iraq has not managed to recover its preGulf war international terrorist </div> <div> capabilities, but it is slowly rebuilding its intelligence network. Acts of </div> <div> political violence continued in northern Iraq, and intra-Kurdish fighting in </div> <div> August led to an increased number of operatives there under Baghdad's control. </div> <div> At the time of its military attack on Irbil, Iraq reportedly murdered more than </div> <div> 100 Iraqis associated with the dissident Iraqi National Congress (INC). Later, </div> <div> Baghdad renewed its threat to charge foreign relief personnel and other Iraqi </div> <div> staff with "espionage," a crime punishable by death. </div> <div> Iraq continues to provide safehaven to a variety of Palestinian rejectionist </div> <div> groups, including the Abu Nidal organization (ANO), the Arab Liberation Front </div> <div> (ALF), and the former head of the now defunct 15 May Organization, Abu Ibrahim, </div> <div> who masterminded several bombings of US aircraft. The Mujahedin-e Khalq (MEK), a </div> <div> terrorist group that opposes the current Iranian regime, also is based in Iraq. </div> <div> In mid-November a Jordanian diplomatic courier was murdered in Iraq on the road </div> <div> from Amman to Baghdad, and his diplomatic pouch stolen. The perpetrators of the </div> <div> act have yet to be identified. The diplomatic bag contained 250 new Jordanian </div> <div> passports, which could be used by terrorist operatives for travel under cover. </div> <div> The terrorist Kurdistan Workers' Party (PKK) continues to attempt to use </div> <div> northern Iraq as a safehaven and base for attacks on Turkey. </div> <div> Libya </div> <div> The end of 1996 marked the fifth year of the Libyan regime's refusal to comply </div> <div> with the demands of UN Security Council Resolution 731. This measure was adopted </div> <div> following the indictments in November 1991 of two Libyan intelligence agents for </div> <div> the bombing of Pan Am Flight 103 in 1988. UNSCR 731 ordered Libya to turn over </div> <div> the two Libyan bombing suspects for trial in the United States or the United </div> <div> Kingdom, pay compensation to the victims, cooperate in the ongoing </div> <div> investigations into the Pan Am 103 and UTA Flight 772 bombings, and cease all </div> <div> support for terrorism. </div> <div> UN Security Council Resolution 748 was adopted in April 1992 as a result of </div> <div> Libya's refusal to comply with the demands of UNSCR 731. UNSCR 748 imposed </div> <div> sanctions that embargoed Libya's civil aviation and military procurement efforts </div> <div> and required all states to reduce Libya's diplomatic presence. In November 1993 </div> <div> UNSCR 883 was adopted, imposing additional sanctions against Libya for its </div> <div> continued refusal to comply with UNSC demands. UNSCR 883 included a limited </div> <div> assets freeze and a ban on sales of some oil technology to Libya and </div> <div> strengthened existing sanctions in other ways. </div> <div> By the end of 1996 Qadhafi had yet to comply in full with the UNSC demands. He </div> <div> did, however, allow a French magistrate to visit Libya in July to further his </div> <div> investigation of the 1989 bombing of UTA 772. As a result of that investigation, </div> <div> France has issued a total of six arrest warrants-two in 1996-for Libyan </div> <div> intelligence officers, who are still at large. </div> <div> Tripoli continues to deny any involvement in Pan Am 103 and has made no attempt </div> <div> to comply with the UN resolutions. Most significantly, it still refused to turn </div> <div> over for trial in the United States or the United Kingdom the two Libyan agents </div> <div> indicted for the Pan Am bombing. In response to continued Libyan and Iranian </div> <div> support for terrorism, the US Congress passed the Iran and Libya Sanctions Act </div> <div> of 1996. This Act imposes new sanctions on companies that invest in the </div> <div> development of either country's petroleum resources. The law is intended to help </div> <div> deny revenues that could be used to finance international terrorism. </div> <div> In addition to the Pan Am and UTA airliner bombings, Libya continues to be held </div> <div> responsible for other terrorist acts of the past that retain current interest. </div> <div> In October 1996 warrants were issued by German authorities for four Libyans who </div> <div> are suspected of initiating the 1986 Berlin discotheque bombing that killed two </div> <div> US citizens. The four are believed to be in Libya. Also, Libya is widely </div> <div> believed to be responsible for the 1993 abduction of prominent Libyan dissident </div> <div> and human rights activist Mansur Kikhia. The current whereabouts of Kikhia, a US </div> <div> green card holder, remains unknown. </div> <div> Libya also continued in 1996 to provide support to a variety of Palestinian </div> <div> terrorist groups, including the Abu Nidal organization (ANO), the Palestine </div> <div> Islamic Jihad (PIJ), and Ahmed Jabril's Popular Front for the Liberation of </div> <div> PalestineGeneral Command (PFLP-GC). The ANO maintains its headquarters in </div> <div> Libya, where the group's leader, Sabri al-Banna (a.k.a. Abu Nidal) resides. </div> <div> North Korea </div> <div> North Korea has not been conclusively linked to any international terrorist </div> <div> attacks since 1987. North Korea is best known for its involvement in the 1987 </div> <div> midair bombing of KAL Flight 858 and the 1983 Rangoon bombing aimed at South </div> <div> Korean Government officials. A North Korean spokesman in November 1995 stated </div> <div> that the Democratic People's Republic of Korea (DPRK) opposed "all kinds of </div> <div> terrorism" and "any assistance to it." </div> <div> There is no conclusive evidence the DPRK conducted any act of terrorism since </div> <div> 1987. The Republic of Korea, however, suspects that North Korean agents were </div> <div> involved in the murder of a South Korean official in Vladivostok on 1 October </div> <div> 1996, which shortly followed a North Korean warning that it would retaliate if </div> <div> Seoul did not return the bodies of several North Korean infiltrators killed in </div> <div> South Korea. </div> <div> The DPRK provides asylum to a small group of Japanese Red Army members-the </div> <div> "Yodo-go" group-who hijacked a JAL airliner to North Korea in 1970. The senior </div> <div> surviving Yodo-go member, Yoshimi Tanaka, in late March was arrested in Cambodia </div> <div> on counterfeiting charges. Tanaka was captured while carrying a North Korean </div> <div> diplomatic passport and in the company of several North Korean diplomats. </div> <div> P'yongyang admitted publicly that Tanaka was a Yodo-go member, did not dispute </div> <div> the counterfeiting charges, and refused to take up his defense. </div> <div> Sudan </div> <div> Sudan in 1996 continued to serve as a refuge, nexus, and training hub for a </div> <div> number of international terrorist organizations, primarily of Middle East </div> <div> origin. The Sudanese Government also condoned many of the objectionable </div> <div> activities of Iran, such as funneling assistance to terrorist and radical </div> <div> Islamic groups operating in and transiting through Sudan. </div> <div> Following the passage of three critical UN Security Council resolutions, Sudan </div> <div> ordered the departure of terrorist financier Usama Bin Ladin from Sudan in May. </div> <div> Sudan failed, however, to comply with the Security Council's demand that it </div> <div> cease support to terrorists and turn over the three Egyptian al-Gama'at </div> <div> al-Islamiyya (IG) fugitives linked to the 1995 assassination attempt of </div> <div> President Mubarak. Khartoum continued to deny any foreknowledge of the planning </div> <div> behind the Mubarak attempt and claimed not to know the whereabouts of the </div> <div> assailants. </div> <div> Since Sudan was placed on the list of state sponsors of terrorism in August </div> <div> 1993, the Sudanese Government has continued to harbor members of several </div> <div> international terrorist and radical Islamic groups, including the Abu Nidal </div> <div> organization (ANO), Lebanese Hizballah, the Palestine Islamic Jihad (PIJ), the </div> <div> Islamic Resistance Movement (HAMAS), and the Islamic Salvation Front (FIS) of </div> <div> Algeria. The National Islamic Front, which is the dominant influence within the </div> <div> Sudanese Government, also supports opposition and insurgent groups in Uganda, </div> <div> Tunisia, Ethiopia, and Eritrea. </div> <div> In April 1996 the Department of State expelled a Sudanese diplomat at the </div> <div> Sudanese UN Mission who had ties to the conspirators planning to bomb the UN </div> <div> building and other targets in New York in 1993. A Sudanese national, who pleaded </div> <div> guilty in February 1995 to various charges of complicity in the New York City </div> <div> bomb plots foiled by the FBI, indicated two members of the Sudanese UN Mission </div> <div> had offered to facilitate access to the UN building in support of the bombing </div> <div> plot. </div> <div> Syria </div> <div> There is no evidence that Syrian officials have been directly involved in </div> <div> planning or executing international terrorist attacks since 1986. Nevertheless, </div> <div> Syria continues to provide safehaven and support for several groups that engage </div> <div> in such attacks. Though Damascus has stated its commitment to the peace process, </div> <div> it has not acted to stop anti-Israeli attacks by Hizballah and Palestinian </div> <div> rejectionist groups in southern Lebanon. Syria also permits the resupply of arms </div> <div> for rejectionist groups operating in Lebanon via Damascus. On the positive side, </div> <div> Syria took action to prevent specific terrorist acts, continued to restrain the </div> <div> international activities of some terrorist groups in Syria, and has been a </div> <div> member of the Israel-Lebanon Monitoring Group-established by the 12 April 1996 </div> <div> Understanding-helping to enforce its provisions. After King Hussein of Jordan </div> <div> raised the issue of individuals infiltrating into Jordan from Syria with plans </div> <div> to attack Jordanian and Israeli targets, Damascus conducted an arrest campaign </div> <div> against the infiltrators' backers. </div> <div> Several radical terrorist groups maintain training camps or other facilities on </div> <div> Syrian territory. Ahmed Jibril's PFLP-GC and the Palestine Islamic Jihad (PIJ), </div> <div> for example, have their headquarters near Damascus. In addition, Damascus grants </div> <div> basing privileges or refuge to a wide variety of groups engaged in terrorism in </div> <div> areas of Lebanon's Bekaa Valley under Syrian control. These include HAMAS, the </div> <div> PFLP-GC, the PIJ, and the Japanese Red Army (JRA). The Kurdistan Workers' Party </div> <div> (PKK) continues to train in Syria-controlled areas of Lebanon, and its leader, </div> <div> Abdullah Ocalan, resides at least part-time in Syria. In 1996 the PKK executed </div> <div> numerous terrorist attacks across Europe and continued-with limited success-its </div> <div> violent campaign against Turkish tourist spots. </div> <div> Syria also suffered from several terrorist attacks in 1996, including a string </div> <div> of unresolved bombings in major Syrian cities. </div> <div> (###) </div> <div>  </div> <bR> <bR> <bR> <bR> <bR> <div> (1)</div> <div> U. S. Bureau of Industry and Security - 2001 Foreign Policy Report: Chapter 4Bureau </div> <div> of Industry and Security </div> <div> U.S. Department of Commerce</div> <div> Where Industry and Security Intersect</div> <div> What's New | Sitemap | Search </div> <div>  About BIS</div> <div> News</div> <div> Press Releases</div> <div> Speeches</div> <div> Testimony</div> <div> Publications</div> <div> Electronic FOIA </div> <div> Archives</div> <div> Policies and Regulations</div> <div> Licensing</div> <div> Compliance and Enforcement</div> <div> Seminars and Training</div> <div> International Programs</div> <div> Defense Industrial Base ProgramsHome >News >Archives >2001 Foreign Policy Report </div> <div> >Chapter 4</div> <div> Anti-Terrorism Controls</div> <div> (Sections 742.8, 742.9, 742.10, 742.19, 744.10, 746.2, 746.4)</div> <div> Export Control Program Description and Licensing Policy </div> <div> These controls reflect U.S. opposition to acts of international terrorism </div> <div> supported by a foreign government, as well as terrorist acts carried out by </div> <div> designated terrorist entities.</div> <div> Pursuant to Section 6(j) of the Export Administration Act, the Secretary of </div> <div> State has designated seven countries -- Cuba, Iran, Iraq, Libya, North Korea, </div> <div> Sudan and Syria -- as nations whose governments have repeatedly provided support </div> <div> for acts of international terrorism. As noted below, the United States controls </div> <div> multilateral list items destined to military or other sensitive end users in </div> <div> designated terrorist countries for anti-terrorism reasons under Section 6(j) of </div> <div> the Act. The United States controls additional items on the Commerce Control </div> <div> List (CCL) to four of these designated countries (Iran, Sudan, North Korea and </div> <div> Syria) for anti-terrorism reasons under the general authority of Section 6(a) of </div> <div> the Act. Comprehensive trade embargoes have applied to four of these countries </div> <div> (Cuba, Iran, Iraq and Libya) for many years.</div> <div> The embargo on exports to Cuba is administered by the United States under the </div> <div> Act and other statutes. Among other recent measures on Cuba, in January 1999, </div> <div> the President announced a number of new initiatives, implemented under Commerce </div> <div> and Treasury Department regulations, intended to further aid the Cuban people in </div> <div> their transition to democracy. These measures included case-by-case review of </div> <div> applications to sell food and certain agricultural items to non-governmental </div> <div> entities in Cuba, facilitating exploratory American business trips to Cuba and </div> <div> expansion of people-to-people contacts between the United States and Cuba.</div> <div> On September 17, 1999, the President announced his decision to ease economic </div> <div> sanctions maintained against North Korea. The President acted in response to </div> <div> North Korea's continued restraint from testing long-range missiles and in </div> <div> pursuit of improved overall relations. On June 19, 2000, the United States </div> <div> published regulations implementing the sanctions-easing program. Under these </div> <div> measures, U.S. exporters may export the vast majority of U.S. consumer products </div> <div> to North Korea without a license, including agricultural, medical, and low-level </div> <div> industrial goods and services. The United States continues to require a license </div> <div> for items on the Commerce Control List (CCL) to North Korea, including items </div> <div> added to the CCL on June 19, 2000. Items on the CCL include multilaterally </div> <div> controlled items, as well as a range of lower-level products and technologies </div> <div> controlled for anti-terrorism and non-proliferation reasons.</div> <div> Broadly speaking, the Department of Commerce has licensing responsibility for </div> <div> exports and reexports to Cuba, Syria and North Korea and for reexports to Libya; </div> <div> the Department of the Treasury has licensing responsibilities for exports and </div> <div> reexports to Iran and Iraq and for exports to Libya. Both Departments maintain </div> <div> license requirements for exports and reexports to Sudan and the </div> <div> Taliban-controlled areas of Afghanistan. This report does not describe the </div> <div> restrictions administered by the Treasury Department against Iran, Iraq, Sudan </div> <div> and the Taliban.</div> <div> In addition to specific discussion of the designated terrorist states, this </div> <div> chapter summarizes briefly a revision of the EAR which prohibits exports and </div> <div> certain reexports to Specially Designated Terrorists (SDT) and Foreign Terrorist </div> <div> Organizations (FTO), wherever located.</div> <div> The "Trade Sanctions Reform and Export Enhancement Act of 2000," contained in </div> <div> Title IX of the 2000 Agriculture Appropriations Act, requires the lifting of </div> <div> unilateral agricultural and medical sanctions worldwide but also requires that a </div> <div> licensing regime be in place for designated terrorist countries (e.g., Cuba, </div> <div> Iran, Libya, Sudan and others). Please see Chapter 5 for more detail on </div> <div> regulations pursuant to this legislation. We anticipate placing restrictions on </div> <div> exports and reexports to Sudan to reflect the trade embargo on Sudan maintained </div> <div> by the Treasury Department. These restrictions will be similar to those imposed </div> <div> on exports and reexports to Iran and Iraq, countries for which the Treasury </div> <div> Department also maintains embargoes. </div> <div> EAA Section 6(j) determinations:</div> <div> The Secretary of State has determined that Libya (1979), Syria (1979), Cuba </div> <div> (1982), Iran (1984), North Korea (1988), Iraq (1990) and Sudan (1993) are </div> <div> countries whose governments have repeatedly provided support for acts of </div> <div> international terrorism.</div> <div> Effective December 28, 1993, the Acting Secretary of State determined that the </div> <div> United States would control five categories of dual-use items subject to </div> <div> multilateral controls to certain sensitive government end users under Section </div> <div> 6(j) of the Act, since these items meet the criteria set forth in Section </div> <div> 6(j)(1)(B). Specifically, the Acting Secretary determined that these items, when </div> <div> exported to military, police or intelligence organizations or to other sensitive </div> <div> end users in a designated terrorist country, could make a significant </div> <div> contribution to that country's military potential or could enhance its ability </div> <div> to support acts of international terrorism. These anti-terrorism controls apply </div> <div> to all designated terrorist countries.</div> <div> The Acting Secretary also advised that the United States should continue to </div> <div> control other items not specifically controlled under Section 6(j) for general </div> <div> foreign policy purposes under Section 6(a) to terrorist-list countries and that </div> <div> the United States should continue to review the export of such items prior to </div> <div> approval to evaluate whether, under the circumstances of the application, the </div> <div> requirements of Section 6(j) apply. These measures are described in detail </div> <div> below. </div> <div> Paragraph A below reflects the Section 6(j) controls; paragraphs (B), (C), (D) </div> <div> and (E) reflect the Section 6(a) controls on Iran, Sudan, Syria and North Korea. </div> <bR> <div> A. The Acting Secretary of State determined, effective December 28, 1993, that </div> <div> the export of certain categories of goods and technologies, when destined to </div> <div> military, police, intelligence entities and other sensitive end users, as </div> <div> determined by the Department of State, in any country designated under Section </div> <div> 6(j) of the Act as a country that has repeatedly provided support for acts of </div> <div> international terrorism, "could make a significant contribution to the military </div> <div> potential of such country, including its military logistics capability, or could </div> <div> enhance the ability of such country to support acts of international terrorism." </div> <div> As a result of this determination, the Secretaries of State and Commerce would </div> <div> notify Congress thirty days prior to the issuance of any license for the export </div> <div> of any item from the five categories listed below to sensitive end users in the </div> <div> terrorist countries.</div> <div> Pursuant to Section 6(j) of the Act, the Department of Commerce requires a </div> <div> license for the export of the following items to military or other sensitive end </div> <div> users in designated terrorist countries:</div> <div> 1) All items subject to national security controls, except computers with a </div> <div> performance level of less than 500 million theoretical operations per second </div> <div> (MTOPS) (Wassenaar Arrangement)(1);</div> <div> 2) All items subject to chemical and biological weapons proliferation controls </div> <div> (Australia Group);</div> <div> 3) All dual-use items subject to missile-proliferation controls (Missile </div> <div> Technology Control Regime);</div> <div> 4) All items subject to nuclear weapons-proliferation controls (Nuclear Referral </div> <div> List); and </div> <div> 5) All military-related items (items controlled by Commerce Control List (CCL) </div> <div> entries ending with the number 18).</div> <div> B. Pursuant to Section 6(a) of the Act, the United States requires a license for </div> <div> the categories of items listed below for Iran, North Korea, Sudan and Syria to </div> <div> promote U.S. foreign policy goals. Sudan (as of November 4, 1997) and Iran (as </div> <div> of May 7, 1995) are also subject to comprehensive trade and investment embargoes </div> <div> administered by the Treasury Department under the authority granted by the </div> <div> President under the International Emergency Economic Powers Act (IEEPA). The </div> <div> Department of State reviews license applications for items controlled under </div> <div> Section 6(a) of the Act before approval to determine whether the requirements of </div> <div> Section 6(j) apply. If the Secretary of State determines that the particular </div> <div> export "could make a significant contribution to the military potential of such </div> <div> country, including its military logistics capability, or could enhance the </div> <div> ability of such country to support acts of international terrorism," the </div> <div> Departments of Commerce and State will notify the appropriate Congressional </div> <div> committees thirty days before issuing a license. The categories of items </div> <div> controlled under Section 6(a) include, but are not limited to:</div> <div>   Heavy-duty on-highway tractors; </div> <div>   Off-highway wheel tractors (>10 tons); </div> <div>   Cryptographic, cryptoanalytic and cryptologic equipment; </div> <div>   Navigation, direction finding and radar equipment; </div> <div>   Electronic test equipment; </div> <div>   Mobile communications equipment; </div> <div>   Acoustic underwater detection equipment; </div> <div>   Vessels and boats (including inflatable boats); </div> <div>   Marine and submarine engines; </div> <div>   Underwater photographic equipment; </div> <div>   Submersible systems; </div> <div>   CNC machine tools; </div> <div>   Vibration test equipment; </div> <div>   Certain digital computers (CTP6); </div> <div>   Certain telecommunications transmission equipment; </div> <div>   Certain microprocessors (clock speed >25 Mhz); </div> <div>   Certain semiconductor manufacturing equipment; </div> <div>   Software specially designed for CAD/CAM IC production; </div> <div>   Packet switches; </div> <div>   Software specially designed for air traffic control applications; </div> <div>   Gravity meters (static accuracy <100 microgal or with quartz element); </div> <div>   Certain magnetometers with sensitivity <1.0 nt rms per root hertz; </div> <div>   Certain fluorocarbon compounds for cooling fluids for radar and </div> <div>   supercomputers; </div> <div>   High-strength organic and inorganic fibers; </div> <div>   Certain machines for gear-cutting (up to 1.25 meters); </div> <div>   Certain aircraft skin and spar milling machines; </div> <div>   Certain manual dimensional inspection machines (linear positioning accuracy </div> <div>   ±3+L/300); </div> <div>   Robots employing feedback information in real time; </div> <div>   Explosive device detectors used in airports. </div> <div> C. Exports of the following additional items to Iran and Sudan are subject to a </div> <div> license requirement under the Export Administration Regulations (EAR) for </div> <div> foreign policy reasons:</div> <div>   Large diesel engines (>400 hp); </div> <div>   Scuba gear; </div> <div>   Pressurized aircraft breathing equipment. </div> <bR> <div> D. Export of the following additional item to Iran is subject to a license </div> <div> requirement under the EAR for foreign policy reasons: portable electric power </div> <div> generators.</div> <div> E. Exports of the following additional items to North Korea are subject to a </div> <div> license requirement under the EAR for foreign policy reasons:</div> <div>   Ring magnets; </div> <div>   Hot cells; </div> <div>   Glove boxes suitable for use with radioactive materials; </div> <div>   Software for neutronic calculations/modeling; </div> <div>   Software for radiation transport calculations/modeling; </div> <div>   Software for hydrodynamic calculations/modeling; </div> <div>   Radiation detection, monitoring and measurement equipment; </div> <div>   Radiographic detection equipment such as x-ray converters, and storage </div> <div>   phosphor image plates; </div> <div>   Electrolytic cells for flourine production; </div> <div>   Particle accelerators; </div> <div>   Industrial process control hardware/systems designed for power industries; </div> <div>   Freon and chilled water cooling systems capable of continuous cooling duties </div> <div>   of 100,000 BTU/hr (29.3 kW) or greater; </div> <div>   Equipment for the production of structural composites, fibers, prepregs and </div> <div>   preforms; </div> <div>   Hardened steel and tungsten carbide precision ball bearings (3mm or greater </div> <div>   diameter); </div> <div>   304 and 316 stainless steel plate; </div> <div>   Monel plate; </div> <div>   Tributyl phosphate; </div> <div>   Nitric acid in concentrations of 20 weight percent or greater; </div> <div>   Flourine; </div> <div>   Alpha-emitting radionuclides; </div> <div>   Software specially designed for industrial process control hardware/systems </div> <div>   controlled by 1B999; </div> <div>   Software specially designed for equipment for the production of structural </div> <div>   composites, fibers, prepregs and preforms controlled by 1B999, n.e.s.; </div> <div>   Bellows sealed valves; </div> <div>   Isostatic presses, n.e.s.; </div> <div>   Bellows manufacturing equipment, including hydraulic forming equipment and </div> <div>   bellows forming dies; </div> <div>   Laser welding machines; </div> <div>   MIG welders; </div> <div>   E-beam welders; </div> <div>   Monel equipment, including valves, piping, tanks and vessels; </div> <div>   304 and 316 stainless steel valves, piping, tanks and vessels; </div> <div>   Mining and drilling equipment, as follows: </div> <div> - Large boring equipment capable of drilling holes greater than two feet in </div> <div> diameter, and</div> <div> - Large earth-moving equipment used in the mining industry;</div> <div>   Electroplating equipment designed for coating parts with nickel or aluminum; </div> <div>   Pumps designed for industrial service and for use with an electrical motor of </div> <div>   5 HP or greater; </div> <div>   Vacuum valves, piping, flanges, gaskets and related equipment specially </div> <div>   designed for use in high-vacuum service; </div> <div>   Spin forming and flow forming machines; </div> <div>   Centrifugal multiplane balancing machines; </div> <div>   Austenitic stainless steel plate, valves, piping, tanks and vessels; </div> <div>   Frequency changers capable of operating in the frequency range from 300 up to </div> <div>   600 Hz; </div> <div>   Mass spectrometers; </div> <div>   All flash x-ray machines, and components of pulsed power systems designed </div> <div>   thereof, including Marx generators, high power pulse shaping networks, high </div> <div>   voltage capacitors, and triggers; </div> <div>   Pulse amplifiers; </div> <div>   Electronic equipment for time delay generation or time interval measurement, </div> <div>   as follows: </div> <div> Digital time delay generators with a resolution of 50 nanoseconds or less over </div> <div> time intervals of 1 microsecond or greater, or</div> <div> Multi-channel (three or more) or modular time interval meter and chronometry </div> <div> equipment with resolution of 50 nanoseconds or less over time intervals of 1 </div> <div> microsecond or greater;</div> <div>   Chromatography and spectrometry analytical instruments; </div> <div>   Seismic detection equipment; </div> <div>   Radiation hardened TV cameras. </div> <div> License Requirements and Licensing Policy for Cuba</div> <div> A. The Department of Commerce requires a license for export to Cuba of virtually </div> <div> all commodities, technology and software, except:</div> <div>   technology generally available to the public and informational materials; </div> <div>   some types of personal baggage, crew baggage, vessels and certain aircraft on </div> <div>   temporary sojourn, ship stores (except as prohibited by the Cuba Democracy Act </div> <div>   to Cuba) and plane stores under certain circumstances; </div> <div>   certain foreign-origin items in transit through the United States; </div> <div>   shipments for U.S. Government personnel and agencies; and </div> <div>   gift parcels not exceeding $200 for Cuba limited to food, clothing </div> <div>   (non-military), vitamins, seeds, medicines, medical supplies and devices, </div> <div>   hospital supplies and equipment, equipment for the handicapped, personal </div> <div>   hygiene items, veterinary medicines and supplies, fishing equipment and </div> <div>   supplies, soap-making equipment, certain radio equipment, and batteries for </div> <div>   such equipment. There are no frequency or dollar-value limits on food </div> <div>   contained in gift parcels to Cuba. </div> <div> B. The United States generally denies export license applications for exports to </div> <div> Cuba; however, the Commerce Department will consider applications for the </div> <div> following on a case-by-case basis:</div> <div>   exports to meet basic human needs; </div> <div>   exports to Cuba from foreign countries of non-strategic, foreign-made products </div> <div>   containing 20 percent or less U.S.-origin parts, components or materials, </div> <div>   provided the exporter is not a U.S.-owned or controlled subsidiary in a third </div> <div>   country; and </div> <div>   exports to Cuba of telecommunications equipment, to the extent permitted as </div> <div>   part of a telecommunications project approved by the Federal Communications </div> <div>   Commission, necessary to deliver a signal to an international </div> <div>   telecommunications gateway in Cuba. </div> <div> C. The United States reviews applications for exports of donated and </div> <div> commercially supplied medicine or medical items to Cuba on a case-by-case basis. </div> <div> The United States will not restrict exports of these items, except in the </div> <div> following cases:</div> <div>   to the extent Section 5(m) of the Export Administration Act of 1979 or Section </div> <div>   203(b)(2) of the IEEPA would permit such restrictions; </div> <div>   in a case in which there is a reasonable likelihood the item to be exported </div> <div>   will be used for purposes of torture or other human rights abuses; </div> <div>   in a case in which there is a reasonable likelihood the item to be exported </div> <div>   will be reexported; </div> <div>   in a case in which the item to be exported could be used in the production of </div> <div>   any biotechnological product; or </div> <div>   in a case where the U.S. Government determines it would be unable to verify, </div> <div>   by on-site inspection and other appropriate means, that the item to be </div> <div>   exported will be used for the purpose for which it was intended and only for </div> <div>   the use and benefit of the Cuban people. This exception does not apply to </div> <div>   donations of medicine for humanitarian purposes to a nongovernmental </div> <div>   organization in Cuba. </div> <div> Licensing Policy for North Korea</div> <div> The United States has a general policy of denial for items on the Commerce </div> <div> Control List to all military or police end users or end uses, and items with </div> <div> potential nuclear applicability to nuclear end users or end use in North Korea. </div> <div> Certain items on the Commerce Control List may be licensed to civil end users or </div> <div> end uses on a case-by-case basis, subject to interagency review by the United </div> <div> States Government. Commodities, technology or software not on the Commerce </div> <div> Control List may be exported to North Korea without a license, provided that the </div> <div> end user is not involved in proliferation activities, in which case provisions </div> <div> of the Enhanced Proliferation Control Initiative (EPCI) "catch-all" control </div> <div> would apply. </div> <div> License Requirements and Licensing Policy for Libya</div> <div> A. Reexport authorization is required from Commerce for foreign policy purposes </div> <div> for export from third countries to Libya of all U.S.-origin goods, technology or </div> <div> software, except for the following:</div> <div>   medicine and medical supplies; </div> <div>   food and agricultural commodities; </div> <div>   items permitted under certain license exceptions; </div> <div>   foreign non-strategic products of U.S.-origin technology or software; or </div> <div>   foreign strategic products of U.S.-origin technology or software exported from </div> <div>   the United States before March 12, 1982. </div> <div> B. Applications for reexport authorization will generally be denied for the </div> <div> following:</div> <div>   off-highway wheel tractors with carriage capacity of 10 tons or more, except </div> <div>   for exports of such tractors in reasonable quantities for civil use; </div> <div>   aircraft (including helicopters), and specified parts and accessories; </div> <div>   other commodities and related technology and software controlled for national </div> <div>   security purposes, including controlled foreign-produced products of United </div> <div>   States technology and software exported from the United States after March 12, </div> <div>   1982, and oil and gas equipment and related technology and software not </div> <div>   readily available from non-United States sources; </div> <div>   commodities, software, and technology destined for the Ras Lanuf Petrochemical </div> <div>   Processing Complex, except for (a) exports or reexports pursuant to a </div> <div>   contractual arrangement in effect prior to December 20, 1983; and (b) the </div> <div>   reexport of goods or technology already outside the United States on December </div> <div>   20, 1983, for which license applications will be reviewed on a case by case </div> <div>   basis; and </div> <div>   items subject to UNSC Resolution 748 of March 30, 1992 (effective April 5, </div> <div>   1992) and of November 11, 1993 (effective December 1, 1993)(2); </div> <div> C. Exceptions are considered on a case-by-case basis for the following:</div> <div>   reexports of commodities or technology and software involving a contract in </div> <div>   effect prior to March 12, 1982, where failure to obtain an authorization would </div> <div>   not excuse performance of the contract; </div> <div>   the reexport of goods or technology subject to national security controls </div> <div>   already outside the United States on March 12, 1982, or the export of foreign </div> <div>   products incorporating such items as components; or </div> <div>   the use of U.S.-origin components incorporated in foreign origin equipment and </div> <div>   constituting 20 percent or less by value of that equipment. </div> <div> D. All other reexports will generally be denied.</div> <div> Licensing Policy for Sudan</div> <div> The United States has a policy of denial for all end users in Sudan for all </div> <div> items controlled for chemical, biological, missile and nuclear proliferation </div> <div> reasons, military-related items controlled for national security reasons (CCL </div> <div> entries ending in the number 18) and certain items controlled for national </div> <div> security or foreign policy reasons for export and reexport, such as aircraft, </div> <div> cryptologic items, aircraft and explosive device detectors. Other items </div> <div> controlled to Sudan for national security or foreign policy reasons are subject </div> <div> to a policy of denial for military end users or end uses and are reviewed on a </div> <div> case-by-case basis for non-military end users or end uses. Pursuant to Executive </div> <div> Order 13067 of November 3, 1997, the Department of the Treasury maintains </div> <div> comprehensive trade restrictions on exports and reexports to Sudan. The </div> <div> Department of Commerce will only review a license application after it has been </div> <div> approved by the Department of the Treasury.</div> <div> Licensing Policy for Syria</div> <div> The United States has a policy of generally denying exports and reexports of </div> <div> chemical, biological and missile items controlled for proliferation reasons, </div> <div> military-related items controlled for national security reasons (CCL entries </div> <div> ending in the number 18) and certain other national security or foreign policy </div> <div> controlled items, such as cryptologic items and explosive device detectors, to </div> <div> all end users in Syria. We review other national security and foreign policy </div> <div> controlled items under a policy of denial to military end users and end uses and </div> <div> on a case-by-case basis to non-military end users and end uses.</div> <div> The United States will consider applications for export and reexport to Syria on </div> <div> a case-by-case basis if they meet the following conditions:</div> <div> a. the transaction involves the reexport to Syria of items where Syria was not </div> <div> the intended ultimate destination at the time of original export from the United </div> <div> States, provided that the export from the United States occurred prior to the </div> <div> applicable contract sanctity date;</div> <div> b. the U.S. content value of foreign-produced commodities is 20 percent or less; </div> <bR> <div> c. the commodities are medical equipment; or</div> <div> d. the commodities are aircraft equipment necessary to maintain the safety of </div> <div> civil aviation and the safe operation of commercial passenger aircraft. </div> <div> Applicants wishing to have contract sanctity considered in reviewing their </div> <div> applications must submit adequate documentation demonstrating the existence of a </div> <div> contract that predates the imposition or expansion of controls on the item(s) </div> <div> intended for export.</div> <div> Licensing Policy for Iran</div> <div> The United States has a policy of denial for all items controlled for national </div> <div> security or foreign policy reasons that require a license to Iran. Pursuant to </div> <div> Executive Order 12959 of May 6, 1995, the Department of the Treasury maintains </div> <div> comprehensive trade restrictions on exports and reexports to Iran. </div> <div> License Requirements and Licensing Policy for SDT/FTO</div> <div> The United States requires a license for exports and reexports to Specially </div> <div> Designated Terrorists (SDT) and Foreign Terrorist Organizations (FTO) of all </div> <div> items subject to the EAR by U.S. persons and for all reexports to such entities </div> <div> of items on the CCL by foreign persons.</div> <div> The United States has a general policy of denial for applications to export and </div> <div> reexport to SDTs and FTOs. A list of designated SDTs and FTOs is available in </div> <div> the Appendices to 31 CFR Chapter V. Applications for licenses to export or </div> <div> reexport to FTOs are denied consistent with the provisions of the 1996 </div> <div> Anti-Terrorism and Effective Death Penalty Act. </div> <div> Analysis of Control as Required by Section 6(f) of The Act </div> <div> A. The Purpose of the Control </div> <div> Anti-terrorism controls effectively distance the United States from nations that </div> <div> have repeatedly supported acts of international terrorism and from individuals </div> <div> and organizations that commit the same. Further, the controls demonstrate the </div> <div> firm resolve of the United States not to trade with nations or entities that do </div> <div> not adhere to acceptable norms of international behavior. The policy provides </div> <div> the United States with the means to control any U.S. goods or services that </div> <div> might contribute to the military potential of designated countries and to limit </div> <div> the availability of such goods for use in support of international terrorism.</div> <div>   Cuba</div> <div> The United States imposed an embargo several decades ago when Cuban actions </div> <div> posed a serious threat to the stability of the Western Hemisphere, and the Cuban </div> <div> government expropriated property from U.S. citizens without compensation. In </div> <div> March 1982, as a result of Cuba's support for insurgent groups that engaged in </div> <div> terrorism, the Secretary of State designated it as a state sponsor of terrorism </div> <div> under Section 6(j) of the Act. </div> <div>   North Korea</div> <div> Although there has been a bilateral dialogue on terrorism with North Korea, </div> <div> controls remain because of unresolved issues concerning North Korea's continuing </div> <div> support of international terrorism, including, but not limited to, harboring </div> <div> members of the Japanese Red Army Faction (JRAF). The alleged abduction of </div> <div> Japanese individuals by North Korean intelligence services during the 1980s and </div> <div> 1990s remains of concern as well. Although there is no recent evidence of North </div> <div> Korean complicity in the disappearance of Japanese nationals, government </div> <div> activity in other areas supports the continuation of the controls. The purpose </div> <div> of the controls includes restricting the import of equipment useful in enhancing </div> <div> the military or terrorist-supporting capabilities of the regime and addressing </div> <div> other U.S. foreign policy concerns, including human rights, nonproliferation and </div> <div> regional stability. </div> <div>   Libya</div> <div> The purpose of export and reexport controls toward Libya is to demonstrate U.S. </div> <div> opposition to, and to distance the United States from, Libya's intervention in </div> <div> the affairs of neighboring states and support for acts of international </div> <div> terrorism and international subversive activities. Although Libya has made </div> <div> progress in distancing itself from terrorist organizations and activities and in </div> <div> its multilateral relations as a whole, the United States Government believes </div> <div> that further progress is needed before the United States can resume normal </div> <div> economic ties. </div> <div>   Sudan</div> <div> Evidence indicates that Sudan allows the use of its territory as a sanctuary for </div> <div> terrorists including the Osama bin Ladin, al-Qaida, the Egyptian Islamic Group, </div> <div> the Egyptian Islamic Jihad, Hamas and Palestinian Islamic Jihad. Safe houses and </div> <div> other facilities used to support radical groups exist in Sudan. The embargo and </div> <div> the export controls demonstrate U.S. opposition to Sudan's support for </div> <div> international terrorism and restrict access to items that could make a </div> <div> significant contribution to Sudan's military capability and ability to support </div> <div> international terrorism. </div> <div>   Syria</div> <div> Although there has been no evidence of direct involvement by the Syrian </div> <div> Government in the planning or implementation of terrorist acts since 1986, Syria </div> <div> continues to provide sanctuary and support to groups that engage in terrorism. </div> <div> The trade controls reflect U.S. opposition to Syria's support of terrorist </div> <div> groups, prevent significant U.S. contribution to Syria's military capabilities </div> <div> and ability to support international terrorism and promote other U.S. foreign </div> <div> policy interests, including human rights and regional stability. </div> <div>   Iran</div> <div> These controls respond to the continued Iranian sponsorship of terrorism. The </div> <div> purpose of the controls is to restrict equipment that would be useful in </div> <div> enhancing Iran's military or terrorist-supporting capabilities and to address </div> <div> other U.S. foreign policy concerns, including human rights, non-proliferation </div> <div> and regional stability.</div> <div> The controls allow the United States to prevent shipments of U.S.-origin </div> <div> equipment to Iran for uses that could pose a direct threat to U.S. interests. </div> <div> Iran actively continues to support groups that practice terrorism, including </div> <div> terrorism to disrupt the Middle East peace process. By restricting items with </div> <div> military use, the controls demonstrate the resolve of the United States not to </div> <div> provide any direct or indirect military support for Iran and to support other </div> <div> U.S. foreign policy objectives.</div> <div>   SDT/FTO</div> <div> The purpose of these controls is to allow the Department of Commerce to use its </div> <div> enforcement mechanisms and resources to support U.S. counterterrorism efforts.</div> <div> B. Considerations and/or Determinations of the Secretary of Commerce</div> <div> 1. Probability of Achieving the Intended Foreign Policy Purpose.</div> <div> Although widespread availability of comparable goods from foreign sources </div> <div> greatly limits the effectiveness of these controls, they do restrict access by </div> <div> these countries and persons to U.S.-origin commodities, technology and software, </div> <div> and demonstrate the determination of the United States to oppose and distance </div> <div> itself from acts of international terrorism. In extending controls toward Iran, </div> <div> Syria and Sudan, the Secretary has determined that they are likely to achieve </div> <div> the intended foreign policy purpose. During the period that sanctions have been </div> <div> imposed against the designated countries, their level of active support for </div> <div> terrorist activities has generally declined. Several countries have sought to be </div> <div> removed from the terrorism list.</div> <div>   Cuba</div> <div> The United States maintains an embargo and anti-terrorist sanctions against Cuba </div> <div> to express U.S. opposition to the continued repressive policies of the Castro </div> <div> government. The embargo has been modified on numerous occasions in the interest </div> <div> of aiding the Cuban people in bringing about a transition to democracy and a </div> <div> free market economy and expanding humanitarian assistance to the Cuban people.</div> <div>   North Korea</div> <div> The controls deny the North Korean government the commodities, technology and </div> <div> software to support acts of international terrorism or to expand or increase </div> <div> proliferation activities. </div> <div>   Libya</div> <div> The United States maintains export and reexport prohibitions for commodities </div> <div> controlled for national security reasons, for certain types of oil terminal and </div> <div> refining equipment, for items used to service or maintain Libyan aircraft and </div> <div> airfields, and for virtually all other items subject to the EAR. The intent of </div> <div> these restrictions is to prevent U.S. contributions to Libya's involvement in </div> <div> activities detrimental to United States national security and foreign policy; in </div> <div> military activities; and in efforts to destabilize nations friendly to the </div> <div> United States. The controls send a clear signal that the United States is </div> <div> unwilling to permit trade in light of Libya's behavior. </div> <div>   Sudan</div> <div> The controls on Sudan affirm the commitment of the United States to oppose </div> <div> international terrorism by limiting Sudan's ability to obtain and use </div> <div> U.S.-origin items in support of terrorist or military activities. These controls </div> <div> send a clear message to Sudan of strong U.S. opposition to its support for </div> <div> terrorist groups. The additional restrictions the Commerce Department intends to </div> <div> impose will further U.S. efforts to ensure that U.S.-origin items are not </div> <div> directed to Sudan.</div> <div>   Syria</div> <div> These controls are an important means of demonstrating U.S. resolve by limiting </div> <div> Syria's ability to obtain U.S.-origin items that could be used to support </div> <div> terrorist activities or contribute significantly to Syria's military potential. </div> <div> Although other nations produce many of the items subject to U.S. anti-terrorism </div> <div> controls, this fact does not eliminate the need to send a strong signal to the </div> <div> Syrian government of U.S. disapproval of its support for groups involved in </div> <div> terrorism.</div> <div>   Iran</div> <div> The controls on Iran restrict its access to specified U.S.-origin items that </div> <div> could be used to threaten U.S. interests. The United States has sought, and will </div> <div> continue to seek, the cooperation of other countries in cutting off the flow of </div> <div> military and military-related equipment to Iran. </div> <div>   SDT/FTO</div> <div> These controls affirm U.S. opposition to international terrorism by limiting the </div> <div> ability of terrorist organizations and specified individuals to obtain and use </div> <div> U.S.-origin items in terrorist operations. The controls send a strong message of </div> <div> U.S. opposition to terrorism not only to the specified individuals and </div> <div> organizations but also to other countries.</div> <div> 2. Compatibility with Foreign Policy Objectives. </div> <div> In extending these controls, the Secretary has determined that they are </div> <div> compatible with the foreign policy objectives of the United States toward </div> <div> nations and persons who support terrorism. They are also compatible with overall </div> <div> U.S. policy toward Iran, Sudan, Cuba, North Korea, Libya and Syria and terrorist </div> <div> groups and organizations. In addition, the controls are consistent with U.S. </div> <div> efforts to restrict the flow of items and other forms of material support to </div> <div> countries, individuals or groups for military or terrorist purposes.</div> <div> 3. Reaction of Other Countries. </div> <div> Most countries are generally supportive of U.S. efforts to fight terrorism and </div> <div> stop the proliferation of weapons of mass destruction in countries of concern. </div> <div> However, almost none have imposed embargoes as comprehensive as those the United </div> <div> States has imposed. Certain U.S. controls have been challenged by other </div> <div> countries as extraterritorial and have prompted opposition among many of our </div> <div> major trading partners, including some close allies, and have become a point of </div> <div> contention with countries who are members of the European Union. This reaction </div> <div> to perceived extraterritorial application has led some foreign firms to </div> <div> design-out U.S. components or to cite the lack of their own national sanctions </div> <div> as a marketing tool to secure business contracts that otherwise may have gone to </div> <div> U.S. companies. In some instances, foreign firms are instructed by their </div> <div> governments to ignore U.S. reexport controls.</div> <div>   Cuba</div> <div> Although most countries recognize the right of the United States to determine </div> <div> its own foreign policy and security concerns, many countries, particularly </div> <div> Canada, Mexico and the members of the European Union, opposed the Cuban Liberty </div> <div> and Democratic Solidarity (Libertad) Act of 1996 (Helms-Burton). </div> <div>   North Korea</div> <div> The United States maintained a comprehensive trade embargo against North Korea </div> <div> for 50 years. In general, the United States' allies have largely acted in </div> <div> concert with the United States to deny North Korea modern equipment and </div> <div> technology. The recent U.S. sanctions easing toward North Korea and the removal </div> <div> of some U.S. controls have been echoed by other western countries. We anticipate </div> <div> that U.S. allies will follow the United States' lead and not go beyond the scope </div> <div> of U.S. liberalizations until North Korea places further limits on its </div> <div> proliferation and military activities. </div> <div>   Libya</div> <div> Many countries believe that in turning over the two Libyan nationals for trial, </div> <div> Libya fulfilled its obligations to the United Nations in regard to the Pan Am </div> <div> 103 bombing. The U.N. suspended its sanctions against Libya in April 1999. These </div> <div> same countries have urged the United States to repeal the Iran-Libya Sanctions </div> <div> Act (ILSA) and to remove sanctions that the United States maintains under IEEPA </div> <div> on items such as aircraft parts and components and oil well equipment.</div> <div>   Sudan</div> <div> The United States imposed the controls (and the subsequent embargo) in response </div> <div> to credible evidence that Sudan assists international terrorist groups, </div> <div> destabilizes neighboring governments and violates human rights. The United </div> <div> States has consulted with key allies and urged them to take all possible </div> <div> measures to convince Sudan to halt its support for terrorism, and in response </div> <div> some countries have complied. For example, the Organization of African Unity </div> <div> (OAU) passed a resolution in September 1995 calling on Sudan to extradite to </div> <div> Ethiopia three suspects charged with the June 1995 assassination attempt against </div> <div> President Mubarak of Egypt. In 1996 the United Nations Security Council adopted </div> <div> three resolutions specific to Sudan: the first resolution reaffirmed the OAU </div> <div> resolution; the second resolution called on Sudan to stop support for terrorism; </div> <div> and the third resolution imposed diplomatic and travel sanctions. We do not </div> <div> expect any negative reaction to the imposition of additional regulations as the </div> <div> new regulations simply underscore existing restrictions maintained by the </div> <div> Treasury Department.</div> <div>   Syria</div> <div> The United States maintains controls in response to Syria's lack of concrete </div> <div> steps, including the restriction of arms supplies, to end support for </div> <div> international terrorist groups that maintain a presence in Syria and </div> <div> Syrian-controlled areas of Lebanon. Although other countries concur that Syria's </div> <div> regional activities have a destabilizing effect, very few countries maintain </div> <div> control regulations similar to those implemented by the United States. </div> <div>   Iran</div> <div> Regarding the controls on specific product categories, other countries share the </div> <div> U.S. concern over Iran's support of terrorism, human rights abuses, and attempts </div> <div> to acquire weapons of mass destruction. The 33 members of the Wassenaar </div> <div> Arrangement on Conventional Arms and Dual-Use Goods and Technologies (including </div> <div> the United States) have recognized Iran as a country whose behavior is a cause </div> <div> of concern. In general, however, U.S. controls on commercial goods to Iran are </div> <div> more stringent than those of other countries. Iran's trade partners include </div> <div> Germany, Japan, the United Kingdom and many other nations that are members of </div> <div> the Organization for Economic Cooperation and Development. </div> <div>   SDT/FTO</div> <div> Most countries support U.S. efforts to fight terrorism and block efforts by </div> <div> terrorist organizations and individuals to obtain commodities with potential use </div> <div> in terrorist operations. However, while some countries are considering </div> <div> restrictive legislation, very few countries maintain control regulations similar </div> <div> to those implemented by the United States. </div> <div> 4. Economic Impact on United States Industry. </div> <div>   Cuba</div> <div> The United States requires a license for the export and reexport of virtually </div> <div> all U.S.-origin commodities, technology, and software to Cuba. In recent years, </div> <div> the number of license applications that the United States approved for exports </div> <div> to Cuba has increased significantly over levels in the mid-1990s, when the </div> <div> United States generally approved about 100 licenses per year. In FY 2000, the </div> <div> United States approved 310 applications valued at $737 million, up from 183 </div> <div> applications in FY 1999 and 128 in FY 1998. Much of the increase in the number </div> <div> and value of export license applications that the United States approved for </div> <div> Cuba can be attributed to recent changes in U.S. export policies, including the </div> <div> resumption of direct flights to Cuba, expedited processing for applications to </div> <div> export medicines and medical supplies and equipment to Cuba, and a case-by-case </div> <div> review of license applications to export food and certain agricultural </div> <div> commodities for sale to independent non-government entities in Cuba. The United </div> <div> States denied two export license applications (valued at $20.2 million) in FY </div> <div> 2000 and returned without action (RWAd) 27 license applications worth $107.8 </div> <div> million.</div> <div> Table 1: Export License Applications Approved for Cuba (FY 1994-2000)</div> <div>       Fiscal YearNumber of ApplicationsTotal Value in U.S. Dollars</div> <div>       199473$618,991,550</div> <div>       1995111$604,004,985</div> <div>       199683$592,738,313</div> <div>       199787$493,414,819</div> <div>       1998128$544,659,988</div> <div>       1999181$758,407,893</div> <div>       2000310$737,108,231</div> <div>       TOTAL (1994-2000)973$4,349,325,779</div> <bR> <div> The majority of the export licenses that the United States approved for Cuba in </div> <div> FY 2000 (273 of the 310 cases) were for EAR99 items, including medicines and </div> <div> medical supplies, instruments, equipment and gift parcels; and for aircraft on </div> <div> temporary sojourn in Cuba (33 cases).</div> <div> In general, the U.S. regions and economic sectors affected most by the trade </div> <div> embargo are southern Florida (particularly the port area of Tampa), producers of </div> <div> agricultural products (perishable products, in particular) and exporters of </div> <div> other products that benefit from the cost advantages of the United States' </div> <div> proximity with Cuba. </div> <div>   North Korea</div> <div> U.S. export sanctions on North Korea have had a minimal impact on U.S. industry. </div> <div> North Korea's total imports average about $1-2 billion per year, and the primary </div> <div> imports include petroleum, grain, coking coal, machinery and equipment, and </div> <div> consumer goods. As reported by the Korea Trade Promotion Corporation (KOTRA), </div> <div> North Korea's five major trading partners are China, Japan, Russia, South Korea, </div> <div> and Germany, which account for more than 60 percent of its total trade (exports </div> <div> plus imports). The Central Intelligence Agency estimates that imports totaled </div> <div> $954 million in 1998, including imports of petroleum, coking coal, machinery, </div> <div> and grain. </div> <div> U.S. exports to North Korea, although remaining far below the export levels of </div> <div> other developed countries, increased significantly after the signing of the </div> <div> U.S.-North Korea Agreed Framework in October of 1994, rising from only $179,730 </div> <div> in 1994 to between $3 and $4 million each year from 1995 through 1998. In 1999, </div> <div> U.S. exports to North Korea nearly tripled to $11.3 million. The vast majority </div> <div> of U.S. exports were in the form of dairy products (milk and cream), cereals, </div> <div> and charitable donations. </div> <div> The total number of export license applications that the United States approved </div> <div> for North Korea experienced a corresponding surge, increasing from only 6 </div> <div> licenses (valued at $66,443) in FY 1994 to an annual average of 40 licenses, </div> <div> valued at more than $574.5 million through FY 1999 (see Table 3). In FY 2000, </div> <div> only 10 licenses for exports to North Korea were approved, valued at $31.1 </div> <div> million. No applications were rejected during FY 2000, and two applications </div> <div> (valued at $3.2 million) were returned without action.</div> <div> Table 2: Export License Applications Approved for North Korea (FY 1994-2000)</div> <div>       Fiscal YearNumber of ApplicationsTotal Value in U.S. Dollars</div> <div>       19946$66,443</div> <div>       199527$366,498,433</div> <div>       199639$209,134,369</div> <div>       1997 47$393,281,396</div> <div>       199843$129,113,580</div> <div>       199932$407,887,147</div> <div>       20009$31,130,643</div> <div>       TOTAL203$1,537,112,011</div> <bR> <div> On September 17, 1999, the President announced his decision to ease some of the </div> <div> sanctions maintained against North Korea and administered under the Trading with </div> <div> the Enemy Act, the Defense Production Act, and the Department of Commerce's </div> <div> Export Administration Regulations. The sanctions easing was implemented in June </div> <div> 2000, in view of North Korea's assurances that it would continue its moratorium </div> <div> on the testing of long-range ballistic missiles. The easing of U.S. sanctions </div> <div> makes most consumer goods available for export to North Korea and allows imports </div> <div> of most North Korean-origin goods into the United States.</div> <div>   Libya</div> <div> U.S.-origin products comprised a negligible percentage of Libyan imports in </div> <div> Fiscal Year 2000. This is in stark contrast to the value of U.S. exports to </div> <div> Libya as recently as the mid-1980s, when U.S. exports reached as high as $310.2 </div> <div> million (FY 1985).</div> <div> U.S. exports to Libya have declined steadily since 1979, when export controls </div> <div> were first tightened. Since then, the United States has authorized exports to </div> <div> fulfill pre-1982 contractual obligations and humanitarian aid. Annual U.S. </div> <div> exports and reexports to Libya fell from $860 million in 1979 to less than $1 </div> <div> million annually from 1987 through 1994. Total U.S. exports to Libya have been </div> <div> virtually zero for every year from 1992 through 1999. In FY 2000, exports </div> <div> totaled $1.6 million due to the shipment of corn. The Department of Commerce, </div> <div> which issues licenses for reexports to Libya, issued one license and denied one </div> <div> license in FY 2000.</div> <div>   Sudan</div> <div> U.S. unilateral export sanctions on Sudan have had only a minor affect on U.S. </div> <div> industry. Sudan's poor economic performance over the past decade, a result of </div> <div> the ongoing civil war, adverse weather, and a ban on International Monetary Fund </div> <div> assistance, prevents the country from importing a significant amount of goods </div> <div> from any supplier, including the United States. Before the U.S. embargo on Sudan </div> <div> went into effect on November 4, 1997, the small amount that Sudan imported from </div> <div> the United States generally did not require an export license and thus was </div> <div> generally not affected by the export controls. </div> <div> The U.S. aerospace industry sector appears to have been affected the most by the </div> <div> anti-terrorism controls on Sudan. Aircraft exports from the United States to </div> <div> Sudan totaled more than $6.4 million in 1992, but no exports of aircraft from </div> <div> the United States to Sudan have been reported since 1994. Exports of aircraft </div> <div> engines and aircraft engine parts from the United States to Sudan show a similar </div> <div> decline, falling from $845,142 in 1992 to barely $10,000 in 1997. In fact, </div> <div> nearly all U.S. aerospace exports to Sudan in 1997 ($71,578) consisted of </div> <div> miscellaneous aircraft parts and equipment. By 1998, U.S. aerospace exports to </div> <div> Sudan had fallen to virtually zero.</div> <div> The total number of export licenses that the United States issued for Sudan was </div> <div> negligible before the implementation of sanctions, since, as discussed above, </div> <div> low technology items (which did not require export licenses prior to the </div> <div> implementation) constituted the bulk of U.S. exports. After the United States </div> <div> implemented sanctions on Sudan, the Office of Foreign Assets Control (OFAC) at </div> <div> the Department of Treasury also acquired export control authority for Sudan. </div> <div> Since that time, the Department of Commerce has only processed license </div> <div> applications with Sudanese end users when the application is for a "deemed </div> <div> export." </div> <div> Table 3: Approved Licenses for Sudan (FY 1992 to FY 2000)</div> <div>       Fiscal YearTotal Applications ApprovedTotal Value (in U.S. dollars)</div> <div>       19921$25</div> <div>       19932$5,404,000</div> <div>       19940$0</div> <div>       19950$0</div> <div>       19967$571,992</div> <div>       199710 $7,095,973</div> <div>       19980$0</div> <div>       19991$1</div> <div>       20001$1</div> <bR> <div> In FY 2000, the United States approved one license application for a deemed </div> <div> export to a Sudanese national employed by a U.S. firm. In addition, the United </div> <div> States returned without action (RWAd) 6 applications valued at $1.6 million, </div> <div> with instructions for the exporter to contact the Department of Treasury/Office </div> <div> of Foreign Assets Controls regarding these proposed exports. We do not </div> <div> anticipate that the new regulations will have a significant impact on U.S. </div> <div> industry.</div> <div>   Syria</div> <div> U.S. controls on exports to Syria have had a minimal impact on U.S. industry </div> <div> because the United States does not require a license for most items in the </div> <div> leading export sectors to Syria. Despite recent setbacks to Syria's economy, </div> <div> including reduced oil revenues, a heavy public debt burden, and domestic </div> <div> financial and economic difficulties, the economic reforms and infrastructure </div> <div> improvements undertaken by the government in the early 1990s, while limited, </div> <div> have enhanced the country's potential as a market for U.S. exports. Agricultural </div> <div> items and EAR99 petroleum industry items do not usually require a license for </div> <div> export to Syria. </div> <div> From 1992-1999, the volume of U.S. exports to Syria has been relatively stable, </div> <div> falling within the range between $161 million (1998) and $226 million per year </div> <div> (1996). In calendar year 1999, U.S. exports totaled $170.4 million. Exports of </div> <div> cereals accounted for about a quarter of exports, as did exports of various </div> <div> types of machinery; other leading exports were tobacco and pharmaceuticals.</div> <div> The average annual value of export licenses issued by the Department of Commerce </div> <div> for Syria has increased significantly in the last ten years. In FY 1991, the </div> <div> United States approved only eight licenses with a total value of $1,041,504. </div> <div> From an annual average of just under </div> <div> $45 million per year in FY 1992 and FY 1993, the value of items that Commerce </div> <div> has licensed for export to Syria has risen to more than $83 million per year </div> <div> during the last six years (i.e., FY 1994 through FY 1999). In FY 2000 this </div> <div> upward trend continued with the approval of 121 licenses valued at $141.5 </div> <div> million. </div> <div> The majority of items that the United States licensed for export to Syria during </div> <div> the period covered by Table 4 fall within the categories of aircraft parts and </div> <div> components, digital computers, and certain electronic devices and </div> <div> telecommunications equipment controlled only for foreign policy reasons. The </div> <div> Commerce Department denied 66 applications for Syria from FY 1991 through FY </div> <div> 2000, valued at $32.7 million.</div> <div> Table 4: Approved Licenses for Syria (FY 1991-2000)</div> <div>       Fiscal YearTotal Applications Approved Total Value</div> <div>       (in U.S. dollars) </div> <div>       19918$1,041,504</div> <div>       199231$46,366,527</div> <div>       1993106$42,896,103</div> <div>       1994167$76,379,096</div> <div>       1995139$68,298,135</div> <div>       199680$81,006,877</div> <div>       1997100$107,003,346</div> <div>       199881$80,707,010</div> <div>       1999100$86,534,591</div> <div>       2000121$141,539,669</div> <bR> <div> The U.S. policy of reviewing export licenses for the export of aircraft parts </div> <div> and components and aircraft engine parts and components to Syria for air safety </div> <div> on a case-by-case basis has led to an increase in U.S. aerospace exports to </div> <div> Syria. U.S. exports of aircraft engine parts to Syria from 1991-98 totaled $3.1 </div> <div> million (slightly more than 17.4 percent of total U.S. aerospace exports to </div> <div> Syria during this period) while exports of avionics equipment totaled only </div> <div> $355,596 (just </div> <div> 1.9 percent of total U.S. aerospace exports to Syria). In 1998, miscellaneous </div> <div> aircraft parts and equipment accounted for 71.4 percent ($1.39 million) of total </div> <div> U.S. aerospace exports to Syria, while exports of avionics equipment totaled </div> <div> $52,139 (2.7 percent of total U.S. aerospace exports to Syria). Exports of </div> <div> aircraft engine parts to Syria, which had fallen to virtually zero in 1997, </div> <div> increased to $503,991 in 1998 (25.9 percent of total 1998 U.S. aerospace exports </div> <div> to Syria). </div> <div> The U.S. policy of not approving the sale of new aircraft to Syria is resulting </div> <div> in a gradual shift away from the export of aircraft parts and components for </div> <div> U.S.-origin planes to Syria and toward the export of parts for non-U.S.-origin </div> <div> planes. Although Syrian Arab Airlines (SAA) currently operates several Boeing </div> <div> aircraft, which, because they are all 20-25 years old, require large amounts of </div> <div> spare and maintenance parts to continue operating safely, their recent purchase </div> <div> of six Airbus aircraft indicate that the Boeing aircraft may be retired. Many of </div> <div> the components currently required by SAA for use on the Boeing aircraft are </div> <div> provided by U.S. exporters. Although the impact of retiring the Boeing aircraft </div> <div> on U.S. exporters has not yet been determined, U.S. exporters are also providing </div> <div> parts and components for the Airbus aircraft, albeit at lower levels. </div> <div>   Iran</div> <div> U.S. policy is to deny dual-use licenses for Iran, consistent with the Iran-Iraq </div> <div> Arms Non-proliferation Act of 1992 contained in the National Defense </div> <div> Authorization Act of FY 1993 (NDAA) and the U.S. trade and investment embargo of </div> <div> 1995. Prior to the enactment of the NDAA and the imposition of the embargo, U.S. </div> <div> exports to Iran rose sharply in the early 1990s in response to Iran's removal of </div> <div> certain import restrictions. From a total of only $166 million in 1990, U.S. </div> <div> exports to Iran increased to $527 million in 1991 and rose to $747 million in </div> <div> 1992. From 1991 through 1994, U.S. exports to Iran totaled close to $2.2 </div> <div> billion, making the United States the sixth largest exporter to Iran during this </div> <div> period. Those exports, however, amounted to only five percent of Iran's total </div> <div> imports and less than one percent of U.S. exports.</div> <div> Following the denial policy mandated by FY 1993 NDAA and the 1995 U.S. trade and </div> <div> investment embargo, U.S. exports to Iran fell $200 million-$300 million per </div> <div> year. Total U.S. exports to Iran averaged $626 million per year from 1991 </div> <div> through 1993, but only $302 million per year for 1994 and 1995. In FY 1995 and </div> <div> 1996, no applications for exports to Iran were approved by the United States. </div> <div> Since 1997, the United States has only approved applications for "deemed </div> <div> exports" (i.e., transfers of controlled U.S. technology to Iranian nationals </div> <div> legally residing in and working in the United States), rather than actual </div> <div> exports. In FY 2000, the United States approved 23 deemed export licenses for </div> <div> Iranian nationals. </div> <div> In contrast, during the four fiscal years prior to FY 1995 (i.e., FY 1991-94), </div> <div> the United States approved an average of $177 million in applications to Iran </div> <div> each year. Table 5 shows the impact of the NDAA on U.S. trade with Iran: </div> <div> Table 5: Approved Applications to Iran (FY 1991-2000)</div> <div>       Fiscal YearNumber of ApplicationsTotal Value in U.S. Dollars</div> <div>       199189$ 60,149,182</div> <div>       1992131$567,559,528</div> <div>       19934463,834,952</div> <div>       199410$ 16,774,377</div> <div>       19950$0</div> <div>       19960$0</div> <div>       19975$19</div> <div>       19986$10,012</div> <div>       199910$20,408</div> <div>       200023$35</div> <bR> <div> The 1995 U.S. trade and investment embargo radically transformed the nature, as </div> <div> well as the volume, of U.S. trade with Iran. Since 1996 (the first full year of </div> <div> the embargo) the top U.S. exports to Iran have been completely different from </div> <div> the top export categories of previous years. Most of the items the United States </div> <div> exported to Iran beginning in 1996, and continuing through 2000, were </div> <div> humanitarian goods that closely resembled those exported to other embargoed </div> <div> countries such as Cuba and North Korea. In calendar year 2000, for example, 99 </div> <div> percent of U.S. exports to Iran were in the form of cereals; printed materials </div> <div> such as books and newspapers made up the remaining percentage point. </div> <div> Table 6: Top U.S. Exports to Iran, 1991-1995 (FAS Value, in U.S. Dollars)</div> <div>       S.I.C. Number Description of GoodsTotal Value</div> <div>       3511Turbines & turbine generator sets$322.5 million</div> <div>       3531Construction machinery & parts$307.8 million</div> <div>       3533Oil & gas field equipment$250.1 million</div> <div>       2044Milled rice & by-products$166.3 million</div> <div>       0115Corn$137.4 million</div> <div>       2873Nitrogenous fertilizers$124.2 million</div> <div>       3714 Motor vehicle parts & accessories$50.8 million</div> <div>       2821Plastics materials & resins$45.4 million</div> <div>       3743Railroad equipment & parts$42.7 million</div> <div>       3569General industrial machinery & equipment$41.8 million</div> <bR> <div> The data in Table 6 indicate that the agricultural and oil industry sectors were </div> <div> among those most directly affected by the embargo. Additionally, the U.S. </div> <div> aerospace industry was significantly affected by both the NDAA of FY 1993, and </div> <div> the imposition of the trade embargo on Iran in 1995. From 1991 through 1994, </div> <div> U.S. exports of aircraft engine parts to Iran totaled almost </div> <div> $9.4 million, averaging $2.3 million per year and peaking at more than $7.5 </div> <div> million in 1994. Exports of aircraft engine parts to Iran declined sharply in </div> <div> 1995, as the license denial policy mandated by the NDAA of 1993 and the U.S. </div> <div> trade embargo went into effect. Of the $72,374 in total U.S. aerospace exports </div> <div> to Iran during 1995, almost 92 percent ($66,373) consisted of miscellaneous </div> <div> aircraft parts and equipment (a category that does not include aircraft engines </div> <div> and parts or avionics equipment). By 1996, the first year that the trade embargo </div> <div> was fully in effect, total U.S. aerospace exports to Iran declined to virtually </div> <div> zero.</div> <div> Prior to the U.S. embargo on Iran, the United States competed with Iran's other </div> <div> major trading partners in areas including general industrial machinery, motor </div> <div> vehicles and motor vehicle parts, power generating machinery, measuring and </div> <div> controlling devices, electronic computers, plastics and resins, transportation </div> <div> equipment, and industrial organic chemicals. In 1998, Iran imported a total of </div> <div> $13.8 billion in goods such as machinery, metals, and pharmaceuticals. Iran's </div> <div> leading sources of these products in 1998 were Germany, Italy, Japan, the United </div> <div> Arab Emirates, the United Kingdom and Belgium. </div> <div> The most damaging effect of the Iran embargo on U.S. industry is the reaction of </div> <div> foreign firms to U.S. re-export requirements. U.S. exporters report that their </div> <div> products are often designed-out of foreign manufactured goods to insure that </div> <div> foreign exports do not fall within the scope of U.S. controls. This </div> <div> "designing-out" damages U.S. exports, both for sales to embargoed countries as </div> <div> well as non-embargoed countries.</div> <div> The Secretary of State announced an easing of the embargo on March 17, 2000. The </div> <div> measures implemented at that time affected only the import of certain Iranian </div> <div> goods to the United States. Therefore, the liberalization has had no impact on </div> <div> U.S. exports to Iran.</div> <div>   SDT/FTO</div> <div> Commerce did not review any licenses destined for SDTs or FTOs in FY 2000. The </div> <div> economic impact of these controls is minimal. The Office of Foreign Assets </div> <div> Control maintains restrictions on activities of U.S. persons involving SDTs and </div> <div> FTOs. This control augments those restrictions.</div> <div> 5. Enforcement of Control.</div> <div> Because of the well-publicized involvement of these countries in acts of </div> <div> international terrorism, there is public knowledge of, and support for, these </div> <div> controls, which facilitates enforcement. The large number of items exported in </div> <div> normal trade to other countries - including some aircraft items and consumer </div> <div> goods that have many producers and end users around the world -- creates </div> <div> innumerable procurement opportunities for brokers, agents, and front companies </div> <div> working for these countries. In addition, differences in export laws and </div> <div> standards of evidence for violations also complicate law enforcement cooperation </div> <div> between countries. </div> <div> The Department of Commerce views these controls as a key enforcement target, </div> <div> using regular outreach efforts to keep businesses informed of concerns and </div> <div> gathering leads on activities of concern, safeguard visits to verify end use and </div> <div> end users of U.S. commodities, and other programs to maintain a strong </div> <div> enforcement effort. The Commerce Department is moving to develop a strong </div> <div> program to deal with procurement by or for terrorist groups. This program </div> <div> includes enhanced agent training, development of a targeted outreach program to </div> <div> familiarize U.S. business with concerns, and close cooperation with lead </div> <div> agencies working terrorism issues. </div> <div> C. Consultation with Industry</div> <div> On November 6, 2000, the Department of Commerce, via the Federal Register and </div> <div> via BXA's web page, solicited comments from industry on the effectiveness of </div> <div> foreign policy based export controls. No comments were received specific to the </div> <div> controls described in this chapter. A more detailed review of the comments is </div> <div> available in Appendix I.</div> <div> Prior to implementing the liberalized policy on medical sales to Cuba (announced </div> <div> May 13, 1998) the Department of Commerce consulted with industry representatives </div> <div> from the pharmaceutical and medical sectors. In response, the Department of </div> <div> Commerce posted a special page on its web site in October 1999 explaining the </div> <div> process and providing guidance to industry. On July 15, 1999, the Commerce </div> <div> Department and other agency representatives briefed over 75 company </div> <div> representatives on this new policy. </div> <div> One-half of the comment letters received by the Department of Commerce from </div> <div> industry during the official comment period addressed the need to lift U.S. </div> <div> unilateral reexport controls on Libya. The letters came from PEC/SEA, NAM, NFTC, </div> <div> PESA, Baker Hughes, Conoco, Inc. and Halliburton Company. They all struck a </div> <div> common theme: the Libyan market is growing, and continued reexport controls </div> <div> ensure that U.S. companies will be left out of the market without any resulting </div> <div> foreign policy benefit. The PEC/SEA noted, "The chief impact of the reexport </div> <div> controls is to provide rationale for competitors to encourage countries to </div> <div> 'design-out' U.S. products for the Libyan market -- a market that is beginning a </div> <div> dramatic expansion. Without question the extension of these reexport controls </div> <div> would damage the reputation of the United States as a reliable supplier." </div> <div> Many of these letters called for the Secretary of Commerce not to extend the </div> <div> Libyan reexport controls for 2001. The organizations cited the continued </div> <div> existence of an embargo on Libya, as well as the option of continuing reexport </div> <div> controls on items controlled for national security, non-proliferation or </div> <div> anti-terrorism reasons, while liberalizing non-sensitive reexports. Baker Hughes </div> <div> noted the value of at least a partial liberalization of reexport controls: "The </div> <div> continued existence of the virtually total U.S. embargo on trade with Libya </div> <div> ensures that the United States will remain out of the Libyan market, but the </div> <div> suggested change in the reexport control would provide a benefit for U.S. </div> <div> companies even in the context of continued broad U.S. sanctions against Libya." </div> <div> The Commerce Department continues to receive inquiries and to consult with </div> <div> industry in regard to licensing policy and practices in Sudan, Syria, and Iran </div> <div> and for SDT/FTOs. The Commerce Department works in coordination with the </div> <div> Departments of State and Defense, and the Office of Foreign Assets Control </div> <div> (OFAC) at the Department of the Treasury to keep industry informed on changes in </div> <div> licensing requirements and policies toward embargoed and terrorist-designated </div> <div> states.</div> <div> D. Consultation with Other Countries</div> <div> The United States continues to consult with a number of countries, on both a </div> <div> bilateral and a multilateral basis, on activities by designated terrorist states </div> <div> in support of international terrorism. The U.S. Government also holds ongoing </div> <div> consultations on SDTs and FTOs. In general, most countries are supportive of </div> <div> U.S. anti-terrorism efforts but do not implement strict export control programs </div> <div> like those of the United States.</div> <div>   Cuba</div> <div> The Administration has worked hard to resolve disputes that arise from </div> <div> implementation of the Libertad Act with other countries. Friction between the </div> <div> United States and the European Union (EU) over policy toward Cuba has diminished </div> <div> substantially with adoption by the Europeans of a binding policy that links </div> <div> expanded ties to Cuba to improvements in human rights conditions and advances </div> <div> toward democracy by Cuba's communist government. The United States viewed the </div> <div> announcement that EU members would evaluate future relations with Cuba according </div> <div> to the ratification and observance of international human rights conventions as </div> <div> an affirmation of the international community's commitment to fostering human </div> <div> rights and democracy in Cuba.</div> <div>   North Korea</div> <div> The United States consults on an ongoing basis with its regional allies </div> <div> regarding anti-terrorism controls on North Korea. In particular, the U.S. works </div> <div> closely with Japan on continuing anti-terrorism controls on North Korea.</div> <div>   Libya</div> <div> Extensive consultation with other nations on Libyan controls continues to take </div> <div> place under UN auspices. The United States has also conducted numerous bilateral </div> <div> discussions on this topic. </div> <div>   Sudan</div> <div> The United States continues to consult with other countries in regard to the </div> <div> continuing fighting within Sudan, the resulting refugee problem with its </div> <div> associated food shortages, and the military acts against refugee relief and </div> <div> humanitarian aid workers committed by combatants on both sides of Sudan's </div> <div> internal dispute. Many of these consultations have occurred within the forum of </div> <div> the United Nations. Additionally, the U.S. Special Envoy for Sudan traveled to </div> <div> Khartoum in March 2000. </div> <div>   Syria</div> <div> The United States consults on an ongoing basis with Syria and the other </div> <div> countries involved in, or party to, the Middle East peace process.</div> <div>   Iran</div> <div> The United States has an ongoing dialogue with its allies and partners on Iran's </div> <div> activities and outreach. The United States continues to work with other states </div> <div> to curb Iran's proliferation activities. </div> <div>   SDT/FTO</div> <div> The United States cooperates with allies and partners and shares information on </div> <div> SDT/FTO activities. </div> <div> E. Alternative Means</div> <div> The United States has taken a wide range of diplomatic, political, and </div> <div> security-related steps, in addition to economic measures such as export </div> <div> controls, in an effort to persuade certain countries to stop their support for </div> <div> terrorist activities. The methods that the United States uses against any one </div> <div> country, terrorist organization or individual varies, and is dictated by the </div> <div> specific circumstances prevailing at any given time. For example, in the case of </div> <div> Syria, the United States believes that maintenance of anti-terrorism controls is </div> <div> an appropriate way to remind Syria of its obligations to act against terrorist </div> <div> elements whenever it has the capability to do so.</div> <div> F. Foreign Availability</div> <div> The foreign availability provision does not apply to items determined by the </div> <div> Secretary of State to require control under Section 6(j) of the Act(3). </div> <div> Cognizant of the value of such controls in emphasizing the U.S. position toward </div> <div> countries supporting international terrorism, Congress specifically excluded </div> <div> them from foreign availability assessments otherwise required by the Act. </div> <div> However, the Department of Commerce has considered foreign availability of items </div> <div> controlled to designated terrorist countries under Section 6(a).</div> <div> For Syria and Iran, there are numerous foreign sources for commodities similar </div> <div> to those subject to controls. Although Sudan's imports are low-technology items </div> <div> for which numerous foreign sources exist, the poor health of Sudan's economy -- </div> <div> and thus its inability to import these </div> <div> goods -- makes foreign availability less of an issue. The development of Sudan's </div> <div> oil resources would change this perception radically, as would an end to the </div> <div> civil war, since these events are likely to have a positive impact on the health </div> <div> of Sudan's economy. For North Korea, the continued maintenance of sanctions by </div> <div> many other countries severely limits the impact of foreign availability. </div> <div>   END NOTES</div> <div>   1. The Department of Commerce requires a license under Section 6(a) of the Act </div> <div>   for all computers going to Iran, North Korea, Sudan, or Syria with a CTP of 6 </div> <div>   MTOPS or above. Note also that controls on computers apply at all levels to </div> <div>   Cuba and Libya. For Iraq, the Department of Commerce maintains restrictions on </div> <div>   items subject to the EAR that are also controlled by the Treasury Department, </div> <div>   which administers a comprehensive embargo on Iraq.</div> <div>   2. See 15 CFR 746(c)(2)(vi and vii).</div> <div>   3. Provisions pertaining to foreign availability do not apply to export </div> <div>   controls in effect before July 12, 1985, under sections 6(i) (International </div> <div>   Obligations), 6(j) (Countries Supporting International Terrorism), and 6(n) </div> <div>   (Crime Control Instruments). See the Export Administration Amendments Act of </div> <div>   1985, Public Law 99-64, section 108(g)(2), Stat.120, 134-35. Moreover, </div> <div>   sections 6(i), 6(j), and 6(n) require that controls be implemented under </div> <div>   certain conditions without consideration of foreign availability.</div> <bR> <bR> <div> Cato Handbook for Congress: Unilateral Sanctions</div> <bR> <div> 53. Unilateral Sanctions </div> <div>       Congress should </div> <bR> <div>         require an analysis that measures the economic cost to the U.S. economy </div> <div>         of all current and proposed economic sanctions; </div> <div>         provide compensation to U.S. companies whose investments are lost or </div> <div>         devalued because of a U.S.-imposed sanction; </div> <div>         establish a time limit on any new economic sanction; </div> <div>         require an explicit national security justification for any new economic </div> <div>         sanction; and </div> <div>         grant China, a frequent target of proposed sanctions, a multi-year </div> <div>         waiver for most-favored-nation trading status and facilitate its entry </div> <div>         into the World Trade Organization. </div> <bR> <bR> <bR> <div>       The attempt to punish foreign governments through unilateral sanctions and </div> <div>       secondary boycotts is an unwelcome obstacle on the road to greater freedom </div> <div>       of commerce. That development bodes ill for U.S. citizens, for America's </div> <div>       diplomatic relations with our major trading partners, and for the poor of </div> <div>       the targeted nations who are the most likely victims of economic </div> <div>       sanctions. U.S. government restrictions send the wrong message about </div> <div>       America's belief in the positive influence of private investment and fail </div> <div>       to recognize that U.S. companies help foster greater economic and </div> <div>       political freedom for people in developing nations. </div> <div>       Why Unilateral Sanctions Are Bad Policy </div> <div>       Unilateral sanctions simply do not work. There are no examples of U.S. </div> <div>       unilateral economic sanctions changing the basic character or significant </div> <div>       policies of a foreign nation. The 35-year economic embargo of Cuba, a tiny </div> <div>       country less than 90 miles from our coast, is a monument to the </div> <div>       ineffectiveness of unilateral economic sanctions as a foreign policy tool. </div> <div>       Yet, as Table 53.1 shows, the United States maintains sanctions against a </div> <div>       number of countries, and several others are likely targets of future </div> <div>       sanctions. </div> <div>       Supporters of sanctions often point to South Africa as a success story, </div> <div>       but the facts tell a different tale. It is unrealistic to credit the U.S. </div> <div>       congressional vote for sanctions in October 1986 with the overthrow of </div> <div>       apartheid. It was not outside forces but powerful and well-organized </div> <div>       domestic political forces that, after a three-decades-long struggle, </div> <div>       achieved the peaceful overthrow of an anachronistic system that had no </div> <div>       moral standing. </div> <bR> <div>       Table 53.1</div> <div>       U.S. Economic Sanctions </div> <div>             Countries in Which U.S. Economic Sanctions are in Full Force--Total </div> <div>             EmbargoaCountries on State-Sponsored Terrorism List--U.S. </div> <div>             Restrictions on Financial TransactionsCountries on Drug </div> <div>             De-certification Listb Likely Targets of Future Sanctionsc</div> <div>             Cuba</div> <div>             Iran</div> <div>             Iraq</div> <div>             Libya</div> <div>             North KoreaCuba</div> <div>             Iran</div> <div>             Iraq</div> <div>             Libya</div> <div>             North Korea</div> <div>             Syria</div> <div>             SudanAfghanistan</div> <div>             Burma (Myanmar)</div> <div>             Colombia</div> <div>             Iran</div> <div>             Nigeria</div> <div>             SyriaChinad </div> <div>             Burmae (Myanmar) </div> <div>             Nigeria </div> <div>             Indonesia </div> <div>             Mexico </div> <div>             Pakistan </div> <div>             Angola </div> <div>             Algeria </div> <div>             Turkey </div> <div>             Liberia </div> <div>             Burundi </div> <div>             SOURCE: Personal communications with personnel at the U.S. </div> <div>             Department of State. </div> <div>             a Legislation passed by Congress in 1996 places additional </div> <div>             restrictions on foreign companies that invest in the energy sector </div> <div>             in Iran and Libya or that use property confiscated in Cuba from </div> <div>             American citizens. </div> <div>             b Countries that are decertified are not eligible for U.S. foreign </div> <div>             assistance, except for anti-drug and humanitarian aid. The U.S. </div> <div>             government is obliged to vote "no'' on loan applications from these </div> <div>             countries at multilateral development banks. National interest </div> <div>             waivers have been granted to Lebanon, Pakistan, and Paraguay. </div> <div>             c These countries have been targeted for sanctions by lawmakers in </div> <div>             recent bills or by the media. </div> <div>             d As an aftermath of the Tiananmen Square incident, the U.S. </div> <div>             government restricts China's purchases of U.S.-made weapons and law </div> <div>             enforcement materials. </div> <div>             e Sanctions are in place that deny U.S. visas to certain Burmese </div> <div>             political leaders and that direct American votes against Burma in </div> <div>             multilateral lending institutions; the executive branch decides on </div> <div>             other actions. </div> <bR> <bR> <div>       Because of the limited nature of the sanctions, the volume of U.S.-South </div> <div>       African trade did change significantly, and many African governments that </div> <div>       condemned apartheid continued to trade with South Africa behind the </div> <div>       scenes. Disinvestment in South Africa led many Western companies to reduce </div> <div>       their community-based funding of anti-apartheid organizations, according </div> <div>       to the Investor Responsibility Research Center. After General Motors sold </div> <div>       its plants, the new owners renewed sales to the South African military and </div> <div>       police--which GM had ended--and reduced wages and total employment at the </div> <div>       facilities. </div> <div>       To the extent that outsiders influenced developments in the country, it </div> <div>       was through the discipline of market forces--banks were reluctant to make </div> <div>       or renew loans in an unstable environment--and international expressions </div> <div>       of opprobrium, such as banning South African participation in forums such </div> <div>       as the Olympics. That helped shame the Afrikaner elite and, in combination </div> <div>       with other forces, to lead to its abandonment of white-only rule. </div> <div>       It is also important to note that the economic sanctions against South </div> <div>       Africa were multilateral, whereas all recent U.S. sanctions have been </div> <div>       unilateral. In an effort to compel multilateral support from our allies, </div> <div>       legislation passed by Congress in 1996 established secondary boycotts </div> <div>       against firms doing business with Cuba, Iran, and Libya. Passed quickly in </div> <div>       the wake of Cuba's shooting down of two airplanes flown by </div> <div>       Cuban-Americans, the Cuban Liberty and Democratic Solidarity Act, </div> <div>       sponsored by Sen. Jesse Helms (R-N.C.) and Rep. Dan Burton (R-Ind.), bars </div> <div>       entry to the United States to CEOs of foreign companies that engage in </div> <div>       commerce involving properties seized from Americans by Cuba many years </div> <div>       ago. It also allows Americans to sue those foreign companies for triple </div> <div>       damages in U.S. courts. Considering that South Africa is routinely cited </div> <div>       by supporters of sanctions, it is worth noting that Nelson Mandela </div> <div>       announced his government's opposition to Helms-Burton. </div> <div>       Such sanctions harm our diplomatic relations with friendly countries, as </div> <div>       evidenced by the threat of our major trading partners to retaliate against </div> <div>       American measures that penalize their companies. Other nations object </div> <div>       particularly to the extraterritorial authority the U.S. government assumed </div> <div>       over citizens of foreign countries. </div> <div>       It is vainglory to believe that by adopting unilateral sanctions America </div> <div>       is "leading by example,'' since nations throughout the world not only have </div> <div>       refused to support recent U.S. sanctions but have actively opposed them. </div> <div>       Leaders in France, Italy, Britain, Germany, and much of the rest of the </div> <div>       world view economic sanctions as counterproductive and generally favor </div> <div>       them only in extraordinary circumstances, such as war. Great Britain, for </div> <div>       example, never supported the sanctions against South Africa and believes </div> <div>       its constructive engagement policy was successful. </div> <div>       Without multilateral support, American trade sanctions can succeed only if </div> <div>       a U.S. company is a monopoly supplier of a good or service to the targeted </div> <div>       nation, which is not the case virtually anywhere in the world. In the </div> <div>       absence of a monopoly, U.S. unilateral sanctions simply transfer business </div> <div>       from an American company to a foreign competitor in the same market. </div> <div>       The goals of U.S. economic sanctions are often unrealistic. A bill </div> <div>       seriously considered by Congress in 1996 would have banned all investment </div> <div>       in Burma (Myanmar) unless the president of the United States certified </div> <div>       "that an elected government of Burma has been allowed to take office.'' </div> <div>       Clearly, the details of the situation in Burma differ from those of the </div> <div>       situations in other nations, yet setting a standard that requires a </div> <div>       trading partner to have an elected government is a dangerous precedent, </div> <div>       since that would lead to questions about whether U.S. companies would some </div> <div>       day be prevented from doing business in the vast majority of countries in </div> <div>       Africa and the Middle East, and much of the rest of Asia, including China. </div> <bR> <div>       Our major trading partners are unlikely to support any future </div> <div>       congressionally imposed ban on doing business in Burma. To have any hope </div> <div>       of effectiveness, such a boycott would require the cooperation of China, </div> <div>       Singapore, and other Asian nations, which is not likely to happen. In </div> <div>       fact, Asian countries are choosing, not isolation, but closer engagement </div> <div>       with Burma, having invited it to participate in the Association of </div> <div>       Southeast Asian Nations. As has happened elsewhere in the world, U.S. </div> <div>       unilateral sanctions against Burma will serve primarily to transfer </div> <div>       business from American to foreign firms without accomplishing larger </div> <div>       goals. To date, those U.S. corporations that have pulled out of Burma have </div> <div>       seen their investments replaced by companies from Singapore and Western </div> <div>       Europe. </div> <div>       As economic leaders, American companies should be encouraged to enter, not </div> <div>       discouraged from entering, new markets. U.S. foreign investment not only </div> <div>       is profitable for those companies that invest wisely; it also helps foster </div> <div>       greater economic growth in developing nations. The companies help those </div> <div>       nations advance their social, political, and economic institutions. The </div> <div>       removal of American influence is often unfortunate because U.S. </div> <div>       corporations tend to increase the wages and labor standards in the </div> <div>       countries in which they operate. Companies engaged in long-term </div> <div>       investments in Burma and elsewhere also build schools, hospitals, and </div> <div>       roads that local governments often cannot afford. U.S. companies operating </div> <div>       in Nigeria donate more money to help poor residents than does the U.S. </div> <div>       government, according to the Corporate Council on Africa. </div> <div>       Common-Sense Criteria for Sanctions </div> <div>       All current and future U.S. sanctions should undergo an economic cost </div> <div>       analysis to make clear that sanctions involve economic tradeoffs for the </div> <div>       American people. A 1988 study from Johns Hopkins University estimates that </div> <div>       over a 25-year period the embargo against Cuba cost American companies $30 </div> <div>       billion in lost exports, while the diplomatic benefits gained by the </div> <div>       United States were difficult to pinpoint. To avoid becoming entangled by </div> <div>       new U.S. sanctions against energy investments by any company in Iran and </div> <div>       Libya, many European oil companies and suppliers are likely to redesign </div> <div>       their procurement policies to exclude American equipment makers. That will </div> <div>       put at risk $600 million in U.S. exports and 12,000 export-related jobs, </div> <div>       according to the Petroleum Equipment Suppliers Association. </div> <div>       The illusion that sanctions are cost free also necessitates reintroducing </div> <div>       the concept of private property into the sanctions debate. It is one thing </div> <div>       to stop sending U.S. government dollars to a distasteful regime; it is </div> <div>       quite another to prevent private individuals and companies from legally </div> <div>       using their own property in another country. All future sanctions bills </div> <div>       should contain appropriations to compensate American companies and </div> <div>       individuals for investments lost or devalued as a result of a U.S. </div> <div>       economic sanction. For example, if a U.S. company is lawfully extracting </div> <div>       natural resources from mines in Indonesia and Congress bans all investment </div> <div>       there, that corporation should be compensated for its losses. Such a ban </div> <div>       is a form of "takings''--within the meaning of the Fifth Amendment--and </div> <div>       should be treated as such. That would make clear the real costs of </div> <div>       sanctions and should encourage lawmakers to allow any ongoing company </div> <div>       investment in a country to continue unmolested and to place no new </div> <div>       restrictions on additional investment by such a company. Compensation </div> <div>       should include the net present value of a company's investment plus a </div> <div>       premium based on reasonable expectations of future profit. In the absence </div> <div>       of compensation, the most any future U.S. sanction should be allowed to do </div> <div>       is to block investments by new entrants into the targeted country's </div> <div>       market. </div> <div>       Congress should also place time limits on economic sanctions so that the </div> <div>       force of inertia does not allow such a significant foreign policy decision </div> <div>       to continue indefinitely without being reexamined. The 1996 sanctions </div> <div>       against Iran and Libya wisely carry a five-year sunset provision. Any </div> <div>       sunset measure, however, should not interfere with the compensation paid </div> <div>       to those whose investments are devalued by U.S. government action. </div> <div>       Congress should also require a finding that any sanction is in the </div> <div>       "national security interest'' of the United States. That finding ought to </div> <div>       describe in specific terms how the conduct of the target country poses a </div> <div>       threat to the security of the American people and how sanctions would </div> <div>       materially reduce that threat. Such a requirement would not necessarily </div> <div>       stop the use of sanctions, but it would raise the policy standard for </div> <div>       sanctions beyond a show of distaste for another nation's domestic </div> <div>       policies. </div> <div>       China and MFN Status </div> <div>       The annual ritual of attempting to deny China most-favored-nation (MFN) </div> <div>       trading status serves no legitimate policy purpose and only reduces the </div> <div>       stability of the U.S.-China relationship. MFN is itself a misnomer in that </div> <div>       it does not grant China a "favored'' trading position; it simply treats </div> <div>       Chinese products the same as those from nearly all other countries in the </div> <div>       world. Only seven countries do not have MFN status. It would be more </div> <div>       appropriate to employ the term "normal trade relations.'' A measure to </div> <div>       change MFN to "normal trade relations'' was passed by the U.S. Senate in </div> <div>       1996 but did not become law. </div> <div>       The Clinton administration made a wise decision in 1994 when it de-linked </div> <div>       human rights from trade and granted China its annual waiver for MFN. The </div> <div>       next logical steps are to give China a multiyear waiver and to facilitate </div> <div>       China's entry into the World Trade Organization. One emerging complaint </div> <div>       against China is its significant trade "surplus'' with the United States. </div> <div>       Trade deficits, particularly between two nations, are not important </div> <div>       economic indicators, do not represent job "losses,'' and should not be </div> <div>       used to justify actions that restrict the flow of goods and services </div> <div>       between nations. </div> <div>       Conclusion </div> <div>       The United States should maintain a flexible asylum policy to help victims </div> <div>       of persecution from any country and should not provide financial </div> <div>       assistance to oppressive regimes. But America cannot force other </div> <div>       governments to become democratic, or even to treat their citizens </div> <div>       humanely, though we should encourage, primarily through diplomatic means, </div> <div>       moves toward more freedom. </div> <div>       Current sanction policies have hurt American companies while accomplishing </div> <div>       little else. More engagement with the outside world, through increased </div> <div>       tourism and a proliferation of trade and investment activity, is more </div> <div>       likely to encourage the changes we would all like to see take place in </div> <div>       Cuba, Burma, and elsewhere. Since dictatorships thrive by controlling the </div> <div>       populace and finding scapegoats for domestic problems, greater interchange </div> <div>       with the democratic, market-oriented United States would accomplish more </div> <div>       than isolation. </div> <div>       Undoing current sanctions and refraining from imposing new unilateral </div> <div>       sanctions against Burma, China, Nigeria, and other nations is the best </div> <div>       policy course for the United States. Such sanctions are ineffective, </div> <div>       eschew normal diplomatic channels, and undermine our international </div> <div>       relations. U.S. companies are often hurt, not only directly, but </div> <div>       indirectly because they gain a reputation as unreliable suppliers. </div> <div>       Congress should at a minimum adopt reforms that make clear to the public </div> <div>       the costs of such sanctions to individual companies and the U.S. economy </div> <div>       as a whole. We should abandon the practice of attempting to improve the </div> <div>       conduct of other nations by restricting the freedom of our own citizens. </div> <div>       Suggested Readings</div> <div>       Bartlett, Bruce. "What's Wrong with Trade Sanctions.'' Cato Policy </div> <div>       Analysis no. 64, December 23, 1985. </div> <div>       Dorn, James A. "Trade and Human Rights: The Case of China.'' Cato Journal </div> <div>       (Spring-Summer 1996). </div> <div>       Hufbauer, Gary Clyde, Jeffrey L. Schott, and Kimberly Ann Elliot. Economic </div> <div>       Sanctions Reconsidered, 2d ed. Washington: Institute for International </div> <div>       Economics, 1990. </div> <div>       Shin, Mya Saw, Alison Krupnick, and Tom L. Wilson. "Burma'' or "Myanmar''? </div> <div>       U.S. Policy at the Crossroads. Seattle: National Bureau of Asian Research, </div> <div>       1995. </div> <div>       --Prepared by Stuart Anderson </div> <bR> <bR> <bR> <div> SEC Instructed to Review Public Company Ties to States Identified as Sponsoring Terrorism </div> <bR> <bR> <bR> <div>         (2)</div> <div>             Public companies doing business with "terrorist-sponsoring states" </div> <div>             may come under intensified scrutiny by the Securities and Exchange </div> <div>             Commission due to a paragraph slipped into a conference committee </div> <div>             report on a major appropriations bill recently passed by Congress. </div> <div>             The relevant paragraph (in House Report 108-221 accompanying H.R. </div> <div>             2799) was inserted by Representative Frank Wolf (R., Va.), chairman </div> <div>             of the House Appropriations subcommittee overseeing the SEC's </div> <div>             budget. It directs the SEC to establish an Office of Global Security </div> <div>             Risk within the Division of Corporation Finance. The duties of this </div> <div>             new office would include:</div> <bR> <div>               establishing a process by which the SEC identifies all companies </div> <div>               listed on U.S. stock exchanges or NASDAQ that operate in State </div> <div>               Department-designated "terrorist-sponsoring states" (currently, </div> <div>               Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria). U.S. </div> <div>               companies are severely limited in their ability to do business in </div> <div>               these sanctioned countries, but U.S.-listed foreign companies are </div> <div>               not subject to the same limitations; </div> <div>               ensuring that such companies disclose these activities to </div> <div>               investors; </div> <div>               implementing enhanced disclosure requirements based on the </div> <div>               "asymmetric nature of the risk to corporate share value and </div> <div>               reputation" stemming from business interests in these countries; </div> <div>               coordinating with other federal government agencies to share </div> <div>               relevant information; and </div> <div>               initiating a global dialogue to ensure U.S.-traded foreign </div> <div>               corporations properly disclose their activities in </div> <div>               "terrorist-sponsoring states" to U.S. investors. </div> <div>             The SEC is also directed to provide quarterly reports on the </div> <div>             activities of the new office.</div> <bR> <div>             The SEC has not yet established the Office of Global Security Risk </div> <div>             contemplated by the paragraph. House and Senate Reports do not have </div> <div>             binding legal effect on government agencies, but SEC appropriations </div> <div>             come up for review every year before Congressman Wolf's </div> <div>             subcommittee. Consequently, it seems unlikely that the SEC will </div> <div>             completely ignore this directive. To date, the SEC has not taken a </div> <div>             clear position on establishing the new office. Laura Cox, SEC </div> <div>             managing executive, indicated to THE WALL STREET JOURNAL that up to </div> <div>             five Corporation Finance staff members might be assigned. She also </div> <div>             noted, however, that industry groups had expressed concerns about </div> <div>             the proposal and that those concerns would be treated seriously.</div> <bR> <div>             Critics claim that Congressman Wolf's directive would inject a </div> <div>             political or foreign policy agenda into the SEC's traditional role </div> <div>             as disclosure watchdog. As envisioned by Congressman Wolf, public </div> <div>             companies would have to disclose any involvement in the nations </div> <div>             identified by the State Department, no matter how insignificant ("no </div> <div>             matter how large or small"). Eliminating traditional notions of </div> <div>             materiality may indicate that the motivation for creating the new </div> <div>             office is more aimed at applying political pressure than on </div> <div>             protecting investors. The Securities Industry Association noted this </div> <div>             concern in a letter to SEC Chairman William Donaldson, opposing </div> <div>             creation of the new office.</div> <bR> <div>             This is available at </div> <div>             http://www.sia.com/2004_comment_letters/pdf/SEC01-20-04_Intl.pdf.</div> <bR> <div>             This is not the first time Congressman Wolf has sought to use the </div> <div>             SEC to exert pressure on companies trading with nations under U.S. </div> <div>             sanctions. In 2001, he sent a letter to the SEC urging enhanced </div> <div>             disclosure requirements for foreign firms seeking access to U.S. </div> <div>             markets, particularly foreign firms with operations in such nations. </div> <div>             Former Commissioner Laura Unger responded that "doing material </div> <div>             business with a country, government or entity on [the Office of </div> <div>             Foreign Assets Control's] sanctions list is, in the SEC staff's </div> <div>             view, substantially likely to be significant to a reasonable </div> <div>             investor's decision about whether to invest in that company."</div> <bR> <div>             In another action demonstrating Congressional concern about </div> <div>             operations in terrorist-sponsoring states, Senators Charles E. </div> <div>             Grassley and Max Baucus (Chair and ranking member of the Senate </div> <div>             Finance Committee) sent letters to the CEOs of ConocoPhillips, GE </div> <div>             and Halliburton, requesting information on their activities in </div> <div>             facilitating transfer of U.S. capital to terrorist-sponsoring states </div> <div>             through operations of their non-U.S. subsidiaries in Iran and Syria. </div> <div>             The Senators also sent a letter to the Department of Treasury </div> <div>             inquiring about (1) effectiveness of its current rules on doing </div> <div>             business in nations identified as sponsoring terrorism and (2) its </div> <div>             diligence in enforcing such rules.</div> <bR> <div>             It is currently difficult to gauge the impact of Congressman Wolf's </div> <div>             language in the House Report and other Congressional efforts </div> <div>             directed at public companies with activities in </div> <div>             "terrorist-sponsoring states." While continuing to monitor </div> <div>             developments at the SEC and elsewhere, companies doing business in </div> <div>             such nations should be sure to examine their disclosure and U.S. </div> <div>             sanctions compliance practices to avoid the possibility of adverse </div> <div>             U.S. government action.</div> <bR> <div>            </div> <div> (3)</div> <div> Trading With the "Enemy" </div> <div> HOME  DV NEWS SERVICE  ARCHIVE  SUBMISSIONS/CONTACT  ABOUT DV</div> <div>  </div> <div> Trading With the "Enemy": Halliburton & GE Make Millions Trading With Iran</div> <div> by Democracy Now!</div> <div> Dissident Voice</div> <div> July 21, 2003</div> <div>  </div> <div>  </div> <div> Transcript of Democracy Now! radio program, July 16, 2003.</div> <div>  </div> <div> Guests: Michael Scherer, Washington correspondent for Mother Jones. His article </div> <div> Sidestepping Sanctions appears in the July/August issue of Mother Jones. Roger </div> <div> Robinson, CEO and President of Conflict Securities Advisory Group, Inc. He is </div> <div> the former chairman of the William Casey Institute and served as the Senior </div> <div> Director of International Economic Affairs at the National Security Council </div> <div> under President Reagan.</div> <div>  </div> <div>  </div> <div> AMY GOODMAN: As the crackdown continues in Iran on dissidents, on students, on </div> <div> journalists, Iran has also announced that the discovery of one of the largest </div> <div> oil fields in the world, has been made there. Some 38 billion barrels of oil are </div> <div> believed to be in the oil field found in southern Iran making it one of the most </div> <div> lucrative oil finds in years. Iran says they're looking for foreign companies to </div> <div> invest in that field. It will be attempting deal even for U.S. companies that </div> <div> are barred from dealing with Iran. Recent news reports indicate the subsidiaries </div> <div> of several U.S. companies have been quietly trading with Iran for years. They </div> <div> include Halliburton, G.E. and Conoco. According to Money Magazine, in 1997 when </div> <div> Vice President Dick Cheney was Halliburton's C.E.O., the company paid a $15,000 </div> <div> fine for improperly shipping oil field equipment to Iran. Cheney also lobbied </div> <div> both as head of Halliburton and as vice president of the United States, to lift </div> <div> sanctions against Iran and Libya. </div> <div>  </div> <div> According to a new article in Mother Jones, Halliburton currently has at least </div> <div> two major projects in Iran. Along the Iraqi border, a subsidiary of Halliburton </div> <div> is helping to build one of the world's largest fertilizer plants. Another </div> <div> subsidiary is providing a $226 million drilling rig to the Iranian National Oil </div> <div> Company. Meanwhile General Electric is also doing work in Iran. A Canadian </div> <div> subsidiary has provided Iran with four hydro electric generators to expand a dam </div> <div> along the Kuran River. An Italian subsidiary of G.E. is supplying pipeline </div> <div> equipment and gas turbines for Iran's oil industry. This all comes despite the </div> <div> fact that Iran is one of the seven nations listed by the State Department as a </div> <div> state sponsor of terror. The other nations are Iraq, Syria, Sudan, Libya, North </div> <div> Korea and Cuba. Until recently, the dealings of Halliburton and G.E. in </div> <div> countries like Iran got little attention. But a new financial company has begun </div> <div> tracking which companies have investments in nations on the state department </div> <div> list. The company is Conflict Securities Advisory Group. It's created a massive </div> <div> database that lists which countries deal with all the countries on the state </div> <div> department list except Cuba. The group has found that 35 major U.S. companies </div> <div> that have operations in these countries. Overall some 375 publicly traded </div> <div> companies around the world are operating in these countries. Let's start with </div> <div> MICHAEL SHERER, Washington correspondent for Mother Jones. His article is called </div> <div> Side Stepping Sanctions. Welcome to Democracy Now! Michael. </div> <div>  </div> <div> MICHAEL SHERER: Thanks for having me. </div> <div>  </div> <div> AMY GOODMAN: Talk about these companies in Iran. </div> <div>  </div> <div> MICHAEL SHERER: Well, the way they do it is, they're actually not technically </div> <div> breaking the law. They're clearly going against congressional intent. Both Iran </div> <div> and Libya have strict sanctions, unilateral American sanctions against them, </div> <div> that bar any U.S. company or any U.S. citizen from doing any business in these </div> <div> countries. With very few agricultural exceptions here and there. </div> <div>  </div> <div> What companies like Halliburton and General Electric-the examples you mentioned </div> <div> at the beginning-do, is they use foreign subsidiaries that are staffed with </div> <div> foreign nationals. </div> <div>  </div> <div> And even though the profits and ownership ends up being traced back to the </div> <div> American parent company and the American shareholders, they're able to get </div> <div> around the law because they claim that these companies working in Italy, in the </div> <div> Cayman islands, working in other countries in Europe are not American companies </div> <div> and therefore not beholden to U.S. law. </div> <div>  </div> <div> AMY GOODMAN: So, these companies, name them, how they're doing it. </div> <div>  </div> <div> MICHAEL SHERER: Well, you mentioned General Electric, they have a subsidiary </div> <div> called G.E. Hydro in Canada. They also have a subsidiary in Italy called Nuevo </div> <div> Pignone, that they use to provide pipeline compressors and gas turbines to </div> <div> Iran's oil industry. Halliburton has a couple -- they have dozens of </div> <div> subsidiaries around the country. Cayman subsidiaries of Halliburton has been </div> <div> operating in Iran. They also have business in Iran through a Swedish subsidiary </div> <div> that has been working there. It's a trick that has been in place for decades. </div> <div> What is different is that in the past, past presidents including Ronald Reagan </div> <div> and even President Clinton in the mid 1990's, have put pressure on Americans </div> <div> companies that are doing this, to pull out anyway. Reagan was successful in the </div> <div> 1980's when Libya first had sanctions put in place against it, to put pressure </div> <div> on Conoco and Marathon, two oil companies, to leave Libya even though they were </div> <div> operating through foreign subsidiaries. Then again in 1995, Clinton put pressure </div> <div> on Conoco to get out of an oil deal with Iran that had been arranged through a </div> <div> European subsidiary. </div> <div>  </div> <div> The current Bush administration right now, even though there's clear rhetoric </div> <div> about, you're either with us or against us--and there's clearly heightened </div> <div> security about these countries--has not yet put the same type of pressure. One </div> <div> of the possible reasons is that within the administration, there are people who </div> <div> have been on the record for a number of years as being against these types of </div> <div> unilateral sanctions, including the vice president, Dick Cheney, because they </div> <div> hurt U.S. business. So there's a tension within the White House and within the </div> <div> conservative world between the national security interests of the country and </div> <div> the business interests. </div> <div>  </div> <div> AMY GOODMAN: Just to get something straight, MICHAEL SCHERER. Cheney as vice </div> <div> president of the United States, former C.E.O. of Halliburton is still getting </div> <div> money from Halliburton, is that right? </div> <div>  </div> <div> MICHAEL SHERER: Yeah. I think it's through a pension payment, that's right. And </div> <div> also he clearly cashed out when he left the company with quite a bit of money. </div> <div>  </div> <div> AMY GOODMAN: I wanted to turn for a minute to ROGER ROBINSON, C.E.O. and </div> <div> president of Conflict Securities Advisory Group. He is former chair of the </div> <div> William Casey Institute--that is the former Director of Central Intelligence </div> <div> under Reagan, William Casey--and served as the senior director of International </div> <div> Economic Affairs under President Reagan. Welcome to Democracy Now! </div> <div>  </div> <div> ROGER ROBINSON: Thank you very much. </div> <div>  </div> <div> AMY GOODMAN: Can you talk about these companies and how you're tracking these </div> <div> companies in Iran? Would you agree with the assessment that it's legal? </div> <div>  </div> <div> ROGER ROBINSON: Well, we developed, as was mentioned, a database with our </div> <div> partner company Investor Responsibility Research Center, that identifies and </div> <div> profiles about 400 publicly traded companies worldwide, that have business </div> <div> activities in the six State Department designated terrorist sponsoring states </div> <div> you mentioned. All of them except Cuba. As well as any publicly traded companies </div> <div> that have ever been associated or documented to be associated with the </div> <div> proliferation of weapons of mass destruction, or ballistic missiles. So we </div> <div> called this general new risk category in the markets global security risk. And </div> <div> we're finding that institutional investors, pension systems, mutual funds, </div> <div> others, are increasingly recognizing that these risks are valid and are </div> <div> asymmetric in nature that can affect share value and corporate reputation. We </div> <div> are an impartial information provider. This is the first risk assessment tool of </div> <div> its kind dealing with global security risk. And in the case of Iran, we found </div> <div> that there are over 200 publicly traded companies doing business in that country </div> <div> at the present time. Approximately 58 of which are doing business in the energy </div> <div> sector, as you mentioned, which is attractive to many foreign oil companies </div> <div> including our own. And as many as 41 of those may be in violation </div> <div> of--technically at least--of U.S. law in the form of the Iran/Libyan sanctions </div> <div> act. </div> <div>  </div> <div> AMY GOODMAN: Can you talk about the actions of the New York City controller as </div> <div> well as the Pennsylvania State Assembly, to limit investments in companies that </div> <div> invest in countries like Iran? </div> <div>  </div> <div> ROGER ROBINSON: Yes. New York city has been a model in trying to track these </div> <div> types of risks. They are -- they have gone forward with shareholder resolutions </div> <div> as was mentioned by Michael, directed toward General Electric, Halliburton and </div> <div> Conoco-Phillips in terms of the actions or activities of their subsidiaries in </div> <div> Iran and in the case of Conoco, both Iran and Syria. The concern they had was </div> <div> not so much that these companies were engaged in illegal activity, but that they </div> <div> might be skirting the spirit, if not the letter of U.S. law and that this could </div> <div> -- these activities in such higher risk countries could pose significant risks </div> <div> to share values and corporate reputations that have heretofore been unaccounted </div> <div> for. The New York City firefighters and police pension funds are taking the lead </div> <div> on this. We're pleased to say that we've have been able to make use of our </div> <div> global security risk monitor online service in trying to identify companies in </div> <div> their portfolios that have these kind of higher risk business involvements. And </div> <div> I believe that you're going to see more activity out of New York City this fall. </div> <bR> <div>  </div> <div> AMY GOODMAN: ROGER ROBINSON, what do you think would happen if U.S. and other </div> <div> multi-national corporations were forced to pull out of Iran? </div> <div>  </div> <div> ROGER ROBINSON: Well, it's hard for us in an impartial mode that we're in, to </div> <div> make public policy judgments. It is to say that obviously Iran is very </div> <div> dependent--as are the other terrorist sponsoring states--on the infrastructure </div> <div> support, and financing and business activity support, of publicly traded firms </div> <div> that are held by virtually all Americans in the market. These are the largest </div> <div> companies in the world. They're providing multi-billion dollar revenue flows to </div> <div> the Iranian government. Some have suggested that this helps them with predations </div> <div> like weapons of mass destruction programs and sponsorship of terrorism itself. </div> <div> But the point here is that if U.S. sanctions were even to be tightened under the </div> <div> Iran/Libyan sanctions format, these companies could be at significant risk from </div> <div> an investor perspective, and U.S. investors in general should be asking their </div> <div> mutual funds and pension systems, can they identify those companies that are </div> <div> doing businesses in these countries like Iran and if so, what risk mitigation </div> <div> strategies are they pursuing. </div> <div>  </div> <div> AMY GOODMAN: MICHAEL SCHERER, you write Hewlett-Packard, Kodak, Proctor & </div> <div> Gamble, are all shipping their products to Dubai where third parties are known </div> <div> to re-export goods to Iran. </div> <div>  </div> <div> MICHAEL SCHERER: It's a separate -- it's a separate process where by </div> <div> manufacturers of consumer goods, a number of them American companies, will ship </div> <div> their products to resellers in a third country then those resellers will buy </div> <div> them and reship them across the sea to Iran. Technically it's illegal to sell </div> <div> anything to a third party knowing that these goods will end up in a country that </div> <div> is sanctioned by the U.S. government. But there is a veil of ignorance that is </div> <div> claimed by a lot of these companies. So you have a huge portion of Dubai's </div> <div> export market going to Iran and a significant portion of that is not goods that </div> <div> are being created in Dubai. They're goods that are being imported to Dubai. So </div> <div> it's another way that these sanctions are skirted. </div> <div>  </div> <div> AMY GOODMAN: It's interesting on the one hand you have President Bush saying </div> <div> Iran is part of the axis of evil. On the other hand you have vice-president </div> <div> Cheney handsomely profiting, his former company certainly profiting from doing </div> <div> business in Iran. And then I'm wondering if you can comment on that and then </div> <div> talk--expand it a little to what Halliburton is doing in the rest of the world. </div> <div> Mother Jones has a very interesting two-page spread in the July-August issue by </div> <div> you, The World According to Halliburton, a map of the world with Halliburton </div> <div> investments overlaid on it. </div> <div>  </div> <div> MICHAEL SCHERER: Well, like I said before I think there is a split, an </div> <div> ideological split within the administration that hasn't fully been fleshed out. </div> <div> There's a difference between the president's public rhetoric about the dangers </div> <div> that these states pose to the U.S., and the White House's conduct in terms of </div> <div> dealing with these countries that are -- these American companies who are </div> <div> skirting sanctions. I spoke with a sanctions expert who said there's a power the </div> <div> U.S. is choosing not to use for some reason. On the second part of your question </div> <div> about Halliburton's work around the world. Halliburton is the major supplier of </div> <div> logistical support for the U.S. military. As a result, the military has expanded </div> <div> greatly around the world since September 11th, and as a result Halliburton has </div> <div> expanded with them. What I try to do in the map you mentioned is to figure out </div> <div> exactly what business Halliburton has gotten from defense-related government </div> <div> contracts since September 11th. The number I came up with, and this is dated </div> <div> already because these contracts continue to expand, was at least 2.2 billion </div> <div> dollars they have gotten as a result of defense related business since September </div> <div> 11th. </div> <div>  </div> <div> They have gone into countries like Djibouti, Jordan and Turkey, Afghanistan </div> <div> obviously, the Republic of Georgia, and then they have continuing contracts in </div> <div> Bosnia and Kosovo and a number of other countries. Mostly maintaining U.S. </div> <div> military installations, doing laundry for troops, providing food for troops. But </div> <div> also planning logistical deployments in Iraq. They're working on the oil fields. </div> <div> They also were given task orders to build enemy prisoner of war camps for Iraqi </div> <div> prisoners of war. They've done foreign military sales work in the Republic of </div> <div> Georgia and military training there. So there's a wide range of different </div> <div> activities they're doing on behalf of the U.S. government and as the military </div> <div> expands overseas, that business expands as well. </div> <div>  </div> <div> AMY GOODMAN: You are doing a weekly update of how much money Halliburton is </div> <div> making off Iraq. What's the latest? </div> <div>  </div> <div> MICHAEL SCHERER: Well, it isn't a weekly update. We did update it two weeks ago </div> <div> when we put it online. And we put online basically a searchable database. You </div> <div> can click on different parts of this map and you can see each of the individual </div> <div> task orders at Motherjones.com. But the oil service contract that the Army Corps </div> <div> of Engineers gave Halliburton earlier, it was a controversial contract because </div> <div> it was awarded without a competitive bid, because the U.S. military said </div> <div> Halliburton was the company that had done the planning on this. And they were in </div> <div> the best position to do this work. Originally it was-the amount awarded under </div> <div> this contract which is -- can expand up to $7 billion and functions so that as </div> <div> the U.S. government has work it needs to do, the contract automatically expands. </div> <div> There's to fixed price for what the tasks are. It was something like 30 million </div> <div> early this spring. Last time I checked it was well over 200 million. Just this </div> <div> week, Halliburton was awarded another contract for what initial figure is $200 </div> <div> million, but it's sure to expand, to do base support for the U.S. troops that </div> <div> are based in Iraq. </div> <div>  </div> <div> AMY GOODMAN: MICHAEL SCHERER thanks for joining us. Washington correspondent for </div> <div> Mother Jones magazine as well as ROGER ROBINSON, C.E.O. and president of the </div> <div> Conflict Securities Advisory Group. Former chair of the Williams Casey </div> <div> institute, former Reagan advisor. </div> <div> . </div> <div> Democracy Now! is an investigative news radio journal that's a vitally important </div> <div> antidote to the lies and deceptions of state/corporate media. The program is </div> <div> hosted by Amy Goodman and Juan Gonzalez. To find out what radio stations near </div> <div> you air Democracy Now!, or to listen to the program on-line, visit: </div> <div> www.democracynow.org</div> <div>  </div> <bR> <div> Democracy Now! | Trading With the "Enemy": Halliburton & GE Make Millions Trading With Iran</div> <bR> <bR> <bR> <div>                    </div> <div>                   Call 1 (888) 999-3877 or enter the store</div> <bR> <div>                  As head of Halliburton and as U.S. Vice President, Dick Cheney </div> <div>                   lobbied to remove sanctions against Iran to allow his business </div> <div>                   to profit off the Iranian dictatorship. </div> <div>                   In other news from Iran, the country announced this week the </div> <div>                   discovery of one of the largest oilfields in the world. Some </div> <div>                   38 billion barrels of oil are believed to be in the oilfield </div> <div>                   found in southern Iran making it one of the most lucrative oil </div> <div>                   finds in years. </div> <div>                   Iran says they are looking for foreign companies to invest in </div> <div>                   the oilfield. It will be a tempting deal even for U.S. </div> <div>                   companies that are barred from dealing with Iran. </div> <div>                   Recent news reports indicate that the subsidiaries of several </div> <div>                   American companies have been quietly trading with Iran for </div> <div>                   years. These companies include Halliburton, GE and Conoco. </div> <div>                   According to Money Magazine, in 1997 when Vice President Dick </div> <div>                   Cheney was Halliburton's CEO, the company paid $15,000 fine </div> <div>                   for improperly shipping oil field equipment to Iran. </div> <div>                   Cheney also lobbied both as head of Halliburton and as Vice </div> <div>                   President for the U.S. to lift sanctions against Iran and </div> <div>                   Libya. </div> <div>                   According to a new article in Mother Jones, Halliburton </div> <div>                   currently has at least two major projects in Iran. Along the </div> <div>                   Iraqi border, a subsidiary of Halliburton is helping to build </div> <div>                   one of the world's largest fertilizer plants. Another </div> <div>                   Halliburton subsidiary is providing a $226 million drilling </div> <div>                   rig to the Iranian National Oil Company. </div> <div>                   Meanwhile GE is also doing work in Iran. A Canadian subsidiary </div> <div>                   of GE has provided Iran with four hydroelectric generators to </div> <div>                   expand a dam along the Kuran River. And an Italian subsidiary </div> <div>                   of GE is supplying pipeline equipment and gas turbines for </div> <div>                   Iran's oil industry. </div> <div>                   This all comes despite the fact that Iran is one of the seven </div> <div>                   nations listed by the State Department as a state sponsor of </div> <div>                   terror. The other nations are Iraq, Syria, Sudan, Libya, North </div> <div>                   Korea and Cuba. </div> <div>                   Until recently the dealings of Halliburton and GE in countries </div> <div>                   like Iran got little attention. But a new financial company </div> <div>                   has begun tracking which companies have investments in the </div> <div>                   nations on the State Department's list. </div> <div>                   The company is Conflict Securities Advisory Group and it has </div> <div>                   created a massive database that lists which countries deal </div> <div>                   with all of the countries on the State Department list except </div> <div>                   Cuba. The Group has found that there 35 major U.S. companies </div> <div>                   that have operations in these countries. Overall some 375 </div> <div>                   publicly traded companies around the world are operating in </div> <div>                   these countries. </div> <div>                     Michael Scherer, Washington correspondent for Mother Jones. </div> <div>                     His article Sidestepping Sanctions appears in the </div> <div>                     July/August issue of Mother Jones. </div> <div>                     Roger Robinson, CEO and President of Conflict Securities </div> <div>                     Advisory Group, Inc. He is the former chairman of the </div> <div>                     William Casey Institute and served as the Senior Director of </div> <div>                     International Economic Affairs at the National Security </div> <div>                     Council under President Reagan.</div> <bR> <bR> <div>                   TRANSCRIPT OF FULL SEGMENT: </div> <div>                   AMY GOODMAN: As the crackdown continues in Iran on dissidents, </div> <div>                   on students, on journalists, Iran has also announced that the </div> <div>                   discovery of one of the largest oil fields in the world, has </div> <div>                   been made there. Some 38 billion barrels of oil are believed </div> <div>                   to be in the oil field found in southern Iran making it one of </div> <div>                   the most lucrative oil finds in years. Iran says they're </div> <div>                   looking for foreign companies to invest in that field. It will </div> <div>                   be attempting deal even for U.S. companies that are barred </div> <div>                   from dealing with Iran. Recent news reports indicate the </div> <div>                   subsidiaries of several U.S. companies have been quietly </div> <div>                   trading with Iran for years. They include Halliburton, G.E. </div> <div>                   and Conoco. According to Money Magazine, in 1997 when Vice </div> <div>                   President Dick Cheney was Halliburton's C.E.O., the company </div> <div>                   paid a $15,000 fine for improperly shipping oil field </div> <div>                   equipment to Iran. Cheney also lobbied both as head of </div> <div>                   Halliburton and as vice president of the United States, to </div> <div>                   lift sanctions against Iran and Libya. </div> <div>                   According to a new article in Mother Jones, Halliburton </div> <div>                   currently has at least two major projects in Iran. Along the </div> <div>                   Iraqi border, a subsidiary of Halliburton is helping to build </div> <div>                   one of the world's largest fertilizer plants. Another </div> <div>                   subsidiary is providing a $226 million drilling rig to the </div> <div>                   Iranian National Oil Company. Meanwhile General Electric is </div> <div>                   also doing work in Iran. A Canadian subsidiary has provided </div> <div>                   Iran with four hydro electric generators to expand a dam along </div> <div>                   the Kuran river. An Italian subsidiary of G.E. is supplying </div> <div>                   pipeline equipment and gas turbines for Iran's oil industry. </div> <div>                   This all comes despite the fact that Iran is one of the seven </div> <div>                   nations listed by the State Department as a state sponsor of </div> <div>                   terror. The other nations are Iraq, Syria, Sudan, Libya, North </div> <div>                   Korea and Cuba. Until recently, the dealings of Halliburton </div> <div>                   and G.E. in countries like Iran got little attention. But a </div> <div>                   new financial company has begun tracking which companies have </div> <div>                   investments in nations on the state department list. The </div> <div>                   company is Conflict Securities Advisory Group. It's created a </div> <div>                   massive database that lists which countries deal with all the </div> <div>                   countries on the state department list except Cuba. The group </div> <div>                   has found that 35 major U.S. companies that have operations in </div> <div>                   these countries. Overall some 375 publicly traded companies </div> <div>                   around the world are operating in these countries. Let's start </div> <div>                   with MICHAEL SHERER, Washington correspondent for Mother </div> <div>                   Jones. His article is called Side Stepping Sanctions. Welcome </div> <div>                   to Democracy Now! Michael. </div> <div>                   MICHAEL SHERER: Thanks for having me. </div> <div>                   AMY GOODMAN: Talk about these companies in Iran. </div> <div>                   MICHAEL SHERER: Well, the way they do it is, they're actually </div> <div>                   not technically breaking the law. They're clearly going </div> <div>                   against congressional intent. Both Iran and Libya have strict </div> <div>                   sanctions, unilateral American sanctions against them, that </div> <div>                   bar any U.S. company or any U.S. citizen from doing any </div> <div>                   business in these countries. With very few agricultural </div> <div>                   exceptions here and there. </div> <div>                   What companies like Halliburton and General Electric-the </div> <div>                   examples you mentioned at the beginning-do, is they use </div> <div>                   foreign subsidiaries that are staffed with foreign nationals. </div> <div>                   And even though the profits and ownership ends up being traced </div> <div>                   back to the American parent company and the American </div> <div>                   shareholders, they're able to get around the law because they </div> <div>                   claim that these companies working in Italy, in the Cayman </div> <div>                   islands, working in other countries in Europe are not American </div> <div>                   companies and therefore not beholden to U.S. law. </div> <div>                   AMY GOODMAN: So, these companies, name them, how they're doing </div> <div>                   it. </div> <div>                   MICHAEL SHERER: Well, you mentioned General Electric, they </div> <div>                   have a subsidiary called G.E. Hydro in Canada. They also have </div> <div>                   a subsidiary in Italy called Nuevo Pignone, that they use to </div> <div>                   provide pipeline compressors and gas turbines to Iran's oil </div> <div>                   industry. Halliburton has a couple -- they have dozens of </div> <div>                   subsidiaries around the country. Cayman subsidiaries of </div> <div>                   Halliburton has been operating in Iran. They also have </div> <div>                   business in Iran through a Swedish subsidiary that has been </div> <div>                   working there. It's a trick that has been in place for </div> <div>                   decades. What is different is that in the past, past </div> <div>                   presidents including Ronald Reagan and even President Clinton </div> <div>                   in the mid 1990's, have put pressure on Americans companies </div> <div>                   that are doing this, to pull out anyway. Reagan was successful </div> <div>                   in the 1980's when Libya first had sanctions put in place </div> <div>                   against it, to put pressure on Conoco and Marathon, two oil </div> <div>                   companies, to leave Libya even though they were operating </div> <div>                   through foreign subsidiaries. Then again in 1995, Clinton put </div> <div>                   pressure on Conoco to get out of an oil deal with Iran that </div> <div>                   had been arranged through a European subsidiary. </div> <div>                   The current Bush administration right now, even though there's </div> <div>                   clear rhetoric about, you're either with us or against us--and </div> <div>                   there's clearly heightened security about these countries--has </div> <div>                   not yet put the same type of pressure. One of the possible </div> <div>                   reasons is that within the administration, there are people </div> <div>                   who have been on the record for a number of years as being </div> <div>                   against these types of unilateral sanctions, including the </div> <div>                   vice president, Dick Cheney, because they hurt U.S. business. </div> <div>                   So there's a tension within the White House and within the </div> <div>                   conservative world between the national security interests of </div> <div>                   the country and the business interests. </div> <div>                   AMY GOODMAN: Just to get something straight, MICHAEL SCHERER. </div> <div>                   Cheney as vice president of the United States, former C.E.O. </div> <div>                   of Halliburton is still getting money from Halliburton, is </div> <div>                   that right? </div> <div>                   MICHAEL SHERER: Yeah. I think it's through a pension payment, </div> <div>                   that's right. And also he clearly cashed out when he left the </div> <div>                   company with quite a bit of money. </div> <div>                   AMY GOODMAN: I wanted to turn for a minute to ROGER ROBINSON, </div> <div>                   C.E.O. and president of Conflict Securities Advisory Group. He </div> <div>                   is former chair of the William Casey Institute--that is the </div> <div>                   former Director of Central Intelligence under Reagan, William </div> <div>                   Casey--and served as the senior director of International </div> <div>                   Economic Affairs under President Reagan. Welcome to Democracy </div> <div>                   Now! </div> <div>                   ROGER ROBINSON: Thank you very much. </div> <div>                   AMY GOODMAN: Can you talk about these companies and how you're </div> <div>                   tracking these companies in Iran? Would you agree with the </div> <div>                   assessment that it's legal? </div> <div>                   ROGER ROBINSON: Well, we developed, as was mentioned, a </div> <div>                   database with our partner company Investor Responsibility </div> <div>                   Research Center, that identifies and profiles about 400 </div> <div>                   publicly traded companies worldwide, that have business </div> <div>                   activities in the six State Department designated terrorist </div> <div>                   sponsoring states you mentioned. All of them except Cuba. As </div> <div>                   well as any publicly traded companies that have ever been </div> <div>                   associated or documented to be associated with the </div> <div>                   proliferation of weapons of mass destruction, or ballistic </div> <div>                   missiles. So we called this general new risk category in the </div> <div>                   markets global security risk. And we're finding that </div> <div>                   institutional investors, pension systems, mutual funds, </div> <div>                   others, are increasingly recognizing that these risks are </div> <div>                   valid and are asymmetric in nature that can affect share value </div> <div>                   and corporate reputation. We are an impartial information </div> <div>                   provider. This is the first risk assessment tool of its kind </div> <div>                   dealing with global security risk. And in the case of Iran, we </div> <div>                   found that there are over 200 publicly traded companies doing </div> <div>                   business in that country at the present time. Approximately 58 </div> <div>                   of which are doing business in the energy sector, as you </div> <div>                   mentioned, which is attractive to many foreign oil companies </div> <div>                   including our own. And as many as 41 of those may be in </div> <div>                   violation of--technically at least--of U.S. law in the form of </div> <div>                   the Iran/Libyan sanctions act. </div> <div>                   AMY GOODMAN: Can you talk about the actions of the New York </div> <div>                   City controller as well as the Pennsylvania State Assembly, to </div> <div>                   limit investments in companies that invest in countries like </div> <div>                   Iran? </div> <div>                   ROGER ROBINSON: Yes. New York city has been a model in trying </div> <div>                   to track these types of risks. They are -- they have gone </div> <div>                   forward with shareholder resolutions as was mentioned by </div> <div>                   Michael, directed toward General Electric, Halliburton and </div> <div>                   Conoco-Phillips in terms of the actions or activities of their </div> <div>                   subsidiaries in Iran and in the case of Conoco, both Iran and </div> <div>                   Syria. The concern they had was not so much that these </div> <div>                   companies were engaged in illegal activity, but that they </div> <div>                   might be skirting the spirit, if not the letter of U.S. law </div> <div>                   and that this could -- these activities in such higher risk </div> <div>                   countries could pose significant risks to share values and </div> <div>                   corporate reputations that have heretofore been unaccounted </div> <div>                   for. The New York city firefighters and police pension funds </div> <div>                   are taking the lead on this. We're pleased to say that we've </div> <div>                   have been able to make use of our global security risk monitor </div> <div>                   online service in trying to identify companies in their </div> <div>                   portfolios that have these kind of higher risk business </div> <div>                   involvements. And I believe that you're going to see more </div> <div>                   activity out of New York City this fall. </div> <div>                   AMY GOODMAN: ROGER ROBINSON, what do you think would happen if </div> <div>                   U.S. and other multi-national corporations were forced to pull </div> <div>                   out of Iran? </div> <div>                   ROGER ROBINSON: Well, it's hard for us in an impartial mode </div> <div>                   that we're in, to make public policy judgments. It is to say </div> <div>                   that obviously Iran is very dependent--as are the other </div> <div>                   terrorist sponsoring states--on the infrastructure support, </div> <div>                   and financing and business activity support, of publicly </div> <div>                   traded firms that are held by virtually all Americans in the </div> <div>                   market. These are the largest companies in the world. They're </div> <div>                   providing multi-billion dollar revenue flows to the Iranian </div> <div>                   government. Some have suggested that this helps them with </div> <div>                   predations like weapons of mass destruction programs and </div> <div>                   sponsorship of terrorism itself. But the point here is that if </div> <div>                   U.S. sanctions were even to be tightened under the Iran/Libyan </div> <div>                   sanctions format, these companies could be at significant risk </div> <div>                   from an investor perspective, and U.S. investors in general </div> <div>                   should be asking their mutual funds and pension systems, can </div> <div>                   they identify those companies that are doing businesses in </div> <div>                   these countries like Iran and if so, what risk mitigation </div> <div>                   strategies are they pursuing. </div> <div>                   AMY GOODMAN: MICHAEL SCHERER, you write Hewlett-Packard, </div> <div>                   Kodak, Proctor & Gamble, are all shipping their products to </div> <div>                   Dubai where third parties are known to re-export goods to </div> <div>                   Iran. </div> <div>                   MICHAEL SCHERER: It's a separate -- it's a separate process </div> <div>                   where by manufacturers of consumer goods, a number of them </div> <div>                   American companies, will ship their products to resellers in a </div> <div>                   third country then those resellers will buy them and reship </div> <div>                   them across the sea to Iran. Technically it's illegal to sell </div> <div>                   anything to a third party knowing that these goods will end up </div> <div>                   in a country that is sanctioned by the U.S. government. But </div> <div>                   there is a veil of ignorance that is claimed by a lot of these </div> <div>                   companies. So you have a huge portion of Dubai's export market </div> <div>                   going to Iran and a significant portion of that is not goods </div> <div>                   that are being created in Dubai. They're goods that are being </div> <div>                   imported to Dubai. So it's another way that these sanctions </div> <div>                   are skirted. </div> <div>                   AMY GOODMAN: It's interesting on the one hand you have </div> <div>                   President Bush saying Iran is part of the axis of evil. On the </div> <div>                   other hand you have vice-president Cheney handsomely </div> <div>                   profiting, his former company certainly profiting from doing </div> <div>                   business in Iran. And then I'm wondering if you can comment on </div> <div>                   that and then talk--expand it a little to what Halliburton is </div> <div>                   doing in the rest of the world. Mother Jones has a very </div> <div>                   interesting two-page spread in the July-August issue by you, </div> <div>                   The World According to Halliburton, a map of the world with </div> <div>                   Halliburton investments overlaid on it. </div> <div>                   MICHAEL SCHERER: Well, like I said before I think there is a </div> <div>                   split, an ideological split within the administration that </div> <div>                   hasn't fully been fleshed out. There's a difference between </div> <div>                   the president's public rhetoric about the dangers that these </div> <div>                   states pose to the U.S., and the White House's conduct in </div> <div>                   terms of dealing with these countries that are -- these </div> <div>                   American companies who are skirting sanctions. I spoke with a </div> <div>                   sanctions expert who said there's a power the U.S. is choosing </div> <div>                   not to use for some reason. On the second part of your </div> <div>                   question about Halliburton's work around the world. </div> <div>                   Halliburton is the major supplier of logistical support for </div> <div>                   the U.S. military. As a result, the military has expanded </div> <div>                   greatly around the world since September 11th, and as a result </div> <div>                   Halliburton has expanded with them. What I try to do in the </div> <div>                   map you mentioned is to figure out exactly what business </div> <div>                   Halliburton has gotten from defense-related government </div> <div>                   contracts since September 11th. The number I came up with, and </div> <div>                   this is dated already because these contracts continue to </div> <div>                   expand, was at least 2.2 billion dollars they have gotten as a </div> <div>                   result of defense related business since September 11th. </div> <div>                   They have gone into countries like Djibouti, Jordan and </div> <div>                   Turkey, Afghanistan obviously, the Republic of Georgia, and </div> <div>                   then they have continuing contracts in Bosnia and Kosovo and a </div> <div>                   number of other countries. Mostly maintaining U.S. military </div> <div>                   installations, doing laundry for troops, providing food for </div> <div>                   troops. But also planning logistical deployments in Iraq. </div> <div>                   They're working on the oil fields. They also were given task </div> <div>                   orders to build enemy prisoner of war camps for Iraqi </div> <div>                   prisoners of war. They've done foreign military sales work in </div> <div>                   the Republic of Georgia and military training there. So </div> <div>                   there's a wide range of different activities they're doing on </div> <div>                   behalf of the U.S. government and as the military expands </div> <div>                   overseas, that business expands as well. </div> <div>                   AMY GOODMAN: You are doing a weekly update of how much money </div> <div>                   Halliburton is making off Iraq. What's the latest? </div> <div>                   MICHAEL SCHERER: Well, it isn't a weekly update. We did update </div> <div>                   it two weeks ago when we put it online. And we put online </div> <div>                   basically a searchable database. You can click on different </div> <div>                   parts of this map and you can see each of the individual task </div> <div>                   orders at motherjones.com. But the oil service contract that </div> <div>                   the Army Corps of Engineers gave Halliburton earlier, it was a </div> <div>                   controversial contract because it was awarded without a </div> <div>                   competitive bid, because the U.S. military said Halliburton </div> <div>                   was the company that had done the planning on this. And they </div> <div>                   were in the best position to do this work. Originally it </div> <div>                   was-the amount awarded under this contract which is -- can </div> <div>                   expand up to $7 billion and functions so that as the U.S. </div> <div>                   government has work it needs to do, the contract automatically </div> <div>                   expands. There's to fixed price for what the tasks are. It was </div> <div>                   something like 30 million early this spring. Last time I </div> <div>                   checked it was well over 200 million. Just this week, </div> <div>                   Halliburton was awarded another contract for what initial </div> <div>                   figure is $200 million, but it's sure to expand, to do base </div> <div>                   support for the U.S. troops that are based in Iraq. </div> <div>                   AMY GOODMAN: MICHAEL SCHERER thanks for joining us. Washington </div> <div>                   correspondent for Mother Jones magazine as well as ROGER </div> <div>                   ROBINSON, C.E.O. and president of the Conflict Securities </div> <div>                   Advisory Group. Former chair of the Williams Casey institute, </div> <div>                   former Reagan advisor. You're listening to Democracy Now! When </div> <div>                   we come back we'll talk about Aceh, Indonesia and an American </div> <div>                   journalist who is being held by the Indonesian government, </div> <div>                   charged with five years in prison. Stay with us. </div> <div>                   To purchase an audio or video copy of this entire program, </div> <div>                   click here for our new online ordering or call 1 (888) </div> <div>                   999-3877.</div> <div>              Democracy Now! 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