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PROHIBITION ON FINANCIAL TRANSACTIONS WITH COUNTRIES SUPPORTING
TERRORISM ACT OF 1997
TUESDAY, JUNE 10, 1997
House of Representatives,
Subcommittee on Crime,
Committee on the Judiciary,
Washington, DC
The subcommittee met, pursuant to notice, at 10:05
a.m., in room 2237, Rayburn House Office Building, Hon. Bill McCollum
(chairman of the subcommittee) presiding.
Present: Representatives Bill McCollum, Steve
Chabot, Bob Barr, Asa Hutchinson, Howard Coble, and Charles E. Schumer.
Also present: Paul J. McNulty, chief counsel;
Nicole R. Nason, counsel; Kara R. Norris, staff assistant; and David
Yassky, minority counsel.
OPENING STATEMENT OF CHAIRMAN MCCOLLUM
Mr. MCCOLLUM. The meeting will come to
order.
Today, we begin consideration of H.R. 748, the
Prohibition on Financial Transactions with Countries Supporting Terrorism
Act of 1997, which I have cosponsored with Mr. Schumer, the ranking member
of this subcommittee.
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The bill will expand the scope of a key provision
in last year's antiterrorism bill, section 321, by eliminating overly
permissive regulations promulgated by the administration last year and
specifically listing exceptions to the prohibition.
In my view, the forces of militant extremism in
the Middle East and Africa are among the greatest international dangers
currently facing America and its vital interests. The deadly threat posed
by international terrorists must not be underestimated. We have all seen
pictures of the bloody slaughter caused by these violent criminals. Yet if
hatred and coldheartedness were all that these killers needed, the world
would be in even more danger than it already is.
Terrorists do need more than desire. They need
support. They need infrastructure. That is why the presence of
terrorist-supporting countries is so harmful to the world community. A
handful of pariah states—Cuba, Libya, North Korea, Iran, Iraq, Syria,
and Sudan—have been designated by the State Department, pursuant to
section 6(j) of the Export Administration Act, as terrorist-sponsoring
countries or terrorism-list governments.
No one should discount the significance of this
designation. Without the support of these countries, terrorists would
literally not have a home, much less active assistance of government
officials.
There should be no higher priority for the United
States than the battle against terrorism. In my opinion, there should be no
higher priority than the elimination of foreign government support for
terrorists. This is why section 321 of last year's antiterrorism bill is a
vital tool in the battle.
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This section was specifically and successfully
offered as an amendment to the antiterrorism bill by Mr. Schumer and
myself. The clear and unambiguous language of the provision states, in
part, whoever knowingly or having reasonable cause to know that a country
is designated as a country supporting international terrorism and engages
in a financial transaction with the government of that country shall be
fined under this title, imprisoned for not more than 10 years or both.
The term ''financial transactions'' is defined
very broadly to include transactions involving monetary instruments and
financial institutions.
This language was drafted with a dual purpose in
mind. First, by prohibiting financial support from terrorist countries to
U.S. persons, it attempts to prevent the long arm of terrorism from
reaching the shores of the United States through domestic entities. The
need for this prohibition came to light last year when the Rev. Louis
Farrakhan traveled to Libya and received a personal pledge of significant
financial support from Col. Muammar Qadhafi, an infamous supporter of
terrorism.
The second and broader purpose of the provision
was to prohibit all financial transactions by U.S. persons with these
countries regardless of where these transactions took place. This would
have the effect of cutting off terrorist-sponsoring governments from the
economic benefit of doing business with U.S. companies.
Since five of the seven terrorist-list governments
are already subject to economic sanctions as a result of executive order,
the immediate impact of the ban related particularly to Sudan and
Syria.
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In the course of drafting this amendment last
year, we were advised by the administration that the broad wording in the
prohibition would have unintended consequences particularly in the area of
diplomacy. We agreed to authorize the Department of the Treasury, in
consultation with the State Department, to issue regulations which provided
some exceptions to the ban.
We intended these regulations to exclude various
innocuous transactions that occur in the course of diplomatic activities
and other related official matters. Instead, in August of last year, the
Treasury Department published regulations in relation to section 321 which
essentially reversed the effect of the new prohibition.
These regulations permit all financial
transactions with Sudan and Syria other than those which pose a risk of
furthering domestic terrorism. The regulations prohibit U.S. persons from
receiving unlicensed donations, from engaging in financial transactions
with respect to which the U.S. person knows or has reasonable cause to
believe that the financial transaction poses a risk of furthering terrorist
acts in the United States.
Thus, these regulations completely ignore the
second purpose of the prohibition. They ensure a business-as-usual policy
and represent a step backward in the effort to isolate Syria and Sudan. The
regulations could also permit transactions with other terrorist-list
nations if the current executive order should ever be lifted.
Which brings us to H.R. 748. This bill closes the
loophole created by the administration's regulations and prohibits all
transactions other than those that are specifically connected to diplomatic
activities. The bill strips the executive branch of the authority to issue
regulations exempting transactions from the prohibition.
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It establishes, instead, a legislative exception
only for transactions incident to routine diplomatic regulations among
countries. By this, we mean only those transactions which arise when
officials of this country or representatives of a terrorist-supporting
country travel or engage in activities for diplomatic purposes.
For example, a cab ride from Kennedy Airport to
the United Nations building would not be included. Similarly, an American
diplomat traveling to Syria on official business would not be included.
Many will argue that H.R. 748 is too restrictive.
In addition to witnesses from the administration, we will hear today from
those who believe that H.R. 748 would unnecessarily restrict certain
activities that have been going on and may go on in the future which would
not necessarily be disadvantageous to American security.
Among the concerns that will be expressed are
those relating to the relief of human suffering in terrorist nations and
the impact of the legislation on currently existing business
investments.
I look forward to hearing these discussions. I
know that there are instances where we have to be very specific and,
perhaps, carve out some additional exceptions to those that are in the
bill. But there is a very strong desire on my part and I think on the part
of the members of this subcommittee to make sure that, in the process, we
are not watering down this legislation as the regulation that was
promulgated last year did.
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The intent is very strong. It is desired to
send a message. It is desired to cut off future transactions and
investments by private American business interests in Syria and in Sudan
and in other countries that are on the terrorist list with rare
exceptions.
It has never been the desire of this Member to try
to craft the detailed type of exceptions that I am sure we are going to now
have to put into statute. It was always my hope that this could be done by
leaving this entirely to the regulatory bodies of the administration.
But it does not appear, having experienced what we
just did this past year, that that is going to be a satisfactory solution.
As my colleague Mr. Schumer has said, a car bomb could be driven through
the loophole that was placed there by those regulations.
So here we are today. I look forward to, as I say,
hearing from the witnesses, both from administration and from private
industry, because we have got to draft something that is workable. We have
got to make sure that what we put out is the right thing to do. But it has
got to be tough, and it has got to carry the general message.
[The bill, H.R. 748, follows:]
INSERT OFFSET RING FOLIOS 1 TO 2 HERE
Mr. MCCOLLUM. I understand thatMr. Schumer
will be here this morning, though he is not able to be with us at this very
moment. In the meantime, I yield to my friend Mr. Coble, if he has any
comments.
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Mr. COBLE. I have no opening statement, Mr.
Chairman.
Mr. MCCOLLUM. Thank you very much, Mr.
Coble.
With that in mind, I will introduce our first
panel today. Our first panel this morning consists of Government witnesses
from the Departments of State and Treasury with special knowledge of
counterterrorism laws and activities.
From the State Department, we have William Ramsay,
the Deputy Assistant Secretary for Energy, Sanctions and Commodities of the
Bureau of Economic and Business Affairs. Mr. Ramsay is joined by the
Coordinator for Counterterrorism, Ambassador Philip Wilcox; and by the
Acting Legal Advisor, Michael Matheson.
We also have with us this morning Mr. Richard
Newcomb from the Department of Treasury. Mr. Newcomb is the Director of the
Office of Foreign Assets Control.
We welcome all of you this morning.
I am not sure exactly what procedure we are going
to use, but I assume, Mr. Ramsay, you would like to go first in this
process. Instead of moving from left to right or right to left, we will go
right to you; and, please, any statements you have will be made a part of
the record without objection. Hearing none, it is so ordered. You may
summarize or give us whatever thoughts you wish.
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STATEMENT OF WILLIAM C. RAMSAY, DEPUTY ASSISTANT SECRETARY OF STATE
FOR ENERGY, SANCTIONS AND COMMODITIES, BUREAU OF ECONOMIC AND BUSINESS
AFFAIRS, DEPARTMENT OF STATE, ACCOMPANIED BY AMBASSADOR PHILIP WILCOX,
COORDINATOR FOR COUNTERTERRORISM, AND MICHAEL MATHESON, ACTING LEGAL
ADVISOR
Mr. RAMSAY. Thank you, Mr. Chairman, Mr.
Coble. It is, in fact, a pleasure for me to be here to testify this
morning, because my last posting was in the Congo. I would certainly rather
be here.
H.R. 748 would flatly prohibit virtually all
financial transactions between U.S. persons and the governments of
terrorism-list countries.
We fully agree with your views on the importance
of taking unequivocal measures to compel state sponsors of terrorism to end
such involvement. Fighting international terrorism is one of this
administration's top priorities. Economic sanctions are an important tool
in this effort.
The United States is the world's leader in using
these pressures. In fact, the United States has the most stringent set of
laws of any country in imposing trade and other sanctions against state
sponsors of terrorism—an extensive package of sanctions which bites
when the Secretary of State formally designates a country as a
terrorist-list state.
We forbid the export of dual-use items which could
be used to support military or terrorism ends. We suspend military sales,
foreign aid and Eximbank credits. We deny them GSP. We oppose loans to them
in international financial institutions. We deny U.S. persons tax credits
for taxes paid to such countries.
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These sanctions are all relevant to a state's
support for terrorism. They are designed to deter further support by
depriving terrorist-list states of the means for that support and by
increasing their isolation from the international community.
Beyond that, additional sanctions on each of the
terrorist-list states—up to and including full
embargoes—reflect our individualized responses to the behavior of
these states, to their economic and military pressure points, and to our
relationships with each of them.
Each country has a different set of potential
vulnerabilities and circumstances. Thus, our sanctions are tailored for
maximum impact.
But in order to have that impact, we need
flexibility—flexibility to ratchet up the pressure, at the best time
and in new ways, or to ease it, if there is improvement—to offer
inducements as well as threaten punishments. We need flexibility to target
vulnerabilities, which vary from country to country. And we need
flexibility, including the timing of implementation, to enlist, wherever
possible, the participation of our friends and allies in a sanctions
regime.
Flexibility in designing specific measures is
vital to the success of sanctions. We have significant concerns with H.R.
748 because it is not inherently adaptable. Because it severely limits our
ability to focus sanctions measures so they are aimed at each regime's
vulnerabilities, we believe that H.R. 748 will have significant unintended
consequences that might divert and detract from our intended focus on
combatting terrorism.
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I would like to cite a few examples of the
problems we believe the bill will cause if it is enacted as written.
U.S. nationals could not receive payments for
claims from terrorist-list governments such as Iran, Iraq and Libya, even
if the payments were compensation for terrorist acts.
The United States could no longer be able to meet
its obligations under the Algiers Accords as well as under the 1996 Iran
Air Bank claims settlement.
U.S. media and American journalists, who work to
publicize companies in these countries, could no longer pay government
fees, such as transmission charges, necessary to work within the
terrorism-list countries.
The repatriation of MIA remains from North Korea
might have to cease, along with our involvement in the current freeze and
dismantlement of North Korea's nuclear weapons program.
U.S. participation in U.N. inspections in Iraq
might have to stop, effectively ending the U.N.'s mission of detecting and
destroying Iraq's weapons of mass destruction.
U.S. participation and activities to resolve
POW–MIA activities related to the Persian Gulf War could end.
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The orderly, legal and safe migration of Cubans to
the United States, one of the key elements of our Cuba policy, might be
hampered if monitoring of returnees is not deemed to be a routine
diplomatic function.
Donations of food, medicines and medical supplies,
payments for telecommunications services and facilities and direct mail to
Cuba might also have to cease.
The U.S. role in serving as an effective
intermediary between Israeli and Syria and their pursuit of a peaceful
resolution of their differences would be jeopardized.
H.R. 748 could bar the U.S. Government from
funding or directing humanitarian assistance programs in countries like
Sudan, Iraq, and North Korea. Since 1988, the U.S. Government has been the
leading contributor of humanitarian assistance to Sudanese civilians
suffering from civil war and natural disasters. Most of this assistance is
provided through U.N. agencies and operations.
As Secretary Albright has said, there is no cookie
cutter approach to foreign policy. There is no uniform template by which we
shape or mold our relations in precisely the same pattern for each
country.
Our interest in combatting terrorism is a constant
and basic objective shaping our policy. But while our goals and principles
remain constant, our tactics must be flexible to be effective. The
differing interests we have in each country and the differing circumstances
of each country must necessarily shape the political and practical measures
we use to combat terrorism.
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There are many ways to impose sanctions on a
country without causing the foreign policy consequences I have described.
To use sanctions in an effective way, we must resort to them only when
there is compelling need and after we have carefully assessed the benefits
and costs. Specifically, we weigh the impact we hope the sanction will have
on the behavior or policies of the targeted country against the
identifiable costs to U.S. interests, including our trade and investment,
international obligations and overall economic competitiveness.
The administration's policy is to enlist other
nations to support us in imposing sanctions against the targeted nation
whenever possible. A multilateral approach can serve two objectives: to
maximize the effectiveness of the sanctions by making them as universal as
possible, and to distribute the costs of sanctions among other nations to
achieve more equitable burden-sharing.
Country policies are subject to review in light of
the changing conditions and vulnerabilities of the target country; and, in
fact, our policy towards Sudan, for example, is the subject of a current
review. And when changes are necessary in an economic sanctions regime, we
already have the legal tools we need to do the job.
Mr. Chairman, as we examine ways to make our
sanctions policy more effective in deterring state support for terrorism,
we pledge to consult closely with you and other members of the committee in
pursuit of a common position that is best for the United States.
That concludes my remark, Mr. Chairman; and I
would be happy to answer or take any questions you may have.
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[The prepared statement of Mr. Ramsay
follows:]
PREPARED STATEMENT OF WILLIAM C. RAMSAY, DEPUTY ASSISTANT SECRETARY FOR
ENERGY, SANCTIONS AND COMMODITIES, BUREAU OF ECONOMIC AND BUSINESS AFFAIRS,
DEPARTMENT OF JUSTICE
The Chairman, thank you very much for the
opportunity to testify today on H.R. 748.
H.R. 748 would flatly prohibit virtually all
financial transactions between U.S. persons and the governments of
terrorism-list countries.
We fully agree with your views on the importance
of taking unequivocal measures to compel state sponsors of terrorism to end
such involvement. Fighting international terrorism is one of this
Administration's top priorities. Economic sanctions are an important tool
in this effort.
The United States is the world's leader in using
these pressures. In fact, the U.S. has the most stringent set of laws of
any country in imposing trade and other sanctions against state sponsors of
terrorism—an extensive package of sanctions which bites when the
Secretary of State formally designates a country as a terrorist-list state.
We forbid the export of dual-use items which could be used to support
military or terrorism ends. We suspend military sales, foreign aid, and
Ex-Im credits. We deny them GSP. We oppose loans to them in international
financial institutions. We deny U.S. persons tax credits for taxes paid to
such countries. These sanctions are all relevant to a state's support for
terrorism. They are designed to deter further support by depriving
terrorist list states of the means for that support, and by increasing
their isolation from the international community.
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Beyond that, additional sanctions on each of the
terrorist-list states—up to and including full
embargoes—reflect our individualized responses to the behavior of
these of these states (which varies); to their economic and military
pressure points; and to our relationships with each of them.
Each country has a different set of potential
vulnerabilities and circumstances. Thus, our sanctions are tailored for
maximum impact.
But in order to have that impact, we need
flexibility—flexibility to ratchet up the pressure, at the best time,
and in new ways, or to ease it, if there is improvement—to offer
inducements, as well as threaten punishments. We need flexibility to target
vulnerabilities, which vary from country to country. And we need
flexibility, including the timing of implementation, to enlist, wherever
possible, the participation of our friends and allies in a sanctions
regime.
Flexibility in designing specific measures is
vital to the success of sanctions. We have significant concerns with H.R.
748 because it is not inherently adaptable.
Because it severely limits our ability to focus
sanctions measures so they are aimed at each regime's vulnerabilities, we
believe that H.R. 748 will have significant unintended consequences that
might divert and detract from our intended focus on combating
terrorism.
The following recitation is a partial list of the
problems we believe the bill will cause if enacted as written.
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U.S. nationals could not receive payment for claims from terrorist-list
governments, such as Iran, Iraq, and Libya, even if the payments were
compensation for terrorist acts;
The intellectual property rights of Americans might be jeopardized, if
U.S. nationals are not permitted to engage in transactions necessary to
register and maintain these rights in the targeted countries;
U.S. media and American journalists, who work to publicize conditions in
these countries, could no longer pay government fees, such as transmission
charges, necessary to work within terrorism list countries;
We might not be able to provide aid or assistance in support of democracy
in these countries;
The repatriation of MIA remains from North Korea might have to cease,
along with our involvement in the current freeze and dismantlement of North
Korea's nuclear weapons program;
U.S. participation in UNSCOM inspections in Iraq might have to stop,
effectively ending UNSCOM's mission of detecting and destroying Iraq's
Weapons of Mass Destruction programs;
U.S. participation in UNIKOM, which monitors the Iraq-Kuwait border, could
end;
U.S. participation in activities to resolve POW/MIA issues related to the
Gulf War could end;
U.S. participation in the implementation of UNSC Resolution 986 (Iraqi oil
for food) might have to cease;
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Our Interests Section in Havana could be forced to close, since it is not
clear that it would fall within the scope of ''routine diplomatic
relations'' as provided for in H.R. 748.
The orderly, legal, and safe migration of Cubans to the United States, one
of the key elements of our Cuba policy, may be hampered if monitoring of
returnees is not deemed to be a ''routine diplomatic function.''
It is unclear whether the ''Support for the Cuban People'' provisions,
including humanitarian assistance, as authorized by the 1992 Cuban
Democracy Act would continue to apply. The 1992 legislation is a key
element in U.S. efforts to build a civil society and lay the groundwork for
a peaceful democratic transition in Cuba;
Donations of food, medicines and medical supplies, payments for
telecommunications services and facilities, and direct mail to Cuba might
have to cease;
The ability of the U.S. to host international sporting events such as the
Olympics could be jeopardized if teams from terrorist-list countries could
not participate;
Ordinary transactions by U.S. citizens living in terrorist-list countries,
including religious missionaries and employees of humanitarian
organizations, could become criminal acts—for example paying a
telephone or electricity bill to a state-owned utility;
The U.S. could no longer be able to serve as an effective intermediary
between Israel and Syria in their pursuit of a peaceful resolution of their
differences;
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H.R. 748 could bar the USG from funding or directing humanitarian
assistance programs in countries like Sudan, Iraq, and North Korea. Since
1988, the USG has been the leading contributor of humanitarian assistance
to Sudanese civilians suffering from civil war and natural disasters. Most
of this assistance is provided through UN agencies and operations;
The law could bar U.S. commercial airlines from making payments to
terrorism-list governments for use of commercial air corridors, thus
requiring route alterations or relocation of airline operations, and
creating potential risks to air safety;
U.S. citizen travel to terrorism-list countries, if it involved payment of
visa fees or other taxes, user fees or charges incidental to normal travel
transactions, could become illegal; and
Students from terrorism list countries might not receive government
stipends for study in US institutions (potentially leaving them unable
either to return to their countries or continue their studies).
As Secretary Albright has said, there is no
''cookie cutter'' approach to foreign policy—there is no uniform
template by which we shape or mold our relations in precisely the same
pattern for each country.
Our interest in combating terrorism is a constant
and basic objective shaping our policy. But while our goals and principles
remain constant, our tactics must be flexible to be effective. The
differing interests we have in each country and the differing circumstances
of each country must necessarily shape the practical measures we use to
combat terrorism.
Page 18 PREV PAGE TOP OF DOC
There are many ways to impose sanctions on a
country without causing the foreign-policy consequences I described. To use
sanctions in an effective way, we must resort to them only when there is a
compelling need and after we have carefully assessed the benefits and
costs. Specifically, we weigh the impact we hope the sanction will have on
the behavior or policies of the targeted country, against the identifiable
costs to U.S. interests—including our trade and investment,
international obligations, and overall economic competitiveness.
The Administration's policy is to enlist other
nations to support us in imposing sanctions against a targeted nation
whenever possible. A multilateral approach can serve two objectives: to
maximize the effectiveness of the sanctions by making them as universal as
possible, and to distribute the costs of sanctions among other nations to
achieve more equitable burden-sharing.
Country policies are subject to review in light of
the changing conditions and vulnerabilities of the target country—and
in fact, our policy toward Sudan, for example, is the subject of a current
review. And when changes are necessary in an economic sanctions regime, we
already have the legal tools we need to do the job.
Mr. Chairman, as we examine ways to make our
sanctions policy more effective in deterring state support for terrorism,
we pledge to consult closely with you and other members of the Committee,
in pursuit of a common position that is best for the United States.
That concludes my remarks and I would be happy to
answer or take any questions you may have.
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STATEMENT OF R. RICHARD NEWCOMB, DIRECTOR, OFFICE OF FOREIGN ASSETS
CONTROL, DEPARTMENT OF THE TREASURY
Mr. MCCOLLUM. Mr. Newcomb, as the
representative of the Treasury Department, you should be the next witness;
please proceed.
Mr. NEWCOMB. Thank you.
Mr. Chairman, members of the committee, I wish to
thank you for inviting me to testify at your hearing today.
The Office of Foreign Assets Control of the
Treasury Department administers economic sanctions and embargo programs
against specific foreign countries or groups to further U.S. foreign policy
and national security objectives. In administering programs, we generally
rely on presidential authority contained in the Trading with the Enemy Act
or the International Emergency Economic Powers Act and specific legislation
to prohibit or regulate commercial or financial transactions with specific
foreign countries or groups.
As our function is to implement and enforce
sanctions and embargo programs, my comments this morning are addressed to
sanctions administration and the vital role that licensing plays in the
successful implementation of our programs.
Our sanctions programs on the seven countries
designated by the State Department as supporting international terrorism
are quite diverse and carry different foreign policy guidance. Without the
ability, through general and specific licenses, to tailor sanctions
programs to the realities that we see on a day-to-day basis and to wholly
unforeseeable situations that arise daily, sanctions' usefulness would be
lost as an instrument for the defense of U.S. foreign policy, national
security and economic interests.
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H.R. 748 would amend the current law, section 321
of the Antiterrorism Act, to repeal all executive flexibility in
administering the prohibition on financial transactions against terrorist
supporting governments, permitting only transactions incident to routine
diplomatic relations among countries. This codification would drastically
alter preexisting sanctions programs against five of the seven
terrorist-supporting governments and seriously infringe the President's
ability to conduct foreign policy and use sanctions to respond quickly and
flexibly to changing situations in embargoed countries.
In each of our sanctions programs on terrorist
countries, the scope of the prohibitions and of OFAC licensing policy and
practice responds to specific national security, foreign policy or economic
conditions. In the case of Iran, for example, we have administered a full
blocking of government assets with comprehensive trade sanctions beginning
in 1979 through 1981, import prohibitions from 1987 until 1995, and
comprehensive sanctions on trade in goods and services without the blocking
of assets from May 1995 to the present.
In Cuba from 1963 to the present and North Korea
from 1950 to the present, we have administered comprehensive blocking and
trade sanctions applicable both to the governments and all nationals of
these countries.
With respect to Libya from 1986 to the present and
Iraq from 1990 to the present, comprehensive blocking of government assets
and trade sanctions are in place.
However, unlike Cuba and North Korean nationals,
Libya and Iraqi nationals' assets are not blocked. Pursuant to United
Nations sanctions, transfers to persons in Iraq are prohibited. There are
prohibitions against travel transactions to Libya, Iraq, and Cuba, but
travel transactions are permitted by general license under the North Korean
sanctions and are exempt by statute with respect to the current program on
Iran.
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These variations are not haphazard but reflect the
specific policy context in which each program has been developed.
In each of those programs, general and specific
licensing policies have been adopted to minimize unintended human suffering
while accomplishing program goals and to reflect general interests of the
United States.
Examples of the former include licenses permitting
expenditures relating to travel for family reunification purposes to visit
sick and dying relatives in Cuba; permitting participation in amateur and
nonpolitical international athletic competitions and people-to-people
exchanges; allowing limited fund to be transferred to close relatives so
they can emigrate from Cuba; authorizing humanitarian relief for the people
of North Korea and Iran suffering from natural disasters; permitting
families to stay with their immediate families in Libya; dispersing U.S.
vaccines to combat epidemics; bringing home the remains of Americans who
died overseas and administering decedents estates in target countries;
allowing payments for boat repairs if a U.S. vessel, for example, may be
blown into a target country's waters during a storm. This list could be
expanded.
Among the authorizations serving U.S. interests
are licenses permitting travel payments related to journalism; the
compensation of successful U.S. claimants in the Iran-United States Claims
Tribunal in The Hague from Iranian government funds; reciprocal United
States and target country intellectual property protection; payments when
it is necessary to overfly target country airspace or for emergency
landings; the acquisition and sale of publications and informational
materials; and a wide range of humanitarian donations, remittances, family
payments, and other type of travel-related payments.
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In removing licensing authority over financial
transactions by United States persons with regard to the governments of
Cuba, Iran, Iraq, Libya, North Korea, Sudan, and Syria, H.R. 748 would not
only adversely affect the President's constitutional responsibility to
conduct the foreign affairs of the United States, it would also eliminate
Treasury's Office of Foreign Assets Control's ability to make decisions
about very human and often unforeseen events and potentially could cause
great suffering for unintended and untargeted third parties.
Thank you, Mr. Chairman. I will be glad to answer
questions you have on this.
Mr. MCCOLLUM. Thank you, very much, Mr.
Newcomb.
[The prepared statement of Mr. Newcomb
follows:]
PREPARED STATEMENT OF R. RICHARD NEWCOMB, DIRECTOR, OFFICE OF FOREIGN
ASSETS CONTROL, DEPARTMENT OF THE TREASURY
Members of the committee, thank you for inviting
me to testify at your hearing today.
GENERAL BACKGROUND
The Office of Foreign Assets Control (OFAC)
administers economic sanctions and embargo programs against specific
foreign countries or groups to further U.S. foreign policy and national
security objectives. In administering these programs, OFAC generally relies
upon Presidential authority contained in the Trading With the Enemy Act
(TWEA) or the International Emergency Economic Powers Act (IEEPA), or upon
specific legislation, to prohibit or regulate commercial or financial
transactions with specific foreign countries or groups.
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Examples of current TWEA programs include
comprehensive asset freezes and trade embargoes against North Korea and
Cuba. Examples of current IEEPA programs include similarly broad sanctions
against Libya, Iraq, the Cali Cartel, and certain foreign terrorist groups,
as well as comprehensive trade sanctions against Iran.
From time to time, sanctions have been imposed by
Congress directly through legislation. Between 1986 and 1991, for example,
OFAC administered the trade and investment prohibitions against South
Africa mandated by the Comprehensive Anti-Apartheid Act. Similarly, OFAC
has been delegated administration of Section 321 of the Antiterrorism and
Effective Death Penalty Act of 1996 (the Act), which was signed into law by
the President on April 24, 1996.
SECTION 321
Section 321 of the Act prohibits all financial
transactions by United States persons with the governments of
terrorism-supporting nations designated under section 6(j) of the Export
Administration Act, except as provided in regulations issued by the
Secretary of Treasury, in consultation with the Secretary of State. The Act
prohibited all financial transactions by U.S. persons with: North Korea,
Cuba, Iran, Libya, Iraq, Syria, and Sudan.
All but Syria and Sudan were the subject of
existing comprehensive financial and trade embargoes at the time of
enactment. In accordance with foreign policy guidance provided to Treasury
by State, existing sanctions programs against North Korea, Cuba, Iran,
Libya, and Iraq were continued without change. This permitted the specific
policies developed over time with respect to each of these countries to
remain in effect, including the exceptions to each embargo dictated by
unique humanitarian, diplomatic, news gathering, intellectual property, and
other concerns.
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New regulations, known as the Terrorism List
Governments Sanctions Regulations, were issued August 23, 1996 to impose
the prohibitions on financial transactions with respect to Syria and Sudan.
While most transactions are currently authorized, the new regulations,
drafted in consultation with the Department of State, do prohibit financial
transactions which involve transfers from those governments in the form of
donations and transfers with respect to which U.S. persons know or have
reasonable cause to believe that there is a risk of furthering terrorist
acts in the United States.
From a sanctions enforcement perspective, we
believe the Act and implementing regulations are important because they
provide OFAC with comprehensive jurisdiction over all financial
transactions between U.S. persons and the Governments of Syria and Sudan.
We now have authority to act to stop or impede any particular suspicious
transfer to or from these governments by informing U.S. persons handling
the transfer that a reasonable cause exists to believe that the transaction
may pose a risk of furthering terrorist activity in the United States. We
believe the Act's authority provides a significant new tool to prevent
funding of terrorist activities in the U.S.
H.R. 748
H.R. 748 would amend the current law, section 321
of the Antiterrorism Act, to repeal all Executive flexibility in
administering the prohibition on financial transactions against terrorism
supporting governments, permitting only transactions incident to routine
diplomatic relations among countries. This codification would drastically
alter pre-existing sanctions programs against five of the seven
terrorism-supporting governments, and seriously infringe the President's
ability to conduct foreign policy and use sanctions to respond quickly and
flexibly to changing situations in embargoed countries.
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OFAC's function is to implement and enforce
sanctions programs. For that reason, my comments are addressed to sanctions
administration, and the vital role that licensing plays in the successful
implementation of our programs. Our sanctions programs on the seven
countries designated by the State Department as supporting international
terrorism are quite diverse, and carry different foreign policy guidance.
Without the ability—through general and specific licenses—to
tailor sanctions programs to the real world and to wholly unforeseeable
situations that arise daily, sanctions' usefulness would be lost as an
instrument for the defense of U.S. foreign policy, national security, and
economic interests.
In each of our economic sanctions programs on
terrorist countries, the scope of the prohibitions and of OFAC licensing
policy and practice responds to specific national security, foreign policy
or economic conditions. In the case of Iran, we have administered a full
blocking of government assets with comprehensive trade sanctions
(1979–81), import prohibitions (1987–95), and comprehensive
sanctions on trade in goods and services without the blocking of assets
(May 1995-date). In sanctions on Cuba (1963-date) and North Korea
(1950-date), we have administered comprehensive blocking and trade
sanctions applicable both to the governments and all nationals of these
countries. With respect to Libya (1986-date) and Iraq (1990-date),
comprehensive blocking of government assets and trade sanctions are in
place. However, unlike Cuban and North Korean nationals, Libyan and Iraqi
nationals' assets are not blocked. Pursuant to United Nations sanctions,
transfers to persons in Iraq are prohibited. There are prohibitions against
travel transactions to Libya, Iraq, and Cuba, but travel transactions are
permitted by general license under the North Korean sanctions, and are
exempt by statute for Iran. These variations are not haphazard, but reflect
the specific policy contexts in which each program has developed.
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In each of these programs, general and specific
licensing policies have been adopted to minimize unintended human suffering
while accomplishing program goals and to reflect general interests of the
United States.
Examples of the former include licenses permitting
expenditures related to travel to visit sick and dying relatives in Cuba;
permitting participation in amateur and nonpolitical international athletic
competitions and people to people exchanges; allowing limited funds to be
transferred to close relatives so that they can emigrate from Cuba;
authorizing humanitarian relief for the people of North Korea and Iran
suffering from natural disasters; permitting husbands, wives, sons and
daughters to stay with their immediate families in Tripoli; dispensing U.S.
vaccines to combat the outbreak of epidemics; bringing home the remains of
Americans who have died overseas and administering decedents estates in
target countries; allowing payments for boat repairs when a U.S. vessel has
been blown into target country waters during a storm. The list goes on and
on.
Among the authorizations serving U.S. interests
are licenses permitting travel payments related to journalism; the
compensation of successful U.S. claimants in the Iran-U.S. Claims Tribunal
in The Hague from Iranian Government funds; reciprocal U.S. and target
country intellectual property protection; payments when it is necessary to
overfly target country airspace or for emergency landings; the acquisition
and sale of publications, information and information materials; and a wide
range of humanitarian donations, remittances, family payments, and
travel-related transactions.
In removing licensing authority over financial
transactions by U.S. persons with the governments of Cuba, Iran, Iraq,
Libya, North Korea, Sudan and Syria, H.R. 748 would not only adversely
affect the President in his Constitutional responsibility to conduct the
foreign affairs of the United States, it would also eliminate OFAC's
ability to make rational decisions about very human and often unforeseen
events and cause great suffering for unintended and untargeted third
parties.
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Thank you.
Mr. MCCOLLUM. Ambassador Wilcox, Mr.
Matheson are you here to make statements or in just a supportive capacity?
We would welcome any statements you may have.
Mr. WILCOX. Mr. Chairman, I have not
submitted a statement. I would be pleased to answer your questions and to
comment on any aspect of this.
I would be prepared to comment on our view toward
Syria and Sudan with respect to their support for international terrorism,
the differences between those two countries and any other aspect of
this.
Mr. MCCOLLUM. Well, why don't I yield
myself 5 minutes? We will go from there.
I will ask you that question right off the bat,
then, Ambassador Wilcox. I understand that we have a terrorist list of
countries. There are seven of them. Iran, Iraq, Libya and so on are
included in this list. But Syria and Sudan don't have embargoes against
them right now. Why are we treating them differently? I understand they are
terrorist countries like everybody else.
Mr. WILCOX. Mr. Chairman, let me say, first
of all, that we very much welcome your support and commitment to doing
everything the United States government can to minimize the threat of
international terrorism and to bring pressure to bear against state
sponsors of terrorism to stop this reprehensible activity.
Page 28 PREV PAGE TOP OF DOC
We do seek a workable means of doing this. We
have, over the years, I think, achieved a wide variety of measures against
these seven states. All of these states are different; and, as Mr. Ramsay
said, we believe that our sanctions policy toward each of these states
should be tailored to the particular kind of terrorism they support, the
degree of their culpability, and other foreign policy factors.
The threshold level of sanctions that apply to all
of the seven state sponsors represent a very substantial package of
sanctions. And they should. Those sanctions have been applied vigorously
over the years because they represent the kind of pressure we want to bring
to bear against states which in any way support international terrorism and
meet our definition of state sponsors.
Beyond that, we believe that the President needs
flexibility to choose the particular measures and the right combination of
measures. The one-size-fits-all policy does not work and, indeed, could
have adverse consequences for the United States.
Mr. MCCOLLUM. Why Syria and Sudan? Why are
they different? What makes them different?
Mr. WILCOX. Let me address Sudan. The press
reports have given a mistaken impression that somehow we have been lenient
toward Sudan. That is not true. We have taken the lead among nations, for
example, in the United Nations, in promoting new multilateral sanctions
against Sudan. We have had some success. But that task is not complete yet,
so we are continuing to press it.
Page 29 PREV PAGE TOP OF DOC
The thrust of that effort is to impose aviation
sanctions against Sudan. We hope we will succeed. Sudan is a different
case, in some respects, from countries like Iran and Libya and Iraq, which
are more flagrant offenders and more actively involved in state sponsorship
of terrorism than Sudan.
Since former Secretary Christopher designated
Sudan as a state sponsor of terrorism in 1993, we had a very intensive
dialogue with Sudan. That is a distinctive feature, too. We do have
diplomatic relations with Sudan, whereas we do not with five of the state
sponsors. And in that dialog, we have made very clear our requirements.
To some extent, the Sudanese have responded
positively. For example, the world's leading terrorist financier, Usama bin
Laden, at our request was expelled from Sudan in May, 1996. That was a
significant step. He has not been permitted to return. He is now hiding in
Afghanistan, and we think that has reduced his capability to finance
terrorist activities around the world.
Sudan has also told us that it has removed members
of the Abu Nidal organization from Sudanese territory. We are very
skeptical of that claim. Instead, we have evidence that that has not taken
place. Sudan, at our request, has closed a terrorist training camp which
was used by resident terrorist groups for terrorist training; and our
embassy has visited that camp and inspected it.
Now those are positive steps. But, on balance,
Sudan's response has not been satisfactory. Sudan still needs to do more to
change its behavior. The steps that it taken are perhaps only tactical;
but, nevertheless, Sudan has been responsive to some extent, because we
have had a dialogue with them.
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We think that if further sanctions are to be
brought to bear they should be focused and tailored to the need. We do not
think that the situation in Sudan is immutable, but we are skeptical that
at any time soon their performance is going to change.
I see the red light is on. I
could——
Mr. MCCOLLUM. No, you can continue to talk.
That is really for me. That is my own flag. Please continue.
I want to hear the answer to this question because
it is the very crux of the problem with regard to what we need to decide
here today, and our committee members need to hear it. Unfortunately, there
are only two or three of us here because it is the first day back, but we
are still going to ask you quite a few questions, and I will be liberal
with Mr. Coble, Mr. Hutchinson or anybody else that comes in. So please
proceed.
Mr. WILCOX. Thank you.
We certainly do want to continue our discussions
with you, Mr. Chairman, and the members of the committee on what measures
could be appropriate for Sudan which would be most likely to achieve our
shared policy objective, and to do it in a way that would not create
adverse consequences for other U.S. foreign policies. So we hope that we
can do that, sir.
Mr. MCCOLLUM. Before we go into Syria, let
me ask you to clarify why you think Sudan is different now.
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Even though you have told us you think Sudan has
taken some positive steps, isn't it true that Sudan still does things in
harboring terrorist activities or looking the other way or allowing their
properties to be utilized for the basing of terrorist training and so?
Mr. WILCOX. Absolutely. Sudan's record, as
I said, is, on balance, still very negative. Sudan has not redeemed itself
and is still a state sponsor of terrorism because it continues to harbor
terrorist groups on Sudanese soil.
We do not have information that those groups in
Sudan are using Sudan as a base for planning and plotting terrorist attacks
in other countries today, although we do have some evidence that that was
true in the past.
For example, we believe that the Sudanese
government knew about the plot to attack President Mubarak in Addis Ababa
before that attack took place; and the Sudanese government has defied our
wishes and those of the U.N. Security Council in refusing to deliver up
those suspected terrorists to justice for that attempted assassination. So
Sudan certainly has not redeemed itself and is deserving of continued
treatment as a state sponsor.
The severity of Sudan's offenses, though, as I
said, are somewhat different from those of countries like Iran. Sudan does
not carry out direct terrorist attacks overseas; Sudan does not assassinate
its political enemies abroad. Sudan has not been involved, in a tactical or
operational sense, in efforts to use terror to undermine the Middle East
peace process, although Sudan has refused to acknowledge the existence of
the State of Israel and to support the peace process.
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Mr. MCCOLLUM. What makes Syria different? I
am not going to dominate the whole time—you almost should have been a
witness today in your own right by reason of your specialty in regard to
terrorism. So from the terrorist perspective, please tell us about Syria
and what makes it different from other terrorist-list nations.
Mr. WILCOX. Although it is not my
bailiwick, I want to note that the United States has other very serious
problems with Sudanese behavior: its gross violation of its human rights of
its citizens, its perpetuation of a cruel civil war that has brought
terrible harm and suffering and its subversive activities which contribute
to instability in neighboring countries. Those are other reasons why we
have serious problems with Sudan and reasons toward which any new policy
measure should be directed.
Turning to Syria, since 1986, and indeed for
decades, Syria has harbored Palestinian extremist terrorist organizations
in Damascus. It has supported the Hezbollah in Syrian-controlled areas of
Lebanon. For these reasons, the United States has designated Syria as a
state sponsor of terrorism.
Another major Syrian offense took place back in
the late 1980's when the Syrian Government was involved in a plot to blow
up an airliner bound for Israel at London's Heathrow Airport.
Since 1986, when that happened, there has been no
further direct involvement of Syria in acts of terrorism that we know of.
Syria, however, has continued to harbor these terrorist groups in Damascus
and has retained a relationship with Hezbollah. For that reason, we have
kept Syria on our list; and we intend to do so until those policies
change.
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For the last 3 years, Syria has parted company
with the other state sponsors by acknowledging and committing itself to a
peace process with Israel. That is a major departure for any state sponsor
of terrorism. None of the others in the Middle East have done so.
Syria has been involved, on a periodic basis, in
very intensive negotiations with the State of Israel under a process which
the United States has sponsored and served as the principal mediator. The
success of that process, Syrian-Israeli peace, is a strategic objective for
the United States and for our friends in the region, including the
Government of Israel and our Arab friends there.
That is a very important foreign policy objective.
We would not wish to impose new sanctions on Syria how if those sanctions
could risk the future of Syrian engagement in the peace process.
There is no active negotiation at the moment
between Syria and Israel, but we believe that it will be resumed at some
stage.
Syria has also, from time to time, intervened in a
positive way in southern Lebanon to restrain the Hezbollah from terrorist
attacks across the Israeli border into civilian settlements in northern
Israel.
Back in the early 1990's Syria was also helpful in
facilitating the release of American hostages who were held hostage by
Hezbollah terrorists in Lebanon. None of that is enough to mitigate Syria's
continued permission for these groups to maintain activities in Damascus
and in the Syrian-controlled Bekaa Valley, so we will keep Syria on the
list for that reason.
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Mr. Chairman, there are other factors which I
cannot discuss in this open hearing which bear upon the safety and security
of Americans. I would be pleased to brief any members of the committee on
this in private session. But that is another factor in our approach to
Syria and in our calculus on whether or not new sanctions against Syria
would be a positive way of changing its behavior towards support for
terrorism.
In short, we do not believe that sanctions would
have that effect. Indeed, we think they would have a counterproductive
effect. So the administration does not support the extension of sanctions
against Syria.
Mr. MCCOLLUM. Well, let me get a clear
understanding from all of you in relation to Syria, then I will go to Mr.
Coble for questions.
My understanding today is that the
administration's position on the legislation before us is that you would
like to see it modified in terms of some exceptions or with more
specificity than it has today with regard to the terrorist-list
countries—maybe even tailored with regard to Sudan. It is also my
understanding that it is your position that there should be no financial
transaction restrictions whatsoever with regard to Syria. Is that correct?
That you want a complete exception for Syria?
Mr. Ramsay.
Mr. RAMSAY. I would say at this time, Mr.
Chairman, that the administration is keeping under review all of the
terrorist-list states and can adjust the sanction of each of the
terrorist-list states as a function of how our policies and relations with
them evolve. Our review of H.R. 748 is that it causes a lot of collateral
problems that are probably unintended which could conceivably be fixed by
H.R. 748 but needn't be fixed by legislation at all.
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Mr. MCCOLLUM. Well, Mr. Ramsay, let me
interrupt you tell you that it would be highly desirable to give you the
flexibility. But when we gave it to you last time—and we really gave
it through Mr. Newcomb and the Treasury Department that was an
unsatisfactory result.
I read in my opening statement the liberality you
took in your interpretation of the legislation and that was not acceptable
to Congress. It was our desire to tighten that noose.
There is a difference, I suppose, in our opinion
about foreign policy, but this legislation deals with more than just
foreign policy—it deals with terrorism, with activities of the
highest order of concern to this Congress.
So, consequently, just let me say up front that,
unless I am sadly mistaken about the temperament of my colleagues on this
committee, we intend to proceed with, at the very least, some specifically
defined language with regard to financial transactions.
Now we may well grant some exceptions to these
transactions in order to allow for conditions and circumstances that have
to be here. I realize we are not capable and really shouldn't be in the
business of micromanagement; but, to some extent or another, we are going
to get a bit more involved than normal just because we are not happy with
the product you've given us.
Is my understanding correct that the
administration, would want to have a total exemption for Syria and some
specifically staggered exemptions and various targeted exemptions or
exceptions, if you will, for some of these other terrorist-list countries
rather than the blanket language which is in the bill today?
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Mr. RAMSAY. Well, Mr. Chairman, we
understand that it is your intention—the committee's intention to
proceed with H.R. 748; and we have thought about the possibility of
exemptions for one country or the other under some kind of adjusted H.R.
748. But our view is I think our interests—the U.S. interests are
best served by our common view of terrorism and our common view of the
desire to stem terrorism and do what needs to be done to challenge
terrorism, which we think can best be done with the authorities we already
have under the various statutes that have been passed to constrain
transactions as appropriate and to challenge those countries individually
as a function of our relations with each of them individually, rather than
try to do it in a particular amendment that would affect all seven in a
homogeneous way.
Mr. MCCOLLUM. We are going in
circles—again, I want to clarify this. On the one hand, you are
saying we would like to have an open hand and give us total flexibility. On
the other hand, I think you are saying to me that you are prepared to offer
some suggestions about how we might proceed in regard to tailoring this
legislation in a more direct way. But does that more tailored way include a
total exemption for Syria? Is it your assertion that, as I gather from
Ambassador Wilcox, this administration does not want Syria to have any
sanctions at all?
Mr. RAMSAY. Sir, I can't
say——
Mr. MCCOLLUM. Or any in this bill?
Mr. RAMSAY. I can't say that this panel is
briefed to be able to answer that question directly. That is a very
specific question. I think we would need to engage other people back in the
Department.
Page 37 PREV PAGE TOP OF DOC
But my view is that the Department's position
would be for each of the terrorist-list countries we would like to have a
separate dialogue on what is appropriate for each of those countries as a
function of our relations and their roles in terrorism and other
activities.
Mr. MCCOLLUM. Mr. Coble, you are recognized
for 5 minutes.
Mr. COBLE. Thank you, Mr. Chairman.
Good to have you all with us this morning,
gentlemen.
Mr. Ramsay, I sit as a member of the Subcommittee
on Courts and Intellectual Property of the full Judiciary Committee, and I
find your comment interesting in that you say the intellectual property
rights of Americans might be jeopardized if U.S. nationals are not
permitted to engage in transactions necessary to register and maintain
these rights in the targeted countries. Elaborate in a little more detail
about that concern.
Mr. RAMSAY. Basically, sir, as I understand
the constraint, the kinds of transactions—the kinds of registration
fees that would need to be paid in whatever country the interested American
party would like to register his trademark cannot be paid. It could
conceivably be paid if that company requested a license to do so and, under
Treasury licensing authority, that license were granted. But in a blanket
ban on financial transactions, that company would not be able to register
his trademark.
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Mr. COBLE. Mr. Chairman, I am
thinking—just thinking aloud now. I am sure we don't want to do
anything to frustrate the intellectual property of our people. If Mr.
Ramsay and his staff could present language that might address this
concern—Mr. Ramsay—would you be amenable to that, Mr.
Chairman?
Mr. MCCOLLUM. Mr. Coble, if you would
yield, I am very amenable to suggestions by both the Treasury and the State
Department with regard to some specific language. As I have said earlier, I
don't think we ought to be having to micromanage, but we obviously can't
have as flexible a bill as they would turn it into what we had before. So,
yes, I would be very amenable.
Mr. COBLE. Why don't you think about
considering doing that, Mr. Ramsay? Submit some language that you think
might, without trashing the bill, assuage the problems that you have with
the legislation.
Mr. RAMSAY. Yes, sir. We would be happy to
do that.
Mr. COBLE. All right, sir.
Mr. RAMSAY. Your concern raises sort of a
general issue about how one designs sanctions in the first place. Is the
design of sanctions best structured with a sweeping imposition and then a
multitude of exceptions or is it better designed by identifying the
vulnerability——
Mr. COBLE. Yes.
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Mr. RAMSAY [continuing]. And targeting the
sanction on the vulnerability?
Mr. COBLE. That may well be subject to
interpretation, I guess, depending to whom you are talking.
Mr. RAMSAY. Yes, sir.
Mr. COBLE. Mr. Newcomb, let me put a
three-prong question to you. How are U.S. sanctions against terrorist-list
governments enforced? What rules do the Federal law enforcement agencies
perform? And how you do you respond to the complaint that OFAC does not
vigorously target terrorist, quote, front companies, close quote?
Did you get all three of them down, Mr.
Newcomb?
Mr. NEWCOMB. If we can take them one by
one.
Mr. COBLE. OK. Fine.
Mr. NEWCOMB. How do we enforce them? We
have—for each of these programs and when promulgated by the President
under the International Emergency Economic Powers Act or going back to Cuba
and North Korea for the Trading with the Enemy Act, we develop a
comprehensive set of regulations which goes into prohibitions and general
authorization, what we call general licenses.
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So we develop a comprehensive program that goes
into specifically what is intended to be targeted and the unique facts,
circumstances and situations that exist for each of these countries,
specifically dealing with the foreign policy criterion goals that are
developed in consultation—very actively in consultation with the
State Department.
We work closely with the Federal law enforcement
community. We work with U.S. Customs Service and the FBI and others in
terms of developing information and moving forward in our enforcement
program. We have an active civil penalty program. In the course of any
given year, we collect over 200 penalties and bring revenues of over a
million dollars in for violations of our programs. Now, this is across the
board, but I think most of these are terrorist supporting countries.
With regard to not vigorously enforcing, your
question was——
Mr. COBLE. Targeting——
Mr. NEWCOMB [continuing]. Targeting.
Mr. COBLE [continuing]. Terrorist front
companies. And you might explain to us what front companies are.
Mr. NEWCOMB. Sure. When we identify a
government, we usually define that as a government, its agencies,
instrumentalities or controlled entities or individuals or entities acting
for or on their behalf or owned or controlled by. So we have developed a
program where we can designate individuals, companies and front
organizations that act for or on behalf or are under control by these
governments.
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So, for example, in the case of Libya, which is
heavily invested in Europe in oil-refining production, downstream
distribution activities, we have identified those companies and
organizations that they own and control. Same thing with financial
institutions.
We did this for Iraq, where we quite extensively
went and named names of individuals and entities that were a part of Saddam
Hussein's military procurement network outside of Iraq so that individuals,
U.S. persons in Europe, the Middle East and Central and South America,
wherever, would know by name the particular individual and entity that they
would otherwise not know who not to do business with.
We maintain this list of specially designated
nationals, specially designated terrorists, specially designated narcotics
traffickers. We have over 3,000 names which are incorporated in what we
call our Specially Designated National List.
U.S. financial institutions have developed over
the years what is called name recognition software where, in an automated
basis, they are able to work into their computers the ability to stop
transactions with these entities or organizations. We are all now working
with major companies to screen all of their sales so that they don't
inadvertently do business with any of these named entities.
So we have a very comprehensive program in place
to deal with those front companies, and we do have a very active program.
The list continues to be developed, to be refined and to be more meaningful
as to precisely who you are doing business with.
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If it is Iraq, for example, they can't set up
a bunch of companies or have a bunch of people going out, doing their
buying or selling or procurement. If we know about it, we will name them.
They are offlimits to U.S. persons.
And the third part of your question was?
Mr. COBLE. I think you responded about
vigorously targeting the front companies.
Mr. NEWCOMB. Yes, sir, I believe we did
that.
Mr. COBLE. Yes, sir.
Mr. COBLE. Mr. Chairman, the red light
notwithstanding, may I have one more question.
Mr. MCCOLLUM. Certainly.
Mr. COBLE. Does the FBI and/or the Customs
have the authority and do they follow a practice of initiating
investigations on their own, Mr. Newcomb, or do they depend upon referrals
from your office?
Mr. NEWCOMB. We work it both ways. I would
say, for the most part, they develop investigations, they develop leads on
violations on their own; and over the years we have developed a very good,
productive enforcement kind of relationship.
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We also receive leads which we can handle in one
of two ways. We have civil enforcement authority and criminal enforcement
authority. If there is a criminal violation, we refer it out to Customs or
the FBI, depending on the nature of what it is. If it is a Customs-type
violation, we give it to Customs. If it is more of a terrorist
type—domestic terrorist type activity, it would be with the FBI.
We have civil penalty authority which, when either
of the two defer to us or if it doesn't rise to the sufficient level that
it is referred out after consultations, we will deal with it in-house; and
we have a very active ongoing program in that regard.
Mr. COBLE. Thank you, sir.
Thank you, Mr. Chairman.
Mr. MCCOLLUM. Thank you very much.
Mr. Hutchinson, you are recognized for 5
minutes.
Mr. HUTCHINSON. Thank you, Mr.
Chairman.
I appreciate this hearing, because it gives me an
insight as to how a law is passed by Congress and then implemented by a
regulatory agency—in this case, the Treasury Department and the State
Department.
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As you know, I was not a member of this body
when the antiterrorism bill was debated and enacted; but, from my reading
of the statute, it is pretty clear that Congress meant for section 321 to
be applied broadly, prohibiting financial transactions with terrorist
states.
I understand that the phrase ''except as provided
in regulations issued by the Secretary of the Treasury in consultation with
the Secretary of State'' was included during final negotiations to exempt
routine diplomatic and consular relations. Unfortunately, the
administrations capitalized on its narrow authority to rewrite the intent
of the statute. At least that is my view of it.
Rather than requiring that an individual have
knowledge of a country's terrorist status, this new interpretation focuses
the burden of proof on whether the individual who conducts a financial
transaction with a terrorist country believes the interaction poses a risk
of furthering terrorist activity in the United States.
Now I just would like to have Mr. Newcomb or Mr.
Ramsay respond to my concern, as a new Member of Congress, that the intent
of this body was not carried out in the regulations that were adopted. If
you could briefly respond, and I have got some other questions—Mr.
Ramsay.
Mr. RAMSAY. Mr. Hutchinson, it has become
clear in the last weeks that we got significantly away from what the
Members of Congress intended when we passed the legislation. We didn't
think we were doing that at the time we wrote the regs.
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We had available to us the legislative
history, we had statements on the floor, we had discussions and the
correspondence with our relevant contacts on the Capitol Hill, and we
thought we were reaching the correct conclusion about what the intention of
the Congress was.
There are authorities available to us for banning
transfers out of revenues or currencies that might be used for terrorist
purposes. There are other statutes that allow us to intervene on terrorist
activities; and we have authorities in the IEEPA, in the Trading With the
Enemy Act and elsewhere that allow us to ban transactions as appropriate
under the circumstances that obtained at the time with the country.
At the time we were looking at these regulations
we had no foreign policy impulse to change our sanction status with either
Sudan or Syria. We had a dialogue on with Sudan that we hoped was going to
lead some places. It didn't lead to as many places as we had hoped, as you
heard from Ambassador Wilcox.
We had a multilateral effort going in the United
Nations that we expected to lead to action in civil aviation. We are still
working on that. But there was no reason at that point in time to ratchet
up the sanctions on Sudan other than to catch exactly what we had thought
was the intention of the——
Mr. HUTCHINSON. Let me phrase it a
different way. As a result of the enactment of section 321, did the State
Department's policy change?
Mr. RAMSAY. The State Department's policy
was directed at implementing section 321. As we understood it, it was
intended that was to go at what was called the Farrakhan
amendment—that is to say, the transfer inbound of monies that might
be used to further terrorist purposes. So we banned transactions that could
lead to that kind of activity.
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Mr. HUTCHINSON. But how many persons have
been denied the ability to engage in financial transactions with the
governments of Syria and Sudan since the Treasury regulations were issued
in August 1996?
Mr. RAMSAY. Well, we wouldn't necessarily
know if a donation had been refused by somebody. We would only know if a
donation were desired by somebody and they wanted to seek a license to have
it brought in, in which case they would have to apply for a license from
the Treasury.
Mr. HUTCHINSON. Mr. Newcomb, do you want to
comment?
Mr. NEWCOMB. Let me say, in developing and
implementing these programs following the receipt of guidance from the
State Department, we have an active compliance program where we got
ourselves—we are in touch with all the financial institutions with
regard to the requirements of Syria and Sudan. We developed a brochure. We
did training. We had a very active dialogue. So, in effect, what has
happened is the chilling effect.
These transactions are something financial
institutions do not desire to handle because they don't want to be in a
situation where they want to be caught having this, as in the case of, as I
mentioned before, our other sanctioned countries. By working with the
financial institutions, these transfers are not taking place.
The other point I want to make is that the way
these regulations were promulgated is we took jurisdiction across the board
for transfers to the target countries and from the target countries back.
What we did then was we generally licensed everything except donations
coming in and where there was——
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Mr. HUTCHINSON. What do you mean, donations
coming in? Explain that.
Mr. NEWCOMB. Moneys coming in where they
were not for a specific commercial purchase such as a purchase of goods
where you can match up a transfer of a money payment with an invoice.
Mr. HUTCHINSON. So you are allowing all
commercial transactions to take place?
Mr. NEWCOMB. Yes. Donations prohibited.
Mr. HUTCHINSON. Have you prohibited any
commercial transactions between individuals of this country and terrorists
states?
Mr. NEWCOMB. We do with respect to the five
designated—Iran, Iraq, Libya, Cuba, and North Korea.
Mr. HUTCHINSON. You prohibit commercial
transaction with those states?
Mr. NEWCOMB. Yes. Depending—there are
all different types of programs and there are different rules that apply to
each of them. But, for the most part, they are all prohibited except for
very specific kinds of sub——
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Mr. HUTCHINSON. But Syria and Sudan, you
don't prohibit any commercial transactions with those states?
Mr. NEWCOMB. We permit—we take
jurisdiction from financial transactions going to Syria, Sudan, and from
the governments to the United States. They are generally licensed then,
except for donations coming from these countries into the United States or
where there is a reason to believe that it is for a terrorist purpose.
Mr. HUTCHINSON. Let me just conclude, Mr.
Chairman.
It is my understanding there is not a significant
amount of legislative history since section 321 was passed by Congress. So
you are limited in what could be obtained from legislative history; and I
think you are pretty well bound then at that point with the language of the
statute, which, again, I believe is very clear as to congressional
intent.
Again, I will just say I am very disappointed as a
new member of this body. I have always wondered how something Congress says
can be so misconstrued in its application. I am troubled by that. I
appreciate the Chairman holding this hearing; and, hopefully, this new
legislation will remedy this problem.
Mr. MCCOLLUM. Thank you, Mr.
Hutchinson.
Mr. Chabot, you are recognized for 5 minutes.
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Mr. CHABOT. I thank the chairman.
I have a number of questions, and any of the
gentleman are welcome to take a shot at any of the questions I ask.
The first one, do you have any idea how many
persons continue to engage in the financial dealings with Sudan or Syria or
how substantial are the U.S. investments in this country at the present
time and what source of interest is there in the future there?
Anyone that would like to take those?
Mr. RAMSAY. Well, sir, I don't think any of
us is particularly well set up to answer in hard numbers. We can certainly
do that for you. The commercial interests in Sudan are very limited, for
instance. There is virtually no investment inbound to Sudan. There was some
interest expressed by some oil companies about oil deposits in the south of
Sudan. For commercial reasons, they have not pursued that. There is some
trade with Sudan. It is probably not more than $50 or $60 million in total.
And I guess that that is almost all agricultural commodities.
We buy gum arabic and sesame seeds from Sudan, and
Sudan buys wheat and shelled lentils and other foodstuffs and some
equipment for the exploratory programs for the companies in the south, the
oil companies in the south. I don't know how much of that there is now,
because I don't think there is much activity there now.
Syria, on the other hand, there is a great deal of
commerce back and forth and a fair amount of investment across the economy.
I think you will hear from some panels later on about some of the extent of
that investment. There is also a large oil involvement in Syria, oil and
gas, and just general commercial. But I am sorry I don't have the kinds of
details that you might want. I can supply that if that would be useful,
sir.
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Mr. CHABOT. OK.
[The information follows:]
| United States Department of State |
| Washington, DC, October 15, 1997. |
Hon. BILL MCCOLLUM, Chairman,
Subcommittee on Crime,
Committee on the Judiciary,
House of Representatives.
please find enclosed a
copy of the transcript of the June 10, 1997 hearing at which William C.
Ramsay testified. The transcript has been edited and an insert provided as
requested.
If you have any further questions, please do not
hesitate to contact us.
Sincerely,
| Barbara Larkin, |
| Assistant Secretary, |
| Legislative Affairs. |
Enclosure:
As stated.
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SYRIA AND SUDAN
Because Syria and Sudan have been designated by
the Secretary of State as state sponsors of terrorism, the U.S. Government
provides Syria and Sudan with no economic aid, no military aid, no
PL–480 assistance, no Peace Corps program, no Ex-Im assistance, and
no OPIC assistance. We do not sell Syria or Sudan military equipment or
arms. We are required by statute to vote in international fora against
projects providing aid to Syria and Sudan. We have in place a stringent
export licensing regime to prevent the export of items to Syria and Sudan
that would enhance Syria or Sudan's ability to support terrorism or
increase their military potential, particularly with respect to dual use
items for nuclear, chemical or biological warfare.
SYRIA
Commercial trade between the U.S. and Syria is
conducted by the private sector but subject to normal government regulatory
procedures relating to licenses or customs duties. In addition, foreign
exchange is controlled through the official bank of the government of
Syria. Although we do not have data on the number of persons who conduct
trade, there are over 140 American firms that conduct business with Syrian
companies. The volume of trade between the U.S. and Syria in 1996 totaled
approximately $242.5 million. This included U.S. exports of $226 million
(primarily industrial equipment and agricultural goods) and imports of
$16.2 million (primarily oil and textiles). There are several American
firms with existing investments in or pending contracts with Syria's oil
and gas sector. Syria's major trading partners are in Europe, and European
firms would reap the benefits of contracts lost by American firms in the
event of a unilateral economic embargo of Syria by the U.S.
Page 52 PREV PAGE TOP OF DOC
SUDAN
The USG is not aware of any meaningful investment
by U.S. firms in Sudan. The volume of trade between the U.S. and Sudan in
1996 consisted of $50.4 million in exports and $18.7 million in imports.
Most of this trade was in agricultural commodities.
Mr. CHABOT. Were there any other countries,
or what countries, perhaps, came close to being on the list that aren't on
there? Are there others that are on—either on the horizon or just
didn't quite make it?
Mr. WILCOX. Mr. Chabot, we look at lots of
countries, which, for one reason or another, might be eligible. We don't
have a list of also-rans. I can assure you that we are very concerned about
any hint of state support for terrorism by any country in the world. So we
cast our net widely in our annual survey by the Secretary of State.
Mr. CHABOT. Were there any countries that
come to mind that came close to being on there?
Mr. WILCOX. Sir, there are a number of
countries that looked at, but as I say, we don't have a hierarchy of
also-ran countries.
Mr. CHABOT. I understand that. But when I
asked the question, did anything come to your mind, well, yes, here is one
that probably came close?
Mr. WILCOX. We are very concerned about
Afghanistan, although Afghanistan does not have a government which most of
the nations of the world recognize, nor a government which controls the
majority of Afghan territory. But it is clear that terrorist training still
exists inside Afghanistan. Usama bin Laden, the notorious terrorist
financier, has moved to Afghanistan, so Afghanistan is a country of
continuing concern to us.
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Mr. CHABOT. OK. Thank you.
When we do put these particular countries on the
list and our trade is restricted, what countries have been the most
egregious in taking up the slack and taking advantage of a situation and
trading with terrorist countries?
Mr. WILCOX. As you know, we have a
difference of policy view with our European colleagues on trade and
investment in Iran and in Libya. The United States has a complete embargo
on trade and investment. The European countries do not, and so those
countries continue to actively trade with Iran, and they have interests in
oil investment there as well. The same is true with Libya, where European
countries buy Libyan oil, and some European countries have investments in
oil production in Libya.
Mr. CHABOT. Would it be fair to say that
France would be near the top of the list of those countries that have had a
tendency to take advantage of situations where we are trying to promote
world peace or antiterrorist measures?
Mr. WILCOX. France and the United States
have made common cause against international terrorism, and we have
cooperated in many ways. We have a difference of view with the Government
of France on economic stances against state sponsors of terrorism neither
France nor any other European Government has laws like ours which designate
governments as state sponsors of terrorism.
France has been an active partner in enforcement
of the U.N. Security Council sanctions against Libya, but those sanctions
do not include an oil embargo, and so French companies continue to invest
and operate in the Libyan oil sector.
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Mr. CHABOT. My time is running out, but I
guess you are being very diplomatic, I think. Some of our allies
have—France among them—have taken advantage of the situations
all around the world where we are trying to do the right thing and they are
looking strictly at their own economic benefits. And perhaps we can say
that and you can't, but——
Mr. WILCOX. Well, I agree. And we regret
that. We wish these other countries would join us in similar policies,
rather than continuing to do trade and investment on a more or less normal
basis with these countries.
Mr. CHABOT. I thank the chairman.
Mr. MCCOLLUM. Thank you, Mr. Chabot.
Mr. Barr you are recognized for 5 minutes.
Mr. BARR. Thank you, Mr. Chairman.
Who drafted the regulations issued August 23,
1996?
Mr. RAMSAY. The regulations drafted would
have been physically drafted in the Department of the Treasury but with the
foreign policy guidance of the Department of State on how to draft it.
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Mr. BARR. Who actually drafted them?
Did you, Mr. Newcomb?
Mr. NEWCOMB. They were drafted in our
office, yes, but, as Mr. Ramsay said, following guidance from the State
Department on questions presented.
Mr. BARR. I have rarely seen an effort that
it is so blatant to subvert the intent of Congress. I think you ought to be
ashamed of these regulations. You didn't try—and I give you
credit—you didn't try to hide what you were doing. You crafted
regulations here that are clearly designed to completely gut the
congressional intent and the clear language of the statute. I think it is
outrageous, what you all have done here. It is a shame we have to even
waste time on this, but we do.
And I find it hard to believe you all are
objecting to this legislation. All we are doing is telling you to do what
you should have done in the first place.
That is all I have, Mr. Chairman. Thank you.
Mr. MCCOLLUM. Thank you, Mr. Barr.
Ambassador Wilcox, and Mr. Ramsay, in April of
last year, we enacted into law the antiterrorism bill that is the subject
of the section that we are trying to amend here today. One other provision
in that law which is not the subject directly of this hearing had a
requirement that, in consultation with Treasury, State designate a list of
foreign terrorist organizations. To date, that has not happened. Why hasn't
it happened? Where are we with this? And when do we expect to have a
list?
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Mr. WILCOX. Mr. Chairman, we have not
completed that list yet, because after the legislation was adopted, we
discovered that the task of assembling the administrative records that were
called for by the statute was an immense task. We were determined to carry
that out carefully. It has engaged the energy of dozens of lawyers and
officials in many different agencies.
My office has been deeply involved in that
process. We have spent many, many thousands of hours in preparing those
administrative records. They are exhaustive, detailed documents. They must
be done scrupulously, because the consequences of designating these
organizations are very serious.
We have to be fair to our own citizens if we are
going to proscribe contributions to these organizations. We have to be
judicious when we consider that these designations will bar aliens from the
United States and give us extraordinary powers to exclude members and
activists in these organizations.
It has turned out to be a very, very challenging
task, and we are well along in the process. I cannot give you a precise
date when we will be completed. We are very anxious to complete it. The
slowness has not been for lack of effort or investment of time and energy.
It is because of the size of the task and our commitment to doing it
right.
Mr. MCCOLLUM. As you know, the trigger for
us has been the idea of ending the fundraising activity of these
organizations. It is one of the primary purposes of the antiterrorism
bill.
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I might suggest to you: You say you are close,
obviously that is a determination of judgment on your part, and I hope that
you are, but I would suggest that if you can't get all of this ironed out,
perhaps there are some organizations that are so blatant and apparent, you
can at least promulgate them seriatim—we don't have to have every one
of them. You certainly have the right to add to the list.
Am I correct, there is nothing in the law that
prohibits you from adding or deleting later on?
Mr. WILCOX. No, there is not, Mr. Chairman.
I thank you for that proposal. Our preference would be to do them as a
group. But let me discuss your proposal with other agencies who are
involved.
Mr. MCCOLLUM. The main thing I am concerned
about is just getting this going. We have got some very blatant
organizations out there, and the potential for fundraising continues with
every passing day. And this is something for terrorism that none of us
want. So I am just trying to be creative and constructive.
Lastly, I want to clarify something. There has
been some concern raised that the routine diplomatic relations exception
proposed by this bill, H.R. 748, would not capture the United Nations
activities. I think it would, but I would like to know what you think, Mr.
Ramsay.
Mr. RAMSAY. I think that the exceptions
that we are concerned about can be captured. It is a question of language.
It is a question of identifying each of those and setting them aside
as—always permitted. All of those things that I cited could
conceivably be dealt with one in one fashion or another, if the approach is
to put in a sweeping ban and then draw exceptions, as opposed to going for
something more targeted at the kinds of activities in Sudan that might be
more responsive to our measures than the broad brush.
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Mr. MCCOLLUM. Well, I was really interested
specifically in the question of whether or not the terminology and your
judgment of routine diplomatic relations would include the activities of
the United Nations, seeing as several of those things you presented in your
testimony as concerns were activities of the United Nations.
We certainly anticipated activities like the cab
fares I mentioned earlier as being routinely diplomatic. But there are many
more activities that, to me, would be considered routinely diplomatic. It
seems to me this is fairly reasonable language that would allow the
diplomats to the U.N. and other countries to engage in whatever U.N.
activities were normally considered routinely diplomatic—I think
virtually everything they do is. Would you not agree?
Mr. RAMSAY. It is conceivable we can write
language like that, sir, but there are complications, depending on the U.N.
program. If you take, for instance, U.N. 986 with Iraq, basically that
program entitles private sector companies to be involved in buying of oil
and selling of goods, of humanitarian goods and food, into Iraq. So there
is a very different set of things that we have to capture there which are
not normal.
Mr. MCCOLLUM. Routine diplomatic relations.
I understand.
And, Mr. Newcomb, I don't know that you were asked
this question, but somebody has suggested to us—I think one of the
witnesses coming on in the next panel—that the Office of Foreign
Assets Control is understaffed and underfunded. Is it? Do we need to
support you in gaining some more support to do your job?
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Mr. NEWCOMB. My colleague just asked me if
I planted that, and the answer is, no, I didn't. We can always use more
staff. But let me say, because of these new requirements that we have,
including the Antiterrorism Act, that process is under way and we are being
staffed up to deal with many of these situations.
As with any organization, you can always use more
staff. But as far as getting this job done with regard to these specific
programs, let me say for the record that we have comprehensive economic
embargoes in place on all of these countries, following the consultations
with the State Department as to what it is we are trying to do. So I am
confident that we are doing what is required.
Mr. MCCOLLUM. Well, we could spend all
morning with you all because there are many other things that could be
asked, but—Mr. Matheson.
Mr. MATHESON. Thank you, Mr. Chairman.
I just wanted to emphasize, if I might, the great
difficulty of trying to deal with all of the possible situations that would
have to be dealt with, with a series of explicit exceptions if you do not
have some residual discretion on the part of Treasury to make further
exceptions where the circumstance requires.
You started with the question of routine
diplomatic activities, and I think, for example, there are a number of
situations with these terrorist countries where we don't have normal
diplomatic relations, where we have interest sections or other
arrangements, and that is the kind of issue that we would have to try to
interpret in some fashion.
Page 60 PREV PAGE TOP OF DOC
Mr. Ramsay's list of examples of problems that
would have to be dealt with is only partial. I could easily list 20 or 25
examples where I think we would all readily agree that there should be some
kind of exception. A large part of the difficulty is that you can't
necessarily anticipate all of these in advance, which is why Treasury
always has, in these other sanction programs, some residual discretion to
deal with the situation. I know you are unhappy with the way the discretion
has been exercised to date.
Mr. MCCOLLUM. Very unhappy. That is why we
gave you that discretion in the first place.
Mr. MATHESON. And obviously, we have to
have further discussion about that. What I am saying is, if your bottom
line is that you have no discretion reserved, then it is going to be
extremely difficult to cover all of the necessary matters that you would
want to have exempted from a financial transactions ban, which is a very
broad ban.
Mr. MCCOLLUM. Thank you.
Does anybody else have another followup question
for this panel? Mr. Barr? Mr. Hutchinson?
Again, we have got a lot of work to do with you
before we complete this bill. I don't want it to be a product that is
totally unworkable in some way for the State Department or for the Treasury
Department.
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Gentlemen, I think you have got the message
from all of us. We want most of these financial transactions—what we
call commercial transactions—and money flowing between our countries
and these terrorist states, including Syria and Sudan, very constrained
compared to what it is today. That was the original intent of the language,
and unless my colleagues decide otherwise in the markup, it remains the
intent.
Thank you very much.
Mr. MCCOLLUM. Our next panel today consists
of several witnesses with special expertise and interest in both Syria and
Sudan.
Our first witness is Ms. Hillary Mann. Ms. Mann is
an associate fellow at the Washington Institution for Near East Policy,
where she focuses on terrorism and U.S. counterterrorism policy. She has
written articles on Middle East terrorism for the Los Angeles Times and
Washington Times and is currently conducting a study of the gaps in the
U.S. sanctions against state sponsors of terrorism. Prior to joining the
Washington Institute in 1996, Ms. Mann served for 1 year in the State
Department and also worked at the National Security Council.
Also with us today is Kate Almquist, a policy
analyst with World Vision Relief and Development, Inc. Ms. Almquist is
currently managing an ongoing advocacy initiative which seeks resolution of
the crisis in Sudan. Prior to her position as a policy analyst, Ms.
Almquist also served World Vision as an international liaison
assistant.
Our next witness is Mr. James Latham. Mr. Latham
is the senior vice president, general counsel, and secretary for ITT
Sheraton Corp., a Boston-based hotel network. Since joining ITT Sheraton in
1975, Mr. Latham has served as general counsel for the Europe, Africa,
Middle East, and India Division as well as vice president and assistant
secretary of Sheraton Management Corp. Prior to his association with ITT
Sheraton, he was a partner in a law firm in Massachusetts.
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Finally, the subcommittee will hear testimony
today from Mansoor Ijaz. Mr. Ijaz is the founder and chairman of Crescent
Investment Management, a New York-based global investment advisor and bank.
He has written several op-ed pieces for the Wall Street Journal and the Los
Angeles Times, and he has appeared on CNN's ''Inside Business'' and
''Business Asia.'' Mr. Ijaz conducts extensive business in the Middle East
related to his investment management company.
We look forward to hearing from all of our
witnesses today; we are going to go in the order in which I introduced
you.
Ms. Mann, and all the witnesses, your written
testimony will be incorporated, without objection, into the record. Hearing
no objection, it is so ordered. You may proceed to summarize your testimony
or give us any portion of it that you wish.
Ms. Mann.
STATEMENT OF HILLARY MANN, ASSOCIATE FELLOW, WASHINGTON INSTITUTE FOR NEAR
EAST POLICY
Ms. MANN. Thank you, Mr. Chairman and
members of the subcommittee, for the opportunity to appear before you
today.
While America's attention has focused recently on
the heartwrenching and horrific testimony about the Oklahoma City bombing,
it is important to take notice of the international trend toward more
deadly terrorist attacks that nearly doubled the number of terrorist
casualties last year.
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For U.S. policy, the strategic threat Middle East
terrorism poses to historic initiatives like the Arab-Israeli peace
process, security in the Persian Gulf, and the continued viability of
friendly Middle East governments is also very serious. As the U.S.
struggles to deal with Middle East terrorism, we need to understand the
scope of terrorist activities being undertaken, supported, and facilitated
by particular Middle East states. Today, I will limit my comments to the
involvement of Sudan and Syria in international terrorism.
The U.S. has several times been the victim of
terrorism linked to Sudan, which Secretary of State Madeleine Albright has
described as a ''viper's nest'' of international terrorism. In recent
years, a Sudanese national has pleaded guilty, and Sudanese Government
officials have been implicated, in the conspiracy to bomb the U.N. in New
York. Last year, the State Department expelled a Sudanese diplomat who had
ties to the conspirators planning to bomb the U.N. and other targets.
Today, Sudan is even considered too dangerous for the United States to
operate its Embassy there.
The State Department described Sudan as a
''refuge, nexus, and training hub'' for terrorists and has documented
Sudan's nefarious relationship with the world's chief state sponsor of
terrorism, Iran. Many of the most virulently anti-American terrorist
organizations train or receive refuge in Sudan.
Sudan's blatant support for terrorism has
alienated many of its neighbors and prompted the U.N. to consider imposing
sanctions. Nevertheless, the United States sent Sudan over $50 million in
exports last year. While this may not seem like a significant figure, it
does undercut our ability to send a clear message that the United States is
strongly opposed to Sudan's support of terrorism and that the United States
is willing to do something about it.
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Now I will turn to Syria, a country which over the
past 5 years has received over $1 billion in U.S. exports. We are Syria's
sixth largest trading partner, accounting for more than one-ninth of their
imports. Last year alone, Syria received $226 million in U.S. exports, over
a third of which, $81 million, were in controlled commodities. These are
commodities that are supposed to be generally denied to
terrorist-supporting states.
Syria also has long been deeply involved in
supporting international terrorism, dating back to 1979, when it became a
charter member of the U.S. list of countries who sponsor terrorism. The
State Department's terrorism report documents some of Syria's terrorist
activity. It chronicles Syria's continued provision of safe haven and
support for some of the most avowedly anti-American terrorist groups in the
world, including the PFLP, PFLP–GC, Hezbollah, the PKK, as well as
Hamas and the Palestinian Islamic Jihad, the two groups who claimed
responsibility for last year's suicide bombing in Israel and who have been
linked to a bombing in a Tel Aviv cafe in March.
However, unlike its treatment of Sudan, the State
Department's most recent report on terrorism sidesteps the role played by
Syria in sponsoring international terrorism. For example, the report
inexplicably states that there is, ''no evidence of direct Syrian
involvement in planning or executing terrorist activities since 1986,''
even while acknowledging that Syria hosts the headquarters and training
camps for several terrorist groups and that Syria provides safe haven and
support as well as allowing the resupply of arms to terrorist groups.
This alleged Syrian standdown apparently rejects
Jordanian claims that firearms and military equipment have been smuggled
into Jordan from Syria. The report also ignores the fact that Syrian radio
regularly permits terrorists to claim responsibility for their crimes from
Syria. The report also seems to dismiss Turkish accusations that Syria
helped PKK terrorists infiltrate into Turkish territory to attack Turkish
civilians.
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There isn't even a reference to the fact that a
key suspect in last year's bombing of al-Khobar Towers in Saudi Arabia,
killing 19 U.S. servicemen, died mysteriously in a Syrian prison, a fact
which earned a strong demarche from the U.S. Ambassador to Damascus.
Elsewhere, the State Department is mute on what
Iran and Syria call their strategic relationship. Most importantly, the
report should have noted that Hezbollah survives as a terrorist
organization thanks to the weapons Syria permits them to receive from
Tehran via Damascus.
H.R. 748, the Prohibition on Financial
Transactions with Countries Supporting Terrorism Act of 1997, is an
important step toward making Sudan and Syria pay a real economic price for
their support of international terrorism. However, Mr. Chairman,
Congressmen, this bill will not close the half-dozen or more remaining
major loopholes in our antiterrorism legislation that allow terrorists to
use U.S. capital and visa rules against our interests. I commend your work
and urge you to continue to address the sanctions loopholes that cripple
our fight against terrorism.
Thank you for your attention.
[The prepared statement of Ms. Mann follows:]
PREPARED STATEMENT OF HILLARY MANN, ASSOCIATE FELLOW, WASHINGTON INSTITUTE
FOR NEAR EAST POLICY
Thank you, Mr. Chairman and Members of the
Subcommittee, for the opportunity to appear before you today.
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While America's attention has focused recently on
the heart-wrenching and horrific testimony about the Oklahoma City bombing,
it is important to take notice of the international trend toward more
deadly terrorist attacks on mass civilian targets and the use of more
powerful bombs that nearly doubled the number of terrorist casualties last
year in a region vital to U.S. interests: the Middle East.1 For
U.S. policy, the strategic threat Middle East terrorism poses to historic
initiatives like the Arab-Israeli peace process, security in the Persian
Gulf and the continued viability of friendly Middle East governments is
also very serious. As the U.S. struggles to deal with this scourge of
Middle Eastern terrorism, we need to understand the scope of terrorist
activity being undertaken, supported and facilitated by particular Middle
East states. Because this hearing concerns two of these states-Sudan and
Syria—I will limit my comments to the involvement of these two states
in international terrorism.
Sundan: First, I will discuss
Sudan.2 The U. S. has several times been the victim of terrorism
linked to Sudan, which Secretary of State Madeline Albright (when she was
U.S. Permanent Representative to the U.N.) has described as a ''viper's
nest'' for international terrorism. In 1973, the US ambassador and his
deputy were assassinated by terrorists in Sudan. In the past few years, a
Sudanese national pleaded guilty to and Sudanese government officials were
implicated in the conspiracy to bomb the U.N. in New York. Last year, the
State Department expelled a Sudanese diplomat at the Sudanese U.N. Mission
in New York who had ties to the conspirators planning to bomb the U.N. and
other targets in 1993. Today, Sudan is considered too dangerous for the
U.S. to operate our embassy there. Indeed, the most recent State Department
report on terrorism described Sudan as ''a refuge, nexus and training hub''
for terrorist organizations and documented Sudan's nefarious relationship
with the world's chief state sponsor of terrorism, Iran.
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Many of the most virulently anti-American
terrorist organizations train or receive refuge in Sudan. These
organizations, which continue to threaten the U. S. and our allies in the
Middle East, include: Hamas, the Palestine Islamic Jihad, the Abu Nidal
Organization, Hezbollah, the Islamic Salvation Front (FIS) of Algeria, and
militant groups from Uganda, Ethiopia and Eritrea. Sudan's blatant support
for terrorism has alienated many of its neighbors who have, in turn,
sharply criticized, severed diplomatic ties or imposed sanctions on
Sudan.3 The U.N. also has considered imposing sanctions and
demanded, to no avail, that Sudan cease its support for terrorism and turn
over three Egyptian terrorists linked to the 1995 assassination attempt of
Egypt's President Mubarak.4
When it comes to assessing Sudan's involvement in
terrorism, the State Department in its annual review of global terrorism,
has been forthright in articulating Sudan's continued threat to U.S.
interests, and I would commend that report to you.
Syria: Now, I would like to turn my
attention to Syria, a country which, in the past five years, received over
$1 billion in U.S. exports. Last year alone, Syria received $226 million in
U.S. exports over a third of which ($81 million) were in controlled
commodities—these are commodities that are supposed to be generally
denied to terrorist supporting states.5
As with Sudan, Syria has long been deeply involved
in supporting international terrorism, dating back to 1979 when it became a
charter member of the U.S. list of countries who sponsor terrorism. The
State Department's terrorism report documents some of Syria's terrorist
activity. As with Sudan, the report chronicles Syria's continued provision
of ''safehaven and support'' for some of the most avowedly anti-American
terrorist groups in the world by allowing them to ''maintain training camps
and other facilities'' in Syria and Syrian-controlled Lebanon and by
''permitting] the resupply of arms'' to terrorist groups operating in
Lebanon. The report lists the terrorist groups based or headquartered in
Syria or Syrian controlled Lebanon as including: Ahmed Jibril's Popular
Front for the Liberation of Palestine (P.F.L.P.–G.C.), Hezbollah, the
Workers Party of Kurdistan (P.K.K.) as well as Hamas and the Palestinian
Islamic Jihad—the two groups who claimed responsibility for last
year's suicide bombings in Israel that killed dozens of civilians and who
been linked to the bombing of a Tel Aviv cafe in March which killed three
civilians.6
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However, unlike its treatment of Sudan, the State
Department's most recent report on terrorism largely sidesteps the role
played by Syria in sponsoring international terrorism. For example, the
report inexplicably states that there is ''no evidence'' of direct Syrian
involvement in ''planning or executing'' terrorist activities since 1986
even while acknowledging that Syria hosts the ''headquarters'' and
''training camps'' for several terrorist groups, and that Syria provides
''safehaven and support'' as well as allowing ''the resupply of arms'' to
terrorist groups. This alleged Syrian standdown apparently rejects claims
made by Jordanian media last autumn that ''firearms and military
equipment'' were being smuggled into Jordan from Syria. For the first time
in years, the report ignores the fact that Syrian radio regularly permits
terrorists to claim responsibility for their crimes, such as the terrorist
attack by the Abu Mousa ''Fatah Uprising'' clique that claimed the lives of
three Israelis in July 1996. The report also seems to dismiss Turkish
accusations that Syria helps P.K.K. terrorists infiltrate into Turkish
territory to attack Turkish civilians.7 There isn't even a
reference to the fact that a key suspect in last year's bombing of
al-Khobar Towers, killing 19 U.S. servicemen, died mysteriously in a Syrian
prison—a fact which earned a strong demarche from the U.S. ambassador
to Damascus.
Elsewhere, the State Department is mute on what
Iran and Syria call their ''strategic relationship. '' Most importantly,
the report should have noted that Hezbollah survives as a terrorist
organization thanks to the weapons Syria permits them to receive from
Tehran via Damascus.8 As Hezbollah's spiritual leader himself
said in December 1996: ''Syrian President Hafez al-Assad assumed a firm and
responsible stand on the side of the resistance; if it were not for
[Assad's support], Israel's agents would have ... destroy[ed] the
resistance.''9 The report also does not mention in the Syria
section that Syria played host to key meetings between Iran's Vice
President Hassan Habibi and leaders of several terrorist organizations,
including Hamas and Islamic Jihad, responsible for the heinous series of
car bombs in Israel in February and March 1996.
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POLICY RECOMMENDATIONS
H.R 748, the ''Prohibition on Financial
Transactions With Countries Supporting Terrorism Act of 1997,'' is an
important step toward closing a major loop-hole in our counter-terrorism
legislation. One of the most significant tools the U.S. has in its fight
against international terrorism is the ability to make state sponsors of
terrorism pay a real economic price for their nefarious behavior. The U.S.
has done a great deal in this regard by enacting legislation that sanctions
state sponsors of terrorism. However, the Syria-Sudan loop-hole that we are
addressing here today is just one of many loop-holes in our sanctions
policy that have crippled U.S. efforts to deter international
terrorism.
Therefore, my first recommendation is to close the
other remaining loopholes in the sanctions legislation. These loopholes
include:
Caspian Sea Oil Swaps with Iran: Current law allows for U.S.
companies to participate in market-based swaps of crude oil from the
Caspian Sea are with Iranian crude oil in support of energy projects in
Azerbaijan, Kazakhstan, and Turkmenistan. Through this exemption,
Kazakhstan was able to negotiate a deal with the National Iranian Oil
Company to export Kazakh oil from a U.S.-Kazakh joint venture via Iran.
According to the Middle East Economic Digest (MEED), this deal
allows Iran to charge transit and other fees which may amount to $100
million in earnings a year, in addition to Iran's savings in not having to
transport its own oil northward from its southern fields.
Iranian Assets: Even when business is
conducted illegally with terrorist states, an anomaly in the anti-terrorism
sanctions exists in that not every designated terrorist state is subject to
having their assets seized or frozen. While Iraq, Libya and ''Specially
Designated Terrorists'' (individuals and organizations not under the
jurisdiction of a designated terrorist state) can have their assets seized
or frozen, there is no similar authority to freeze the assets of the three
other designated terrorist states in the Middle East: Iran, Syria or
Sudan.
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Front Companies: In those cases where there
are tight prohibitions against doing business with terrorist states, those
restrictions normally apply only to transactions with companies or entities
''owned or controlled by or action on or on behalf of' a terrorist
government, not with the much larger number of companies or entities in
which a terrorist state has an interest. In modern, sophisticated
transactions, however, a terrorist state may only have a small interest in
a given company or entity to use that company for its own purposes. But
unless 50 percent ownership of the company in question is held by a
terrorist government, it is not automatically subject to anti-terrorism
sanctions. For example, the Office of Foreign Assets Control has identified
103 banks and other financial institutions connected with Libya. However,
only 28 of those banks and institutions have been designated as Libyan
front companies with which Americans cannot have transactions. That leaves
the vast majority of identified Libyan front companies (75 of the 103) open
for U.S. business deals.10
Export Controls: As noted above, last year
alone Syria was able to procure $81 million worth of commodities that are
supposed to be generally denied to terrorist supporting states. In
addition, terrorist states are able to procure American goods via third
countries. For example, Dubai is reported to have received over $1 billion
in U.S. exports last year, approximately $300 million of which were
re-exported to Iran.11
Indirect Aid: Legislative prohibitions
against indirect aid to terrorist states have been waived by the President
every year since 1987. This waiver allows U.S. funds to be used in a
variety of international aid projects in designated Middle Eastern
terrorist states, such as underwriting the United Nations Relief and Works
Agency operations in Syria.
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Iran Libya Sanctions Act financing
loophole: While foreign companies are subject to sanctions if they
invest more than $40 million annually in the Iranian or Libyan energy
sectors, if a foreign bank loans more than $40 million to an Iranian or
other company to facilitate the development of Iran or Libya's energy
sector, such a transaction is allowed under the current law.
Second, I suggest that Congress look carefully at
the means the U.S. has to enforce the sanctions. One of the chief enforcers
of the sanctions, the Office of Foreign Assets Control at the Department of
Treasury, is seriously understaffed and underfunded. Similarly, the
enforcement of export and re-export controls need to be tightened and the
many front companies used by terrorist supporting states need to be more
vigorously targeted.
Third, I recommend centralizing the
counter-terrorism effort under one person or committee with enough power to
break through bureaucratic conflicts and to ensure that policy directives
do not fall victim to loop-holes and a lack of enforcement.
Finally, I recommend focussing a public spotlight
on terrorist activities and those who support them, including those who
invest in terrorist supporting states. Minimizing the role of participants
in the U.S.-brokered peace process, such as Syria, is a mistake. Dealing
with international terrorism requires facing the unwelcome truths about its
sources, even if it adds messy complications to other U.S. interests.
1 From 445 casualties in the Middle
East in 1995 to 837 casualties in the Middle East in 1996.
2 In August 1993, Sudan was placed on
the U.S. list of state sponsors of terrorism. In 1996, Sudan received $50.4
million in U.S. exports (Bureau of the Census, Foreign Trade Division, U.S.
Department of Commerce, 1996).
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3 Uganda severed ties with Sudan
in April 1995 and Eritrea did so in December 1994. After the attempted
assassination of Egypt's President Mubarak in Addis Ababa in June 1995,
Ethiopia terminated flights to Sudan and shut down Sudanese
non-governmental organizations in Ethiopia. In an unprecedented actions
criticizing a member, the Organization of African Unity passed a resolution
in September 1995 calling on Sudan to extradite to Ethiopia the three
suspects charged in attempting to assassinate Egypt's President
Mubarak.
4 U.N.S.C. resolution 1054, of April
26,1996, called on member states to adopt travel restrictions on Sudanese
government officials, and U.N.S.C. resolution 1070, of August 16,1996,
sought to ban flights by Sudanese government controlled aircraft.
5 The amount of U.S. exports to Syria
of controlled commodities has risen dramatically over the past five years:
in 1991 there were $1,041,504 in U.S. controlled-commodities exports to
Syria; in 1992 the figure was $46,366,527; in 1993 the figure was
$42,896,103; in 1994 the figure was $76,379,096; in 1995 the figure was
$68,298,135; and in 1996 the figure was $81,006,877. These controlled
commodities included those controlled for foreign policy reasons and
subject to national security controls, chemical and biological weapons
proliferation controls as well as dual-use items subject to
missile-proliferation controls and military-related items. Export
Administration Annual Report for 1996, the U.S. Department of Commerce, p.
III–27.
6 A more complete list of the terrorist
groups, past and present, operating from Syria or Syrian controlled
territory would include:
Palestinian: eight leftist Palestinian
groups opposed to the peace process, the D.F.L.P. led by Naif Hawatma;
Fatah al Intifada led by Abu Musa; P.L.F. with factions led by Mohammed
Abbas and Tal'at Ya'qub; Palestinian Peoples' Party; Palestinian Popular
Struggle Front; P.F.L.P. led by George Habash; P.F.L.P.–G.C. led by
Ahmed Jibril; al Sai'qa, an arm of the Syrian government; and two
Palestinian organizations of a fundamentalist Islamic orientation who
oppose the peace process, Hamas and Islamic Jihad; as well as some related
organizations;
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Lebanese: Hezbollah and its affiliates, the
Syrian Social Nationalist Party, the Batth Party of Lebanon, the Lebanese
Revolutionary Brigades and the Lebanese Armed Revolutionary Faction;
Turkish: the Revolutionary Left, the Gray
Wolves, the P.K.K., and the Armenian Secret Army for the Liberation of
Armenia;
Other Middle Eastern and Muslim: Arab
Egypt, the Committee for the Defense of Democratic Liberties in Jordan,
Polisario, the Democratic Front for the Liberation of Somalia, the Eritrean
Liberation Front, Zulfikar (Pakistan), the Pattani United Liberation
Organization (Thai), and Abu Sayyaf (Philippines);
Non-Middle Eastern and non-Muslim: the Red
Army Faction of West Germany, Action Direct of France, the Red Brigades of
Italy, the Basque ETA, the Fighting Communist Cells of Belgium, the
Liberation Tigers of Tamil Eelam of Sri Lanka, and the Japanese Red
Army.
This list is taken from, Daniel Pipes, Syria
Beyond the Peace Process, The Washington Institute for Near East
Policy, 1996, p.36.
7 The P.K.K., which many describe as
the greatest threat to Turkish domestic security, this month threatened
worldwide attacks against U.S. and Israeli civilians. The leader of the
P.K.K., Abdullah Ocalan, is headquartered in Damascus.
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8 Iran delivered 37 jumbo flights
of weapons to Syria for transport to Hezbollah in just the first four
months of this year, according to Uri Lubrani, Israel's coordinator for
Lebanon.
9 Ba'labakk Voice of the
Oppressed, radio broadcast, December 13, 1996.
10 Libya's International Banking
Connections, U.S. Department of the Treasury, Office of Foreign Assets
Control, August 10, 1994.
11 This is a particular problem in
regard to Iran and Dubai, as at least twenty two Iranian companies are
reported to be operating in Dubai's free trade zone with the main purpose
of handling re-exports, frequently to Iran. U. S. companies are generally
barred from exporting to these Iranian companies if they know that these
companies are Iranian. However, the Department of Commerce has never
published a list of Iranian companies operating in Dubai. In fact, after
the Commerce Department's recent decontrol of high-speed computers, U.S.
companies can now ship powerful supercomputers to buyers in Dubai without
an export license and because Dubai does not have an effective export
control system, there is little to prevent these supercomputers from going
on to Iran or any other terrorist supporting state.
Mr. MCCOLLUM. Thank you very much, Ms.
Mann.
Ms. Almquist, I believe you are next on this
list.
Please.
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STATEMENT OF KATE ALMQUIST, POLICY ANALYST, WORLD VISION RELIEF AND
DEVELOPMENT, INC.
Ms. ALMQUIST. Thank you, Mr. Chairman and
members of the subcommittee, for the opportunity to testify before you
today.
I am Kate Almquist, policy analyst for World
Vision Relief and Development. WVRD is the technical arm of world Vision
U.S., which is the largest privately-funded, faith-based relief and
development organization in the United States. World Vision U.S. is a
member of an international Christian partnership providing assistance in
103 countries to more than 50 million beneficiaries worldwide.
World Vision has been working in Sudan since 1972,
and we have had an operational presence there since the early eighties. In
1988, the Government of Sudan declared World Vision persona non grata, and
since then we have concentrated our operations in the non-government-held
south. In 1997, World Vision has targeted an estimated beneficiary
population of over 250,000 southern Sudanese. Our $8 million program
focuses on food security, basic health care, income generation, clean
water, and emergency relief needs of these populations. I personally have
had the opportunity to travel to southern Sudan and witnessed firsthand the
devastation reaped by years of civil war on this country.
I would like to focus your attention now on the
terrorism which the Sudanese Government propagates against its own citizens
and suggest that this domestic crisis is directly accountable for Sudan's
support of terrorist activities abroad. Until and unless the root causes of
Sudan's domestic crisis are addressed, we should not expect Sudan's role in
sponsoring terrorist activities abroad to cease.
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Since 1983, when the current civil war broke out,
an estimated 1.5 million people have died from the effects of the war, 7
million have been displaced internally, and at least a half a million have
sought refuge outside of Sudan.
In addition, there are egregious human rights
violations that have been documented internally, and the Government of
Sudan continues to manipulate the humanitarian aid operation which is
ongoing and really the only lifeline for millions of southern Sudanese.
Ending the war in the south and restoring
multiparty democracy and respect for human rights would stop Sudan from
being a regional and international menace. More importantly, resolution of
the civil war would offer millions of Sudanese their first opportunity to
live in peace and dignity.
Therefore, the ultimate objective must be a just,
comprehensive, and lasting peace for the whole country, not a partial
settlement between the regime and the SPLA or other southern rebel
movements. Rule of law, respect for human rights, and a just peace in
southern Sudan are prerequisites for ending Sudanese support for
international terrorism.
Mr. Chairman, World Vision firmly believes that
Sudan is the one state on the terrorism list that holds realistic potential
for fundamental change in the near term. The change will be produced by the
Sudanese themselves but it is directly in the interests of the United
States to see such change occur and to encourage it.
We need a clear policy on Sudan that reflects U.S.
interests and sides with the people of Sudan against a rogue government.
Such a policy would not allow ''business as usual'' to continue between
American individuals or companies and the Government of Sudan while at the
same time withholding from the people of Sudan, particularly those living
outside of the control of the Government, appropriate forms of development
assistance.
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To the extent that it is in the interest of the
United States to see a democratic and pluralistic government established in
Sudan, it is in our interest to help prepare southern Sudan for the event
of self-government.
Presently, the fledgling civil administration in
non-government-held areas is severely handicapped by a dearth of resources,
ranging from such basic commodities as paper to write on, chairs to sit in,
and bicycles to enable to administrators and judges to move around their
districts. Modest investments now in building the local capacity of the
civil administration in its formative stages are investments in the
governance of southern Sudan, investments that will pay off for years to
come.
It is also in our interests not to allow U.S.
persons to enrich the present Sudanese Government. Khartoum desperately
needs the hard currency from oil revenues to continue to pursue its radical
Islamic agenda at home and abroad. U.S. policy should ensure that Americans
do not contribute to the ability of the NIF regime to continue to wage war
against its own citizens or to support destabilizing terrorist activities
regionally and internationally.
World Vision firmly believes that American
investment should not contribute to the exploitation of Sudanese oil fields
until a comprehensive settlement is reached, which includes an agreement on
the sharing of natural resources and provides for oil revenues to
contribute to the critical development needs of southern Sudan.
World Vision believes that the administration and
Congress should work together to arrive at a coherent policy on Sudan. Such
a coherent policy would reflect our U.S. interests and also clearly side
with the people of southern Sudan against this Government.
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Specifically, this policy should restrict
financial transactions with the Sudanese Government, with the exception of
diplomatic transactions and transactions incident to the provision of
humanitarian assistance. It would implement the development assistance
language in last year's foreign aid appropriations committee report. It
would not tolerate the Sudanese Government's manipulation of the
humanitarian operation through Operation Lifeline Sudan. And finally, it
would seek a comprehensive peace through a negotiated settlement which
includes all parties to the conflict and takes as its starting point the
IGAD Declaration of Principles, which has been agreed to by the parties
thus far and from which the Sudanese Government has walked away.
Mr. Chairman, the bill you have introduced in the
form of H.R. 748 would ensure that section 321 of the antiterrorism act is
strictly implemented, with no exceptions. While we are supportive of
prohibiting financial transactions between the Government of Sudan and
United States persons, World Vision shares the concern of other
humanitarian organizations that some exemptions to the rule are
necessary.
Completely denying the administration the ability
to write regulations implementing section 321, as this bill would do, may
result in harmful, albeit unintended, consequences for humanitarian
assistance to terrorism list countries.
Specifically, World Vision is concerned that
financial transactions incident to the provision of humanitarian assistance
to meet basic human needs be exempted from section 321 in H.R. 748. H.R.
748 makes similar provision for financial transactions related to routine
diplomatic relations. We request that humanitarian assistance also be
explicitly exempted from this sanction.
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Without such an exemption, humanitarian assistance
would only be possible in the case of non-government-held areas of southern
Sudan, where the Sudanese Government is powerless to collect any taxes or
fees on the delivery of humanitarian assistance or on the travel of
humanitarian aid workers.
In all other cases, including, for instance,
northern Sudan, North Korea, and Cuba, it would be virtually impossible to
avoid payment of any sort to the Government in the course of providing
humanitarian aid to a terrorism list country.
Even if it were possible to deliver humanitarian
assistance without engaging in a financial transaction with the government,
traveling to the country to monitor the distribution of aid would be
virtually impossible without paying, at a minimum, a visa fee, an airline
ticket tax, or an airport tax, or paying for Government-run room and board.
World Vision would face these challenges in North Korea, which is in dire
need of food and agricultural aid to stop the famine that threatens the
lives of 23 million North Koreans, including 2.4 million children.
Mr. Chairman, World Vision urges the committee to
ensure that the millions of needy people in Sudan, North Korea, Cuba, Iraq,
or any other country on the terrorism list not be deprived of vital
humanitarian assistance as a result of H.R. 748. We welcome the opportunity
to work with you on drafting language to ensure that this is not the
case.
Thank you.
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[The prepared statement of Ms. Almquist
follows:]
PREPARED STATEMENT OF KATE ALMQUIST, POLICY ANALYST, WORLD VISION RELIEF
& DEVELOPMENT, INC.
INTRODUCTION
Mr. Chairman, thank you for the opportunity to
testify before you today.
I am Kate Almquist, policy analyst for World
Vision Relief and Development. WVRD is the technical arm of World Vision
US, which is the largest privately funded, faith-based relief and
development organization in the United States. World Vision US is a member
of an international Christian partnership providing assistance in 103
countries to more than 50 million beneficiaries worldwide. Approximately
85% of World Vision US' annual budget of $303 million in 1996 was raised
through private sources, the remaining 15% came from public sources. Over
the past five years, 1.3 million American families have contributed
financially to World Vision.
World Vision has been working in Sudan since 1972,
with an operational presence since the early 1980s, with programs for
internally displaced persons around Khartoum. However, World Vision was
declared persona non-grata by the Government of Sudan in 1988, and since
then we have concentrated our operations in the non-government-held south.
World Vision has worked in all of the major regions of the south, and
presently maintains programs in three areas: Yambio county in Western
Equatoria province, and Tonj and Gogrial countries in Bahr el Ghazal
province. In 1997, World Vision has targeted an estimated beneficiary
population of over 250,000 southern Sudanese. Our $8 million program
focuses on food security, basic health care, clean water, income
generation, and emergency relief needs of these populations.
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World Vision is a founding member of Operation
Lifeline Sudan, an international consortium of UN agencies,
non-governmental organizations and aid donors providing humanitarian
assistance to Sudan. World Vision is also a member of the Nairobi-based NGO
Forum of OLS NGOs and the Washington, DC-based Sudan Working Group. I
personally have had the opportunity to travel to southern Sudan and witness
first-hand the devastation wreaked by years of civil war.
SUDAN'S DOMESTIC TERRORISM
Today we have heard detailed descriptions of the
role which Sudan plays in promoting and fostering international terrorist
activities. Indeed, the evidence against Sudan is compelling. It is
sufficient in and of itself to justify prohibiting financial transactions
between the Government of Sudan and U.S. persons (understood to mean
individuals or companies). Yet I would like to focus your attention now on
the terrorism which the Sudanese government propagates against its own
citizens, and suggest that this domestic crisis is directly accountable for
Sudan's support of terrorist activities abroad. Until and unless the
root causes of Sudan's domestic crisis are addressed, we should not expect
Sudan's role in sponsoring terrorist activities abroad to cease.
For it is the Sudanese people themselves who bear
the brunt of the NIF regime's brutal policies manifested in a devastating
civil war, ruthless oppression and gross violations of human rights. Sudan
has been an independent country since 1956, yet it has only known relative
peace for the period of 1972–1983. Since 1983, when the current civil
war broke out, an estimated 1.5 million people have died from the effects
of the war, several million have been displaced internally, and at least a
half million have sought refuge outside of Sudan. To put these numbers into
perspective, the death toll in Sudan alone is greater than the casualties
in Somalia, Zaire and Bosnia combined.
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Human rights groups, the State Department, and the
UN Special Rapporteur on Human Rights to Sudan have repeatedly documented
the egregious human rights violations by all parties to the conflict, and
in particular by the NIF regime. These abuses frequently target women and
children and include enslavement, forced Islamization and Arabization,
persecution of Christians, animists and moderate Muslims alike, attempted
genocide against entire population groups in the Nuba Mountains, and random
bombing of civilian and humanitarian targets in the south. Indeed, World
Vision itself has been the target of such bombing raids several times,
which typically are devoid of any military pretext. Since May 17, bombs
have been dropped on Thiet in Tonj county four times, with at least one of
the bombs landing near the World Vision compound.
I would be remiss if I did not also mention the
interference of the Sudanese government with the operation of the
humanitarian relief program coordinated by Operation Lifeline Sudan in both
the north and south. In southern Sudan, OLS agencies such as World Vision
are able to operate programs due to an unusual tripartite agreement between
the Sudanese government, the United Nations, and the SPLM/A. Under this
agreement, the three parties negotiate monthly flight clearances for
humanitarian flights to specific sites in southern Sudan. Unfortunately,
the NIF regime has manipulated its role in this agreement to capriciously
deny flight clearances for aid flights into southern Sudan, thereby
handicapping the aid operation and effectively threatening the only
lifeline to which millions of southern Sudanese have recourse. When the GOS
cuts off most or all flights into rebel-held areas of southern Sudan, as it
has done repeatedly in recent weeks, not only does it threaten the very
existence of thousands of Sudanese, it also leaves hundreds of
international aid workers stranded without sufficient supplies in
frequently insecure locations. Presently, flight clearances for the month
of June are being denied in blatant disregard of numerous reports of
malnutrition and other emergency needs in southern Sudan. The manipulation
of OLS by the Sudanese government is so great that the very integrity of
the operation has been called into question.
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SUDAN'S REGIONAL TERRORISM
In addition to the war the NIF regime is waging
against its own citizens, it is also pursuing an aggressive strategy to
destabilize its neighbors to the north and in the Horn of Africa. The
secular, pro-American governments of Egypt, Eritrea, Ethiopia, and Uganda
have been the primary targets of the Sudanese government's destabilization
campaign. In each of these countries, the Sudanese government has provided
financial and material assistance to extremist Islamic groups seeking to
overthrow the democratically-elected governments. As a result, Eritrea,
Ethiopia and Uganda have severed diplomatic relations with Khartoum and are
now actively working to contain the threat coming from Sudan.
ROOT CAUSES
Understanding the crisis in Sudan is a complicated
matter. It is not simply the north against the south, the governing
National Islamic Front regime against the rebel Sudan People's Liberation
Movement/Army, the Arabs against the Africans, nor the Muslims against the
non-Muslims (Christians and traditional animists). In certain respects it
is each of these things, yet still more. Fundamentally the religious,
cultural, and ethnic discrimination underlying the domestic crisis in Sudan
is a function of the identity crisis the country has struggled with since
independence. This identity crisis is manifested in the present conflict of
visions between the NIF regime's radical political Islamic vision and the
SPLM/A's secular, democratic and pluralistic vision. Just as Sudan's
domestic terrorism is a direct manifestation of the NIF regime's radical
political Islamic agenda and its authoritarian style of governance, so too
is its support for international terrorism.
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Ending the war in the south and restoring
multiparty democracy and respect for human rights would stop Sudan from
being a regional and international menace. More importantly, resolution of
the civil war would offer millions of Sudanese their first opportunity to
live in peace and dignity. Therefore, the ultimate objective must be a
just, comprehensive and lasting peace for the whole country, not a partial
settlement between the regime and the SPLM/A or other southern rebel
movements. Rule of law, respect for human rights, and a just peace in
southern Sudan are prerequisites for ending Sudan's support for
international terrorism.
PROSPECTS FOR PEACE
Present political and military dynamics do not
bode well for reaching a comprehensive and just peace among the warring
parties. The conflict has now stratified along vertical lines, with
north-south alliances fighting against each other. Northern opposition
parties and the SPLM/A have joined forces in an umbrella association called
the National Democratic Alliance (NDA), whose objectives are the overthrow
of the regime, the restoration of multi-party democracy and a peaceful
resolution of the conflict in the south. The emergence of the NDA is a
critical development because it defuses the NIF regime's major rallying
cry: that Islam in Sudan is under attack by secularists and the West. The
northern opposition forces are all Muslim and include the traditional and
very conservative Islamic leadership, which claims the loyalties of much of
Sudan's Muslim population. Recently, Sadiq al-Mahdi, Prime Minister of
Sudan at the time of the NIF coup in 1989, president of Sudan's largest
political party, the Umma Party, and a leading figure in the NDA, visited
Washington, DC to reinforce his constituency's support for a pluralistic
and democratic Sudan.
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For its part, the NIF regime has joined forces
with splinter rebel movements in the south, including the South Sudan
Independence Movement/Army (SSIM/A) led by Riek Machar and the
SPLM/A–Bahr el-Ghazal group led by Kerubino Kwanyin Bol. The alliance
between NIF and several rebel factions was formalized in the signing of a
peace agreement on April 21, 1997 which calls for a referendum in the south
on the question of unity or separation following an interim period of four
years. The SPLM/A has refused to join the peace agreement, dismissing it as
a ''sham.'' Indeed, observers question the usefulness of negotiating a
peace agreement without the participation of all of the parties,
particularly the largest southern rebel movement or any of the northern
opposition parties. The true test of Khartoum's sincerity in seeking a
peace agreement will be whether or not it is willing to negotiate with all
parties to the conflict—northern and southern—and whether or
not it is prepared to negotiate from the starting point of the
previously-negotiated IGAD (Inter-Governmental Authority on Development in
the Horn of Africa) Declaration of Principles.
Barring this, we fully anticipate the intensity
and scale of fighting in southern Sudan and other parts of the country to
increase drastically. In January 1997, the NDA launched a military
offensive in territory far more strategic to Khartoum than the south. This
initiative—the ''Eastern Front''—has the potential for shutting
down Khartoum's vital pipeline and corridor to the sea. Combined with the
NDA military fronts in Sudan's Upper Nile and Blue Nile provinces
(threatening a dam that supplies 80 percent of Sudan's electrical power),
SPLM/A rebel activity in central Sudan's Nuba Mountains region, and a
strong SPLM/A offensive in the south generally, the NIF government finds
itself confronted by a major strategic dilemma. For the first time, the
government faces military challenges on four fronts. Never in its existence
has it confronted such a direct threat to its own survival.
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THE ROLE OF US POLICY
World Vision concurs with the assessment recently
made by Roger Winter, director of the US Committee for Refugees, before the
Senate Africa Subcommittee, that Sudan is the one state on the Terrorism
List which holds realistic potential for fundamental change in the
near-term. The change will be produced by the Sudanese themselves, but it
is directly in the interests of the United States to see such political
change occur and to encourage it. We need a clear policy on Sudan that
reflects US interests and sides with the people against a rogue government.
Such a policy would not allow ''business as usual'' to continue between
American individuals or companies and the government of Sudan, while at the
same time withholding from the people of Sudan, particularly those living
outside of the control of the government, appropriate forms of development
assistance.
To the extent that it is in the interests of the
US to see a democratic and pluralistic government established in Sudan, it
is in our interests to help prepare southern Sudan for the eventuality of
self-government, regardless of the ultimate national framework within which
self-government is realized. Presently, the fledgling civil administration
in non-government-held areas is severely handicapped by a dearth of
resources, ranging from such basic commodities as paper to write on, chairs
to sit in, or bicycles to enable administrators to move around their
districts. Modest investments now in building the local capacity of the
civil administration in its formative stages are investments in the
governance of southern Sudan, investments that will pay off for years to
come and will help ensure the sustainability of a just peace agreement when
it comes.
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It is also in our interests not to allow US
persons to enrich the present Sudanese government. The NIF regime is
starved for cash as a result of a failing economy and an estimated drain on
its resources of $1 million per day to wage war against the south. Khartoum
desperately needs the hard currency from oil revenues to continue to pursue
its radical Islamic agenda at home and abroad. US policy should ensure that
Americans do not contribute to the ability of the NIF regime to continue to
wage war against its own citizens or to support destabilizing and terrorist
activities regionally and internationally.
Furthermore, it is important to note that the oil
fields in question lie in regions of southern Sudan which are hotly
contested. The SPLM/A, the NDA, and other rebel factions have indicated to
all foreign companies in Sudan that their installations and personnel would
be considered legitimate military targets if operations do not cease, a
threat which history has shown the SPLM/A is more than willing to act on.
Plans to build a 950-mile pipeline to the Red Sea from the oil fields have
already been jeopardized by NDA attacks in eastern Sudan, through which the
pipeline to Port Sudan is due to be laid.
World Vision firmly believes that American
investment should not contribute to the exploitation of Sudanese oil fields
until a comprehensive settlement is reached which includes an agreement on
the sharing of natural resources and provides for oil revenues to
contribute to the critical development needs of southern Sudan. The
possibility of American investment and assistance in the development of
Sudanese oil fields should be used as an incentive to encourage all parties
to negotiate a just settlement.
Weaknesses in American policy such as the ones I
have just mentioned suggest that a comprehensive review of US policy on
Sudan is needed. World Vision calls on the Administration and Congress to
engage in such a review to identify a coherent policy on Sudan. Both World
Vision and the Sudan Working Group have produced policy papers with
specific recommendations for such a comprehensive policy review.
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SECTION 321 OF THE ANTI-TERRORISM ACT AND 31 CFR PART 596
Section 321 of the Anti-Terrorism and Effective
Death Penalty Act of 1996, if taken at face value, would prevent US persons
from engaging in financial transactions with Terrorism List governments. In
the case of Sudan, this should have precluded the possibility of American
companies seeking rights to oil concessions from the government of Sudan.
Unfortunately, the regulations issued last August by the Office of Foreign
Assets Control of the Treasury Department (31 CFR Part 596) to implement
Section 321 permit all financial transactions with Sudan and Syria except
those which pose a direct risk of furthering domestic terrorism.
Since November of last year, World Vision and the
Sudan Working Group have urged the Administration to rescind these
regulations and rewrite them in a manner more consistent with the letter of
the law. In the absence of the administration's willingness to do this, we
have supported congressional initiatives to ensure that ''business as
usual'' does not continue between the US and the government of Sudan.
World Vision would prefer that this objective be
achieved as part of a coherent policy toward Sudan which recognizes the
domestic and international implications of any financial transactions with
the Sudanese government. Section 321 of the Anti-Terrorism and Effective
Death Penalty Act of 1996, no matter how strictly interpreted, will
ultimately fail to stop the government of Sudan from supporting
international terrorism because it fails to address the root causes of this
support. Section 321 takes an appropriately moral stance on the role of US
persons in contributing to the funding of the NIF regime's abhorrent
practices, but there will always be other countries, companies, and
individuals with fewer scruples willing to support a rogue regime if there
is economic profit to be gained. Reports indicate that Canadian, Chinese,
Malaysian, and now Austrian firms have rushed in where we would have
American companies excluded. Nevertheless, the position articulated in
Section 321 is the right position to take. Although it is beyond the scope
of this committee, World Vision urges Congress and the Administration to
incorporate the sanction provided for in Section 321 into a comprehensive
policy on Sudan that does address the root causes of Sudan's domestic
crisis and support for international terrorism.
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THE IMPACT OF H.R. 748 ON HUMANITARIAN ASSISTANCE
Mr. Chairman, the bill you have introduced in the
form of H.R. 748 would ensure that Section 321 is strictly implemented with
no exceptions. While we are supportive of prohibiting financial
transactions between the government of Sudan and US persons, World Vision
shares the concern of other humanitarian organizations that some exemptions
to the rule are necessary. Completely denying the Administration the
ability to write regulations implementing Section 321, as this bill would
do, may result in harmful, albeit unintended, consequences for humanitarian
assistance to Terrorism List countries.
Specifically, World Vision is concerned that
financial transactions incident to the provision of humanitarian assistance
to meet basic human needs be exempted from Section 321 in H.R. 748.
H.R. 748 makes similar provision for financial transactions related to
routine diplomatic relations; we request that humanitarian assistance also
be explicitly exempted from this sanction.
Presently, the Office of Foreign Assets Control
has either issued written regulations or has adopted a policy of issuing
specific licenses making the provision of humanitarian assistance to the
five Terrorism List countries under sanctions regimes possible. The
Commerce Department's Bureau of Export Administration also provides by
regulation that exports of humanitarian goods to such countries is
permissible, under certain conditions. The regulations issued by OFAC in 31
CFR Part 596 enable these provisions to remain in effect. In the cases of
Sudan and Syria, which do not fall under comprehensive sanctions regimes,
humanitarian assistance is possible because of the very broad general
licenses OFAC has issued for these two countries in 31 CFR Part 596.
Without these regulations, humanitarian organizations would not be able to
provide life-saving aid to Terrorism List countries. H.R. 748, as presently
written, would effectively nullify these provisions and prevent private
humanitarian assistance to any Terrorism List country.
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Only in the case of non-government held areas of
southern Sudan, where the Sudanese government is powerless to collect any
taxes or fees on the delivery of humanitarian assistance or the travel of
humanitarian aid workers, would humanitarian assistance still be possible.
In all other cases, including for instance northern Sudan, North Korea, and
Cuba, it would be virtually impossible to avoid payment of any sort to the
government in the course of providing humanitarian aid to a Terrorism List
country. Even if it were possible to deliver humanitarian assistance
without engaging in a financial transaction with the government, traveling
to the country to monitor the distribution of the aid would be impossible
without at least paying a visa fee, an airline ticket or airport tax, or
paying for government-run room and board. World Vision would face these
challenges in North Korea, which is in dire need of food and agricultural
aid to stop a famine that threatens the lives of 23 million North Koreans,
including 2.4 million children.
Mr. Chairman, World Vision urges the Committee to
ensure that millions of needy people in Sudan, North Korea, Cuba, Iraq, or
any other country on the Terrorism List not be deprived of vital
humanitarian assistance as a result of H.R. 748. We would welcome the
opportunity to work with you on drafting language to ensure that this is
not the case.
Mr. MCCOLLUM. Thank you, Ms. Almquist.
Mr. Latham, you are recognized.
STATEMENT OF JAMES D. LATHAM, SENIOR VICE PRESIDENT AND GENERAL COUNSEL,
ITT SHERATON CORP.
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Mr. LATHAM. Thank you, Mr. Chairman.
I am Jim Latham, senior vice president and general
counsel at ITT Sheraton Corp. Sheraton is a leading worldwide hospitality
company. We own, lease, manage, and franchise hotels around the world. We
have over 420 hotels and resorts in more than 60 countries, including 229
properties with 54,000 employees in the United States. I appreciate this
opportunity to express Sheraton's views on H.R. 748.
Sheraton's concern about the legislation in its
current form arises from the fact that the bill can be construed to require
us to terminate our longstanding contractual arrangement with the Syrian
Ministry of Tourism to manage the Sheraton Damascus Hotel and Towers, a
325-room property in Syria's capital. This would occur without harming
Syria but could expose Sheraton to claims for an alleged breach of contract
and consequent money damages. In that event, management of the hotel would
be immediately turned over to a foreign competitor, and, in our view, the
only parties adversely impacted would be ITT Sheraton, a U.S. company, and
ultimately its shareholders.
The Sheraton Damascus is 1 of 20 existing ITT
Sheraton properties in 10 Middle Eastern countries. Furthermore, we
recently announced plans for major expansion of our already considerable
presence in Israel and Egypt.
ITT Sheraton strongly supports your objective of
attacking international terrorism. We are painfully aware of the human toll
inflicted by terrorist acts, as a senior executive of Sheraton and a
personal friend was killed in the Pan Am 103 bombing. There is no room in a
civilized society for such cowardly acts.
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Sheraton has also been harmed commercially by
terrorism. For example, the Sheraton Kuwait fell victim to Saddam Hussein's
invasion, and, as a result of the ensuing Persian Gulf War, we were forced
to abandon hotels in Baghdad and Basrah, Iraq.
As to the hotel in Damascus, Sheraton is a party
to a management contract with Syria's Ministry of Tourism dating back to
1973. The present contract, including two options exercisable by Sheraton,
extends well beyond the turn of the century. Under this longstanding
arrangement, Sheraton provides substantially all of the management services
for the hotel, including hiring of personnel, supervision of hotel
operations, and the collection and distribution of funds. Sheraton receives
a significant management fee for these services based on a percentage of
the hotel's total revenue and its gross operating profit.
We have no equity in this hotel, so our situation
cannot be equated with those where a company actually makes an investment
in a terrorist country. Enactment of H.R. 748, as introduced, would
effectively preclude Sheraton from managing the property, as our activities
will be construed as a financial transaction. This will likely subject
Sheraton to a claim for significant damages by the Syrian Ministry of
Tourism for, in its view, the unlawful and unilateral termination of the
management contract.
Enactment of U.S. economic sanctions on Syria
would not necessarily be a defense to such a contract claim. Under the
terms of our agreement, arbitration for any such action would occur in
Lebanon, a country to which U.S. citizens are not permitted to travel
without prior U.S. State Department approval.
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Despite our strong support for the bill's
objective, we do not believe that this legislation would in any way reduce
terrorism as applied to our hotel situation. In fact, the opposite may be
the case, because the successful breach-of-contract action by Syria against
Sheraton could result in serious financial exposure to the company, which
would expose Sheraton to pay substantial money damages to Syria. By
contrast, allowing Sheraton to continue to operate the hotel will result in
significant sums being paid from Syria to a U.S. corporation under a
legitimate commercial arrangement with no relationship to terrorist
activity.
Please recognize also that Sheraton pays income
taxes to the Federal Government on the fees that it earns from this
activity. Forcing Sheraton to pull out of Syria would not adversely impact
that country.
The Sheraton Damascus is not a project where a
U.S. company is making a significant new financial investment in the local
economy or building a physical plant or transferring sensitive technology.
Instead, our relationship is one in which a U.S. company performs ongoing
basic management services which are readily available from non-U.S.
companies.
Furthermore, as the only U.S.-run hotel in
Damascus, U.S. diplomats and other U.S. citizens traveling to that city
would no longer have a U.S.-managed hotel in which to stay if, in fact,
Sheraton is forced to leave. The diplomatic importance of Sheraton's
presence in Syria is illustrated by the fact that the former Secretary of
State, Warren Christopher, and his delegation stayed in that hotel no less
than nine times.
We strongly urge the subcommittee, if it
determines to go forward with this legislation, to amend H.R. 748 so that
it will not have the effect of disrupting nonsensitive ongoing business
arrangements in Syria, including the operation of the Sheraton Damascus.
This result could be accomplished in several ways.
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For example, the bill could be targeted to address
only those specific economic activities that the subcommittee determines
might facilitate the support of terrorism. Alternatively, the legislation
could expressly exclude from sanctions nonsensitive business activities
such as humanitarian activities and the provision of consumer goods and
services. At the very least, ongoing, already established business
arrangements such as our management of a hotel should be protected from any
new economic sanctions. I don't believe that it is the intention of this
subcommittee to punish U.S. companies involved in legitimate
non-terrorist-related commercial activities.
Mr. Chairman, members of the subcommittee, ITT
Sheraton appreciates this opportunity to express its views on this
important subject. I look forward to responding to your questions and
providing such additional information as the subcommittee may request.
Thank you.
[The prepared statement of Mr. Latham
follows:]
PREPARED STATEMENT OF JAMES D. LATHAM, SENIOR VICE PRESIDENT AND GENERAL
COUNSEL, ITT SHERATON CORP.
Mr. Chairman and members of the Subcommittee, I am
James D. Latham, Senior Vice President and General Counsel of ITT Sheraton
Corporation, which is based in Boston. As you may know, Sheraton is a
leading worldwide hospitality company which owns, leases, manages, and
franchises over 420 luxury, upscale and midscale hotels and resorts in over
60 countries, including 229 properties with 54,000 employees in the United
States.
Page 95 PREV PAGE TOP OF DOC
I appreciate this opportunity to express
Sheraton's views on H.R. 748, the ''Prohibition On Financial Transactions
With Countries Supporting Terrorism Act of 1997''. Sheraton's concerns
about the legislation in its original form stem from the fact that it could
be construed to require us to terminate our long-standing contractual
arrangement with the Syrian Ministry of Tourism to manage the Sheraton
Damascus Hotel & Towers, a 325-room property and one of only two
international hotels in Syria's capital. This would occur without harming
Syria, but by exposing Sheraton to claims for an alleged breach of contract
and money damages. Management of the hotel would be turned over to a
foreign competitor.
The Sheraton Damascus is one of twenty ITT
Sheraton properties in ten Middle Eastern countries: Bahrain, Egypt,
Israel, Kuwait, Qatar, Oman, Saudi Arabia, Syria, United Arab Emirates and
Yemen. Furthermore, we recently announced plans for a major expansion of
our already considerable presence in Israel and Egypt, where we are a major
part of each country's tourism industry.
ITT Sheraton strongly supports your objective of
attacking international terrorism. We are painfully aware of the human toll
inflicted by terrorist acts as a senior Sheraton executive was killed in
the Pan Am 103 bombing. As a worldwide company, Sheraton has been harmed
commercially by terrorism. For example, the Sheraton Kuwait fell victim to
Saddam Hussein's invasion and, as a result of the ensuing Persian Gulf War,
we were also forced to abandon hotels in Baghdad and Basrah, Iraq.
As to the hotel in Damascus, a Sheraton subsidiary
is a party to a management contract with Syria's Ministry of Tourism,
dating all the way back to 1973, under which the hotel was first
constructed and is now operating. The present contract extends through 1998
and is subject to renewal by Sheraton for up to twenty years. The contract
has no force majeure provision, right of cancellation or other
''escape'' clause should H.R. 748 be enacted into law as introduced.
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Under this long-standing arrangement, Sheraton
provides substantially all of the management services for the hotel,
including hiring of personnel, supervision of hotel operations, sales and
marketing (including access to Sheraton's worldwide reservation network and
sales offices), and the collection and distribution of funds. Sheraton
receives a significant management fee for these services based upon a
percentage of the hotel's total revenue and its gross operating profit.
Enactment of H.R. 748 as introduced, by precluding
all financial transactions with Syria other than those ''incident to
routine diplomatic relations'', would effectively preclude Sheraton from
managing the property and thus likely subject Sheraton to a claim for
significant damages by the Syrian Ministry of Tourism for, in its view, the
unlawful termination of the management contract. Enactment of U.S. economic
sanctions on Syria would not necessarily be a defense to such a contract
claim. Under the terms of the contract, arbitration of any claims would
occur in Lebanon, a country to which U.S. citizens are not permitted to
travel without prior State Department approval.
Despite our strong support for the bill's
objective, we do not believe that this legislation, which could force
Sheraton to cease operation of the hotel in Damascus, would in any way
reduce terrorism. In fact, the opposite may be the case because a
successful breach of contract action by Syria against Sheraton would result
in serious financial exposure to Sheraton which-could require Sheraton to
pay substantial money damages to Syria. By contrast, allowing Sheraton to
continue to operate the hotel will result in significant sums being paid
from Syria to a U.S. corporation under a legitimate commercial arrangement
with no relationship to any terrorist activity.
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Forcing Sheraton to pull out of Syria would not
adversely impact that country. The Sheraton Damascus is not a
project where a U.S. company is making a significant new financial
investment in the local economy, building a physical plant, or transferring
sensitive technology. Instead, our relationship is one in which a U.S.
company performs on-going basic management services which are readily
available from non-U.S. companies, in this instance from other
international hotel systems, most likely one of our European
competitors.
If Sheraton is forced to leave Syria, another
hotel company will quickly take over and immediately begin to receive
revenues that otherwise would have gone to a U.S. firm and thus subject to
U.S. taxation. In addition, as the only U.S.-run hotel in Damascus,
U.S. diplomats and other U.S. citizens traveling to that city would no
longer have a U.S.-managed hotel in which to stay if Sheraton is forced to
leave. The diplomatic importance of Sheraton's presence in Syria is
illustrated by the fact that former Secretary of State Warren Christopher
and his delegations stayed in the hotel no less than nine times and the
hotel hosts an average of four to five congressional delegations each year,
in addition to more routine diplomatic guests.
We strongly urge the Subcommittee, if it
determines to go forward with this legislation, to amend H.R. 748 so that
it will not have the effect of disrupting non-sensitive on-going business
arrangements in Syria, including our operation of the Sheraton
Damascus.
This result could be accomplished in several ways.
For example, the bill could be targeted to address only those specific
economic activities that the Subcommittee determines might facilitate
support for terrorism. Alternatively, the legislation could expressly
exclude from sanctions non-sensitive business activities, such as the
provision of consumer goods and services. At the very least, on-going
business arrangements, such as our management of a hotel, should be
protected from any new economic sanctions.
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Mr. Chairman and members of the Subcommittee: ITT
Sheraton appreciates this opportunity to express its views on this
important subject. I look forward to responding to your questions and
providing such additional information as the Subcommittee might require. We
stand ready to work with you and your colleagues as deliberations on this
measure proceed.
Thank you, Mr. Chairman.
Mr. MCCOLLUM. Thank you very much, Mr.
Latham.
Is it Mr. Ijaz or Ijaz?
Mr. IJAZ. Ijaz. Pronounce the J.
Mr. MCCOLLUM. All right. Mr. Ijaz, please
proceed, sir.
STATEMENT OF MANSOOR IJAZ, CHAIRMAN, CRESCENT INVESTMENT MANAGEMENT,
L.P.
Mr. IJAZ. Thank you.
Mr. Chairman, I would ask you to forgive me for my
cranky throat. I have had a bit of a cold for the last few days and travel
a lot. But I want to thank you very much for giving me the opportunity to
come and present what I hope will be a sort of thought-provoking view of
what may be going on in at least one of the two countries that you have in
mind for this particular bill.
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In my judgment, the time has come for the American
legislative and foreign policy establishments to develop a new set of
policy tools altogether for dealing with the growing problem of terrorism,
which, I concur with this committee's assessment in that sense.
Unilateral economic and political sanctions have
slowly eroded America's leadership role and relevancy in either containing
or controlling the proliferation of terrorist activities.
There is no point in imposing sanctions in cases
where our unilateral actions either will have no impact, which I believe
may be the case in this particular circumstance, or, worse, are flouted by
our allies in a manner that sends a message of inconsistency and lack of
common resolve. Holding the moral high ground is useless when our allies
are repeatedly prepared to fill the very gaps we seek to create and the
operational framework of terrorist advocate governments.
Terrorism is used by advocates because it is cheap
and effective in expressing a challenge to what is perceived as Western
hegemony and imperialism by the outside world. Yet the governments that
support terrorist activities need only enough resources to survive, and
survive they have, in Iran, Iraq, Libya, and other countries despite our
often unilateral actions aimed at containing them.
Now, I would like to ask just some
thought-provoking questions if I might. What would happen if instead of
containing, we engaged states that demonstrated a willingness of their own
accord to rejoin the family of nations, and possibly by doing so, even use
their own moral suasion over other rogue states to try and bring them
around; in other words, effectively creating an internal mechanism within
these family of rogue nations to try and control what they do? What would
happen if we flooded these markets with our Western technologies and forced
their systems to become more dependent on our form of capitalism, our
ideology, and our mechanisms for economic livelihood?
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Would potential young—and I ask this
question just as a hypothetical—would potential young Iranian mullahs
not become more willing Conoco oil and gas capitalists. Would Sudanese
farmers now accused of harboring and training Hezbollah and Hamas
terrorists not potentially become the consummate employees of American food
giant Archer Daniels Midland?
I would like to narrow the balance of my remaining
comments to the Sudan. I have visited the Sudan on a half dozen occasions
offer the past year, and I have gone there to try and better understand
whether or not this country as a unique case can possibly help us to better
understand how we could redefine our antiterrorism policies in this
country.
I have been driven by two overarching concerns,
one born of my business interests as well as my investment management
responsibilities to the portfolios that I am responsible for, and the
second driven by my own political concerns here in the United States of
whether or not America is not coming perilously close to demonizing Islam
as a religion rather than going after specific individual cases.
Now, if I may come to the business discussion just
for a moment, because that is—since I am a businessman, I am probably
here for that reason as well. There are about one trillion barrels of
proven oil reserves, recoverable oil reserves in the world today. Of the
countries that produce oil and export oil, there are 22, 12 of them are
Islamic in some form or the other. They either have an Islamic government,
they have an Islamic ideology or Islamic philosophy of some sort. Now,
those 12 countries control 72 percent of all the world's known and
recoverable crude oil reserves, of which Iran, Iraq, and Saudi Arabia
represent two-thirds of that 72 percent. Now, of those three countries, two
of them are already on our list of terrorism states, and the third, in my
judgment, is moving dramatically to the right just to preserve the
political apparatus that they have in place right now; that is, that the
House of Saud to remain in power may have no choice but to move to the
right of the Islamic spectrum.
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Now, the critical aspect of this argument, is that
the 72 percent that is controlled by the Islamic producing countries has a
pumping lifetime at current rates of consumption and rising—sorry,
current rates of production and rising rates of consumption, of about 100
years. The non-Islamic producing countries, which include the United
States, Russia, China, Venezuela, countries of that type, have a pumping
lifetime of at most 30 years, and that is on a good day when we take
everything and combine it together. So if you are now an Islamic
radicalist, and the United States wants to impose unilateral sanctions, as
a mullah sitting in Iran, your ideology is we will just wait them out, and
then they will have to come ask us for energy resources in a much different
way than they are asking us to deal with the problem today.
So I just ask us to think about this as a, you
know, part of our overall thinking process longer term, what are the
effects of what we are doing shorter term. Can we, in fact, modify the
behavior by doing what we are doing with our legislation today sufficiently
to bring them back in in time to protect our long-term interest? That is I
would ask this committee to think about.
Now, I would like to make a few quick points about
what is going on in the Sudan as an example, because, in my judgment, the
Sudan, as has been stated by Ambassador Wilcox and has been stated by some
of our other prominent panelists, is, in fact, a nexus for an Islamic what
I call fundamentalism. I want to distinguish between fundamentalism and
radicalism, radicalism being the art of figuring out how to propagate
terrorism, and fundamentalism being the art of trying to effectively
practice Islam in a much more pure and real way.
Now, in the Sudan, the reason that this is a
unique example is because this is the—I think it is the only country
on the list that is a government—an Islamic Government in which there
are Animist and Christian minorities as well. You don't just have a purely
Muslim population or purely Catholic population, or purely Communist
population as in the case of North Korea.
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Now, in the case of a country that has this type
of a mix, if you will, what I have seen during the past year, and it really
is only about a year and a half old in terms of what is going on there, you
have a process of institutional governance; that is, that now the dictator
that is today the President could not make a decision today without going
through an institutional framework much the way that things work here in
the United States. He cannot make unilateral decisions to just implement
policy in a particular way without going through a process. Now, the
question is whether or not he can do that without bringing the Christian
and Animist minorities into the process, and that is where our focus should
be in terms of trying to encourage them in moving in the right
direction.
The second very important thing that I think is
going on in Sudan is a process of trying to modernize Islam as a system of
governance. Now, as we know, in Saudi Arabia, Sharia is the governing force
of law. That means that if you steal something, you get your hand cut off.
And I've seen this with my own eyes having lived in Saudi Arabia how that
process works.
In the Sudan their Islamic experiment is, in fact,
trying to take a different tact. My colleague to the left here talked about
the Sudanese peace agreement. While the agreement hasn't brought everybody
into the mix yet, it is the first time in the history of the world that an
Islamic government, under Sharia has provided for the right to
self-determination, the freedom of religion, the freedom of practice and
worship, you know, in the southern Sudanese states, and it is a start. It
may not be there yet. It is not perfected, but it is a start, I think, in
the right direction.
Thirdly, I would like to tell you a little bit
what I know on the resource development side of Sudan, the oil fields,
because I think that is a big issue that needs to be looked at in this
process.
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Clearly, the Sudanese are capable of understanding
what the United States can do to them, and what they have done in response
is they have gone out and they have gotten the Chinese and the Malaysians
to invest in their oil fields. That means, and I know this for a fact from
the Chinese, that they are prepared to use their U.N. Security Council veto
against any legislation that we, the U.S. government, would bring to the
United Nations on terrorist sanctions primarily because they need that
oil.
The Chinese 5-year plan calls for 20 million tons
of oil to be imported by the year 2000. That means literally every barrel
of oil that comes out of the Sudanese field is going to go directly to
China on the boat. So short of closing the Red Sea, one way or the other,
we are going to have a hard time stopping these fields being developed in
any way, shape or form.
Secondly, when you bring the Malaysians into the
mix, you are talking about bringing a country that is probably the only
example of a fundamentalist Islamic state that actually has succeeded. You
know, I was reading in the Economist on the way down this morning these
guys are now bringing the Internet into—with all of its problems, I
might add—into Malaysia. That is a big deal for an Islamic country to
do on an institutional governmental-level basis.
So let me conclude, if I might—one other
quick point I would like to make, and that is on the issue of Christian
persecution in the Sudan, I have been an advocate, and I have been very,
very harsh with my—in my conversations with the Sudanese Government
about the fact Islam does not permit the persecution of any religion. And I
have asked them—and there are other friends of mine in the think tank
community. Tony Sullivan, Graham Fuller were with me on a recent trip in
which we have asked them purposefully to review their regulation on whether
or not, for example, land ought to be salable for the purpose of building
churches and, you know, places of Christian worship.
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Now, as a Muslim, and I am an American, born
American, but as an American of the Islamic faith, I am prepared to fight
for Christians' rights to be able to worship in any way, shape or form that
they choose because that is the principle on which we base our living here
in the United States of America. And that is the principle that we want to
try and encourage them to go forward with. But to do that under a set of
circumstances where sanctions, every time they try to stand up, we slap
them and slap them back down, I am just wondering what the effectiveness of
that may really be in the long run. I think the Sudanese Government is
prepared to make some serious changes in the way that it does things, and I
want to thank you very much. And I ask that the balance of my statement be
entered into the record.
Mr. MCCOLLUM. It certainly will be
done.
[The prepared statement of Mr. Ijaz follows:]
PREPARED STATEMENT OF MANSOOR IJAZ, CHAIRMAN, CRESCENT INVESTMENT
MANAGEMENT, LP
Thank you Mr. Chairman and the distinguished
members of the Subcommittee on Crime present here today for inviting me to
submit views on how this legislative body might consider avenues that
constructively engage Islamic states which have demonstrated histories of
supporting inappropriate activities, some of which must clearly be
categorized as terrorism. In the process I advocate, we might find
mechanisms that modify their behavior patterns in ways that contribute to
protecting American national interests rather than pursuing outdated and
ineffective policies of containment which have produced precious few
results thus far. For the purposes of this discussion, I will limit my
remarks to our bilateral relations with the Sudan, a country we have
labeled as a chief sponsor of Islamic terrorism since the early 1990's.
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I come before the subcommittee first and foremost
as a born American equally concerned about the proliferation of terrorism
and extremism, regardless of its ideological form, throughout the world
today. As an adherent of the Islamic faith, I am even more concerned about
the potentially debilitating consequences for American-Muslims from
America's increasingly hostile and standardized policy response of economic
sanctions and containment towards problem areas in the Islamic world. We
must take great care to avoid demonizing adherents of a religion which is
the fastest growing geopolitical force in the world today, a religion that
is also the faith of over 7 million Americans who are contributing greatly
to the social, economic and political fabric of the United States. We must
take great care not to stigmatize the children of American-Muslims whose
heritage is Pakistani, Afghani, Syrian, Sudanese, Algerian, Palestinian,
Iranian or Iraqi because of the actions of a few whose motives are born of
hatred that has less to do with ideological differences than with their own
internal failures and shortcomings.
Again and again, we have witnessed America's
failure to cope with the many faces of Islam in the aftermath of the Cold
War. Whether in Afghanistan, Algeria, Azerbaijan, Bosnia, Chechnya,
Indonesia, Iran, Pakistan, Somalia, the Sudan and perhaps in the future
even oil powers such as Saudi Arabia, America's inability to effectively
deal with Islam's many dimensions represents one of the most serious
vacuums in our ability to provide for our own national security. In fact,
my appearance here today is demonstrable evidence that Americans of the
Islamic faith can play an integral role in defining solutions which might
reduce rather than increase tensions with those in the Islamic world we see
as a threat to our national interests.
In re-shaping America's terrorism policy,
particularly countries of the Islamic world are concerned, we should use
our considerable economic powers to raise up disaffected Muslims so they
are not as desperate to tear us down. We, a nation born of religiously
persecuted immigrants, often forget that terrorism is born of trampled
egos. The failure of America to cope with Islamic rage stems from our
inability to understand that the rage is as much directed at Islam's
internal failures (tyranny and corruption, to name two) as it is against
foreign oppression and western contempt for Islam's traditions and ways of
life. Furthermore, we fail to see that Islam's extremists are no different
than America's extremists. Both seek to correct what they rightly or
wrongly see as society's deviation from their often misguided vision of the
pure message. Islam's fundamentalist movements, in fact, are capable of
producing widely differing results, from the medieval experiment in
Afghanistan to the modern, competitive state in Malaysia.
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Islamists have even tried their hand at democracy.
Take Algeria, for example. In 1992, Islamists legitimately attained power
in fairly held elections only to see their victory overturned by the
secular military regime after it received a wink from Washington. Had the
Islamists been allowed to assume power, one of two outcomes would have
occurred: their skepticism of democracy as a legitimate mechanism to
express ideas would have been silenced and America's argument that only
democracy can provide the necessary framework for economic and social
prosperity would have bean strengthened; or they might have failed, much as
the Iranian revolution has, to deliver anything but empty rhetoric.
Failure would have demonstrated that democracy as an organizing
principle was not at fault. The fault lay in the quality of their
ideas.
In a secular western world where separation of
church and state are the norm, it is logical to understand our mistrust of
a religion that wants to deeply influence matters of state. More logical,
however, would be for us to maintain a principled neutrality in all cases
where Islamists are trying to use democracy, no matter how poorly, as a
mechanism to express their ideas, not just those in which our mortgage
interest rates are at stake and where democracy doesn't exist anyway.
Failure to implement this policy change is to not see that the aberrant
behavior of an Islamist spurned is as dangerous to our national security as
the threat of $50/bbl oil.
With America's post Cold War propensity to define
the work in terms of benefit to our economic interests, permit me to offer
a definition of Islamic radicalism in these terms. The world has some one
trillion barrels of proven and recoverable oil reserves. 72% of these
reserves are controlled by 12 countries whose predominant religious
beliefs, system of government or philosophical tendencies are Islamic,
while the remaining 28% are controlled by non-Islamic countries, such as
the United States, Russia, Venezuela and China. But the criticality of this
statistic lies in the fact that the 72% controlled by Islamic producers, of
which Iran, Iraq and Saudi Arabia represent over two-thirds, will last for
some 100 years at current rates of production and rising rates of
consumption. The 28% controlled by non-Islamic countries has a pumping
lifetime of at most 30 years.
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For Islamic extremists, this is their trump card.
Our failure to engage and modify their behavior results in a potential
waiting game that could dramatically affect our entire economic
system—one highly dependent on the cost of money—in little more
then a generation. The mullahs and Islamic extremists whom we treat with
disdain and contempt today are mocking our policies because they are
prepared to live in economic straight-jackets, if need be, until such time
as we are forced to come, oil cup in hand, to ask them for more reasonably
priced energy resources in order to avoid the unfavorable consequences of
inflation and rising interest rates to our economy. Even our most trusted
oil allies, Saudi Arabia and other members of the Gulf Cooperation Council,
cannot be counted on to resist the internal pressures of Islamists. One
need only keep in mind Saudi Arabia's recent rapprochement with
Iran—a reconciliation that in no small part had the silent hand of
Sudan's enigmatic Islamic force, Dr. Hassan Al Turabi. I trust it is not
necessary to elaborate on the ramifications for American economic interests
of Saudi Arabia's sharp turn to the right of the Islamic spectrum—an
eventuality that is now all but assured once Crown Prince Abdullah formally
assumes the reigns of power.
With my overarching, concern about the
ramifications of America's failure to deal effectively with the problem
areas of Islam as background, permit me to narrow my remarks to the
subcommittee's focus on the issue of Sudan's support for radical and
extremist Islamic groups that has, until recently, characterized the
Islamic movement there. My interest in the Sudan as a comprehensive case
study for re-defining our anti-terrorism policies is consistent with my
political activism on the issues of how America deals with situations where
Islamic countries and their non-Islamic neighbors don't get along. Hence
interest in Kashmir, where Muslim Pakistan is pitted against Hindu India;
Nagorno-Karabakh, which pits Muslim Azerbaijan against Christian Armenia;
and the Sudan, where the fundamentalist Islamic regime is struggling with
internal Christian and Animist minorities and surrounding Christian and
Muslim neighbor relations are poor. It should be noted here for the record
that while I strongly support American efforts to isolate and contain the
regimes of Saddam Hussein in Iraq and Muhammar Gadafi in Libya, two cases
that amply demonstrate why America's apprehension of Muslim leaders with
the ''God complex'' (i.e., those who use Islam's monotheism for
inappropriate political motives) is justified, we must find more creative
ways that do not also punish the people of Iraq and Libya for their frailty
and inability to rise up against these dictatorial forces.
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The Sudan, however, represents a case where in our
zealousness to contain Islamic fanaticism, and its by-product of terrorism,
we may have overplayed our hand. We have failed to see the potential
benefits from engaging Sudan's Islamists on three different levels: first,
the value of their efforts to modernize Islam; second, enlisting Sudan's
Islamic movement to help us in our fight against global extremism, in
particular where it relates to Islamic extremism and terrorism in countries
vital to our geo-political interests; and third, the value of Sudan's
relationships going forward with Iran, Saudi Arabia, Algeria, Afghanistan
and other countries that are now and will be in the not-so-distant future
vital to our economic interests.
Most disturbingly, we have failed to realize that,
short of declaring outright war on the Sudan for its various transgressions
(or any other state trying to revive Islamic fervor), there is little we
can do to stop the Islamic revival underway there now for the past decade.
China and Malaysia are helping, at an official level, to develop their oil
reserves (estimated at 40–50% of the oil found in Alaska's Prudhoe
Bay) that will ensure the economic resources to maintain the revivalist
movement. Anyone who believes China will not use its UN Security Council
veto to block American efforts to sanction Sudanese oil sales is not fully
cognizant of the massive energy China has for the 21st century, and how
dearly 200,000 barrels a day from Sudan's oil fields will serve those
needs. Anyone who does not fully appreciate the nature of the relationship
between Dr. Turabi and Saudi Prince Abdulla, or President Bashir and Sheikh
Zayed of the UAE, or the growing ties between Sudan and our most stable
Mid-East peace ally, Jordan, fails to see how far the purist influence of
the Sudanese Islamic movement already reaches.
All this, of course, begs the question whether the
present Sudanese regime is an innocent bunch of school boys constantly
being accused of crimes they feign ignorance on. In my judgment, after many
long meetings with Sudanese government and opposition leaders, independent
assessments of controversial events and verification of the most disturbing
aspects of the Bashir regime's record, I have come to the conclusion they
clearly arc not innocent school boys. I have read in great detail the
terrorism reports produced by the House Republican Task Force on Terrorism
and admire the tenacity with which Sudan's alleged terrorism activities are
described. Much of what is described is accurate, some is overstated, some
is over-dramatized beyond recognition of what is fact and what is
fiction.
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One of the key areas of past controversy has been
the activities of Sudan's External Intelligence Department. The unbridled
flow of Afghan Arabs and other undesirable characters into and out of the
Sudan took place in large measure under the guidance of the External
Intelligence Department—until its director was replaced in the
wholesale house-cleaning of senior government ministers and technocrats
that took place last year. In fact, there is now high-level cooperation
between the Sudan and many Islamic countries to stop, or at least properly
track, the movements of a significant number of radical and revivalist
Muslims.
Yet, the real danger for the West lies in
revivalist Islamic movements disintegrating into unguided, genuinely
radical states, pushing terrorist networks underground where they can only
be seen at a sidewalk café with a bomb strapped to the body of a
fanatic. This is why the success of any Islamic experiment that proposes to
modernize the framework within which Sharia (Islamic law) exists as the
guiding principle of governance is so critical to long-term American
security interests. Furthermore, our East African allies' fears that
Sudan's Islamic model is being exported in an unwanted manner should design
a better model to meet the needs of their people if they are so fearful of
models like ''Turabism''.
Where, for example, does representation exist for
the Muslim majority in Eritrea and Ethiopia? Where is there legitimate
opposition in Saudi Arabia or Egypt? Where is there democracy in Uganda?
Why is America so willing to apply double standards when it comes to the
most fundamental of our organizing principles, and why is it that the
application of the double standard appears to have an anti-Islamist
tendency?
Would it not be better for Islam as a governing
principle to succeed or fail on the merit of its ideas than for America to
demonize Islam and give her detractors ammunition to bring their unholy war
to our shores?
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The Sudan case study smacks of America's worst
qualities: arrogance, bullying, cynical misinterpretation and believing
what we want to hear rather than looking at the hard facts. America has a
choice; this legislative body has a choice; we can continue to sanction and
ratchet up pressure on countries where we have little leverage and run the
risk of demonizing Islam as a religion. In that case, we may have more to
worry about with American-Muslims rising up to have their voices heard
en-masse and creating an environment in which the funding for radical
Islamic movements will occur night in our own backyard. Or we can try a
more engaging approach that does not compromise our principles but seeks to
draw out elements that genuinely want to contain radical Islam from within
the revivalist Islamic movements of the world. Whether the Sudan represents
such potential, or whether they are the engine of radical Islam, I am not
qualified to judge. But I am convinced after a year-long study of the
situation that America can design a more creative policy approach if we
have the political courage to break with the mentality of unilateral
economic sanctions as the only deployable ''stick''.
We should engage Dr. Turabi to be our bridge to
the radical fringe of Islam, to explain to them that we are not the demons
they seek to portray us as—this would show American vision. We should
send our FBI teams to Khartoum at their invitation to sift through and
analyze the data on terrorism and then make objective recommendations to
the Sudanese on how best to atone for the sins of the past—this would
show American fairness. We should send Ambassador Bill Richardson to see
SPLA opposition leader John Garang and persuade him that making peace and
sharing in the oil and grain wealth of the country, something Khartoum
would be willing to do if America brought him to the table, would be far
better than endlessly and purposelessly carrying on civil war—this
would demonstrate America's power in the only very it should, creating
peace and prosperity for those who have never known it.
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———
EXHIBIT A.—BASHIR LETTER TO HAMILTON (TEXT ONLY)
Representative LEE H. HAMILTON,
Ranking Democrat, House Foreign Affairs Committee,
U.S. House of Representatives,
Washington, DC.
It was with
pleasure that I received the report of your constructive meeting with my
aide, Dr. Abubaker Shingiati, on February 21, 1997. As you are well aware,
U.S.-Sudan bilateral relations remain severely strained, and we welcome any
channel of communication that can better enable both sides to formulate
solutions for issues of importance to both our countries. We here in the
Sudan remain confused and perplexed at the continuing efforts of your
government to collaborate with our neighboring countries in order to effect
a ''coup d'etat'' in Khartoum at the very moment we are making our most
serious efforts to address the various outstanding bilateral concerns.
Perhaps the American people are unaware of the
serious dialogue initiated by my government to improve relations with not
only our neighboring countries, but most importantly with the minority
segments of our own Sudanese population. These efforts have culminated with
a comprehensive Peace Treaty that will be signed in Khartoum on April 2l,
1997 by virtually all the major Christian and Animist tribal leaders from
Sudan's southern provinces, including many important members of the SPLA.
Each of the critical concerns raised by our minority segments, including
the right to self-determination, are addressed in the Peace Treaty. I would
like to take this opportunity, apologizing in advance for the short notice,
to formally extend an invitation to you to attend the Pence Treaty's
signing ceremony on April 21st in Khartoum as my special guest so you may
witness the progress towards a lasting peace we are making here in the
Sudan.
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As I am sure you can appreciate, being the largest
country by land mass in Africa with porous borders and a largely tribal
community make-up, we face unique difficulties in formulating and
implementing policies centrally. We concede that not everything which has
taken place during the past seven years of rule under my government was
desirable, but we ask that the American people also take into consideration
the circumstances surrounding our difficulties. Nevertheless, in an effort
to avoid the empty rhetoric that so often defines relations between African
nations and the United States, we would like to suggest and offer the
following confidence building measures as steps towards improving our
bilateral relationship:
A. To improve communications at the working level,
we would urge that future visits to Khartoum of your capable ambassador,
Mr. Timothy Carney, include meetings with a wider array of people,
including key policy-makers in my government, in order that he might make a
more complete evaluation of the ground realities in Sudan. In the spirit of
openness and cooperation, we will gladly provide him with access to our
leadership at all levels, both political and societal, and facilitate
whatever meetings or visits he may wish to conduct.
B. We extend an offer to the FBI's
Counter-terrorism units and any other official delegations which your
government may deem appropriate, to come to the Sudan and work with our
External Intelligence Department in order to assess the data in our
possession and help us counter the forces your government, and ours, seek
to contain. For example, we would welcome academics specializing in
counter-terrorism methods to give seminars in Khartoum. It is patently
unfair for the United States to continue its policy of accusing the Sudan
of various terrorism complicities, then answering our queries about what
specifically the U.S. would like us to do to correct matters with ambiguous
responses that hide behind the veil of ''classified methods, sources,
etc.''
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We are open to all constructive ideas for
resolving once and for all the issue that Sudan continues to harbor
terrorists and is acting as an agent for the Islamic Republic of Iran.
These accusations are simply not true, and we are prepared to stand behind
our words with concrete actions—but only if such actions are taken in
the spirit of engagement and reconciliation, not as reason for further
punishments in the international community.
C. We invite you and your staff, as well as other
members of Congress that may wish to objectively verify the realities of
our situation to come to the Sudan for a first-hand accounting. We would
also urge you to visit with the strongest critics of my government's
policies in order to insure the most balanced view. Find out how many
minorities have been and will continue to be a part of the national
government, that the distribution of power within the National Assembly is
not different from the distribution of our population, that women are
treated equally and that Islamic Sharia laws are only applicable in the
Northern parts of Sudan. Come and see for yourself who is violating human
rights. We believe you will be surprised by the answers.
D. We strongly urge appropriate authorities of the
U.S. Government to help us bring those elements in our population who have
not yet agreed to terms of peace and reconciliation to the negotiating
table. Would it not be in the greater interests of peace and stability in
the region for the United States to play a constructive role in supporting
the Peace Treaty that we have reached recently, rather than the role of
military aide supplier to rebel forces?
Congressman Hamilton, as a foreign policy expert,
you inevitably understand the need for stability in a region that has Nile
waters, billions of barrels of crude oil reserves and the potential to
become a major agricultural center producing food for the Horn of Africa.
We are committed to making stability and improved external relations with
our neighbors, protection of basic rights and countering the forces of
terrorism the cornerstones of our foreign policy in the region. We are
grateful for your offer to take these serious issues to the appropriate
levels of your government. Your sense of fairness is an example eve can
carry to the Sudanese people as the beacon of American ideals.
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As we undertake this process, may I suggest
regular communication with our State Minister for Foreign Affairs, Dr.
Mustafa Osman Ismaeli. Our embassy in Washington can provide you with his
details. You are, of course, welcome to communicate directly with me at any
time you wish. We look forward to a new era of dialogue with America and to
your visit here in Khartoum.
Sincerely,
| Omer Hassan Ahmed El Bashir, |
President of the Republic of Sudan.
———
Mr. MCCOLLUM. I want to thank you and thank
the entire panel for your comments.
Ms. Almquist and Mr. Latham, I might say at the
outset that, as far as humanitarian aid and hospitality services are
concerned, I would be willing, and, I suspect, the members of this panel
would be willing to make exceptions that would allow both of your interests
to be served.
It was my original intent when drafting this
legislation with Mr. Schumer that we cut off U.S. dollars flowing to
support terrorism. And, as money is fungible, there is no sense in having
American investment in the countries that are indeed supporting terrorist
state organizations or independent organizations training on their
territories and so on. That is almost an amoral thing to allow to happen
since we are cutting off the money coming here, which was from these states
to people in the United States, presumably with possibilities that that
money might be used for purposes that would be less than desirable on our
part.
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So I realize that these lines are not always
clear. And I also realize that is why we gave a lot of discretion to the
Treasury Department before, but it was abused—so now we are back here
having to make these decisions ourselves.
With that in mind, Ms. Mann, I want to ask you
broadly to comment on what Mr. Ijaz just said. It seems to me that the two
of you have fundamentally different perspectives from which you are
reaching these points, and I am concerned. I don't want us to irreparably
drive a wedge so we can't achieve the result that we want to, which is to
get Sudan and other terrorist states to disavow the terrorist acts in the
entities that are there.
On the other hand, Ms. Mann, you have suggested
even harsher remedies than we have proposed in this bill in terms of going
forward to sanctions as, I presume, a method of trying to deal with these
states. Would you comment on Mr. Ijaz's approach?
Ms. MANN. Yes. But first I would like to
point out that both Mr. Ijaz and I actually do not disagree over the fact
that Sudan and Syriae actively support terrorism. I think is an important
point that shouldn't be lost on this committee. However, we do disagree in
terms of a strategy.
I do not believe, and I have never seen any
evidence, that Syria and Sudan would give up their firmly held and deeply
rooted ideologies in support of terrorism if the U.S. just continues a
dialogue with these regimes. I would argue also that part of these regimes
instruments of actually staying in power is their support of terrorism and
that these regimes are not going to give up the valuable instrument of
terrorism for the promise of perhaps a little bit more money. I have never
seen any evidence of that, and I don't believe it. We have had a dialog for
some years with both the Governments of Sudan and Syria, where presumably
these arguments have been brought up, and the prospect of more American
business has been brought up—none of this has changed Sudanese or
Syrian behavior significantly.
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I would also argue that these countries would
indeed be threatened by an economic opening. Many argue that one of the
reasons why Syria was hesitant to follow through on a full peace agreement
with Israel was the prospect of opening up Damascus to western and Israeli
tourism, economic ventures and political ideas, which would threaten Syrian
President Assad's grip on power. When authoritarian governments choose to
have an economic opening, like in China, they face the very real threat
that democratization will accompany that economic opening. This is a
serious problem for authoritarian governments such as in Syria.
I do not think diplomatic and a economic
engagement is panacea for terrorism. I have never seen any evidence that
terrorist-sponsoring countries, where the use of terrorism as a political
instrument is part of their firmly held ideologies and means for staying in
power, would change or give up terrorism for the prospect of perhaps some
more money. Indeed I think these countries would see the prospect of
Western-sponsored economic uberalization as a double-edged sword that could
cut against their own grip on power.
Mr. MCCOLLUM. But Mr. Ijaz seems to
disagree with you and suggests that—I don't want to put words in his
mouth—if we had this relationship based on economic incentives, and
there is evidence that some of the terrorist-list states might change. Then
we would have the changes that they are fearful we would have, the very
fears you say would prohibit them from doing this. I know that is a chicken
and the egg problem.
Ms. MANN. With all due respect, Mr.
Chairman, we have had a dialog with Syria and Sudan for years, we have had
embassies in these countries for years, and we have been carrying on these
kinds of conversations with them for years, and it hasn't worked. I am not
saying that it shouldn't have been tried. I think it was worthwhile to have
tried such an incentives-oriented engagement policy, very worthwhile, but
it hasn't worked. One of the main reasons it hasn't worked is because our
policy lacks strong disincentives—it's all carrots and no
sticks—regarding Sudan and Syria. That is why I think closing
sanctions loopholes and treating all terrorist countries the same,
especially these two sponsors, Syria and Sudan, who give tactical support
to terrorism, is very important. I don't think more of the same old
strategy of all carrots and no real sticks, that hadn't worked is an
appropriate solution to the problem of these states' support of
international terrorism.
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Mr. MCCOLLUM. Let me ask you a specific
question or two in my time left here. In your written testimony, you of the
things that you thought were also loopholes besides the financial
transactions.
Ms. MANN. Yes.
Mr. MCCOLLUM. It is my understanding that
there are tight prohibitions against doing business with terrorist states
that normally apply only to transactions of the companies or entities owned
or controlled by or action on behalf of a terrorist government and not
with——
Ms. MANN. That is right.
Mr. MCCOLLUM [continuing]. A much larger
number of companies or entities in which a terrorist state has an interest.
In other words, the state might have a 30-percent interest in a company,
and that would not be covered by this. Is there some interest that we could
allow at all that—for example, in the Banking Committee where I serve
with Mr. Schumer and a couple others on the Judiciary Committee, we are in
the process of discussing what we call modernization and whether or not we
should allow U.S. commercial banks to be able to be involved in business
transactions of owning other commercial entities; in other words, mixing
commerce and banking together. And there is a formula that some are
supporting right now that would suggest it would not be against the public
interest, or be less offensive, to allow, say, 15 percent investment or
something of their assets in commercial entities or in ownership of a
certain percentage of another business, if not the total ownership or so
forth. There are all kinds of ways you can configure restrictions and
restraints.
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Would you suggest that we should prohibit any kind
of activity with regard to entities that any ownership interest is in by
one of these terrorist states, or could we come up with some formula like
15 percent or 10 percent or 20 percent and let it go at that?
Ms. MANN. Well, I think it is important
that we do look again at how we target front companies. As CIA
Director-Designate George Tenet has recently testified also before
Congress, this is becoming an increasingly difficult problem and
increasingly more prevalent problem as terrorists become more
sophisticated.
I don't know if I would advocate a specific
percentage, but I would draw your attention to the example that I also have
in my written testimony of 103 banks and financial institutions that OFAC,
the Office of Foreign Assets Control, has identified as being connected to
Libya. These are companies that Libya can use for nefarious purposes. Of
those 103, there are 75 which are open for business, open for U.S.
business. That is the vast majority. So I would just urge you and your
fellow Congressmen to look at the issue of front companies being used by
terrorist-sponsoring states and pay special attention to it.
I think it may be unhelpful to get into specific
percentages as is the case now for designating a front company in terms of
ownership and control, more than 50 percent. That allows for a vast amount
of room for terrorist sponsoring countries to buy into and then use front
companies for their activities.
Mr. MCCOLLUM. You mean if a terrorist
country owns any percentage of a business or bank, then that is a front
company or subject to being intimidated into a position of being a front
for that country's activities?
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Ms. MANN. Well, I think that is what we
would have to look at. I think we would have to see if a
terrorist-sponsoring country has an interest in particular company and then
see if it is being used by these terrorist states. It is hard to believe
that even a very slight interest held in a company by, let's say, Libya
would not be used at all by Libya for its own interests which include
sponsoring terrorism. I think we need to pay particular attention to these
front companies and vigorously target them.
Mr. MCCOLLUM. It is just hard for us to
legislate that way.
Ms. MANN. I understand.
Mr. MCCOLLUM. The State Department.
Ms. MANN. I understand.
Mr. MCCOLLUM. And all the discretion we are
talking about comes into play here. They may or may not be doing it the
right way.
Mr. Schumer, you may be recognized.
Mr. SCHUMER. Thank you, Mr. Chairman.
I want to thank all of the witnesses. I apologize
for being late. I just came down from New York.
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I first want to just corroborate a point made by
Mr. Ijaz think about the difference between Islamic fundamentalism and what
he calls Islamic radicalism or terrorism. I think that is very important
for all of us to do, because nobody wants to be in the position of bashing
any particular religion. I have fundamentalists, I think, of all three of
the great American religions in my district, and I understand the real
differences.
Having said that, I guess my first question to Mr.
Ijaz is we have seven countries on this list. One is a largely Catholic
country, Cuba. One is a country, North Korea, I don't know if they have a
predominant religion, but I don't think it is Islam; what would be Buddhism
and Confucianism, I am told, very fine religions, from the brief knowledge
I have of them. But what I think we are trying to do in this legislation
and in all of the antiterrorist legislation that has come up is try to
separate actions from beliefs and try not to say just because someone is an
X, they are more or less likely to be engaged in terroristic
activities.
Tell me how you think that either legislation like
this or other actions by the United States leads to, quote, demonizing
Islam as opposed to demonizing terrorism, which may be done by people of
Islam, people of Catholic, people of Jewish, people of whatever.
I remember one of the bills that I was active in
labeled—which were both involved in—labeled a variety of
groups, terrorist groups, on the group or groups like Hezbollah and Hamas
and on the group—on the list also was a group called Chai, which is a
militant Jewish group. And it struck me as very fair and very reasonable
that once somebody crosses the line from advocacy to terrorism, which most
of us would interpret to believe killing innocent men, women and children
for political purposes, that we ought to come down harder. So I guess my
first question is the question of terrorism and how going against terrorism
per se demonizes Islam, if it does. You seem to say in the remarks it
may.
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Mr. IJAZ. Thank you, Mr. Schumer,
Congressman Schumer.
I think the way to look at these seven countries
is the following: If you divide them into two categories, one are the
countries that have Islam as a primary or a dominant, you know,
form—system of government, philosophy, et cetera. And then the two
that you describe as Confucian or Buddhist or Catholic, I would say that
the overarching concern there is their Communist ideology. That is the real
reason that we as America have looked very, very carefully at what it is
that was going on in those particular cases.
I will give you another example. It is not on the
list, but came dangerously close. I think you asked the question earlier,
Chairman McCollum, about—or maybe it was Mr. Barr—about other
states that potentially came close to being on the terrorist list. My
country of my heritage, Pakistan, was very nearly put on that list at one
time.
So what I see is the difference here is the
following: That when you look at Libya, you look at Iran, and you look at
Iraq, and you look at Syria, you have four countries in which you have
effectively immovable dictatorial forces that are responsible for
propagating the state sponsorship, if you will, of terrorism. In the Sudan,
I believe that is the way it started. When Mr.—when President Bashir
came to power, I believe, in fact, that is the way things started
there.
What I am suggesting is the difference in the case
of Sudan is the following: That as of last year, as of the, quote-unquote,
election—and I want to put that in very heavy quotation marks—I
don't think that democracy exists in Sudan anymore than anybody else here
does at the moment, but as of the election last year, you have now in every
key government ministry and post that is of any relevance with regard to
external relations of the Sudan a person who was educated in the West.
Again, that is a very unique set of circumstances in a country that has
been, you know, for so long ruled by what my colleague refers to as an
ideolog, you know, ideologues and ideology in that sense.
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So I would ask us to just keep in mind that there
is, in fact, I think, a subtle difference. There is a process going on
inside the Sudan in and of its own accord that I think requires and merits
some very careful scrutiny on our part.
Mr. SCHUMER. But that doesn't go to the
point of demonizing Islam. Your basic thrust is a tactical point, as I
understand it, that a better way to contain terrorism may be engagement as
opposed to isolation.
Mr. IJAZ. Exactly.
Mr. MCCOLLUM. That doesn't deal with
terrorizing Islam—I mean, demonizing Islam.
Mr. IJAZ. Demonizing Islam.
But here is the problem with the demonization of
Islam, and that is that if you—again, you go down the list, over and
over again, I mean, these are not small populations, whether it is Iran,
whether it is Iraq, whether it is Libya, you know, and then the collateral
damage in countries like Saudi Arabia; in other words, you
cannot—maybe the Government doesn't sponsor terrorism in Saudi
Arabia, but you are starting to see increasingly large amounts of the
population wanting to move to the Islamic right, because they view what
goes on here in the United States as being against Islam rather than
against terrorism per se. We need to define our policy process in this
country as against terrorism, not as against Islam as a religion. I think
that is very, very important we state that difference.
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Mr. SCHUMER. OK. Next point which Mr.
McCollum touched on for Ms. Mann, and this is—I guess this is the
fundamental question against our bill, and, obviously, I am an advocate of
our bill, being cosponsor. What about the argument that—you have made
the argument that discussion doesn't seem to work very well, and I am
sympathetic to that based on the history that you site. On the other hand,
the only time sanctions seem to me to have really worked is when the whole
world does them—South Africa is the right case—and that when,
unfortunately, our French or German or Italian allies rush in to fill the
void that we may have left doesn't really do much good other than making us
feel better, and that is a question I will get to in a minute. What is the
answer there to you, that you would have, Ms. Mann, in regards to that?
Ms. MANN. Well, I think multilateral
sanctions have been effective.
Mr. SCHUMER. Right.
Ms. MANN. And we have seen that with Libya
and Iraq in the Middle East in particular, which the State Department
says——
Mr. SCHUMER. Multilateral, I think
everyone——
Ms. MANN [continuing]. Are very important.
But I think on the question of international terrorism, the United States
must take a leadership position and has taken a leadership position in the
cases of Iraq and Libya which led to multi lateral sanctions. The
multilateral sanctions on Iraq and Libya wouldn't have been imposed without
U.S. leadership there. To take a stand against international terrorism is a
moral imperative, a strategic imperative, and for the United States a
question of leadership.
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I would also add a country where there aren't
comprehensive multilateral sanctions, Iran. U.S. leadership against
Iranian-sponsored terrorism has deterred international investment in Iran
even without multi lateral sanctions. And, while I haven't done a
conclusive analysis yet of the Iranian elections, we have seen a
''moderate'' for the first time since the 1979 revolution elected into
office in Iran. And his election did not occur because we were talking to
Iran and pouring investment into Iran. Instead, we took a leadership
position there and made Iran pay a real economic price, which for its
sponsorship of terrorism led to frustration there.
So I think that sanctions, while more effective if
they are multilateral can work unilaterally. As such a major player on the
world scene, the United States has to take a leadership position on matters
of our strategic and moral importance, like terrorism.
Mr. SCHUMER. And it is your belief, for
instance, that the lead unilateral sanctions that we proposed in Iran,
admittedly not multilateral, have had an effect on changing the direction
of the Government to some extent?
Ms. MANN. I do. And I think in particular
since the 1995 Executive Order by President Clinton, because before that we
were still allowed to have some; U.S. oil companies were still to allowed
to have some exports there.
Mr. SCHUMER. Right.
Ms. MANN. But since then I think we have in
particular seen a change inside Iran. And I think our leadership is
important. We have deterred investment by other companies as well. So the
case that other companies are just going to rush in and take all of our
business, I don't think that that argument has shown true in the Middle
East, and Iran in particular. While there have been deals here and there,
it has not been a massive race to invest and take over our business.
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Mr. SCHUMER. Mr. Ijaz, given your knowledge
of the Islamic world, do you agree with Ms. Mann's analysis of the
situation in Iran? And I would just be interested knowing your
view—to know your view of what is happening in Iran right now with
the new elections. Is it an opportunity for the West, is it an opening,
will the Government be better than the previous one in terms of
terrorism?
Mr. IJAZ. With all due respect to Ms. Mann,
I do disagree with her analysis on Iran for the following reason: I think
that what you are seeing throughout the Islamic world, and particularly in
the radical states, is an internal implosion. They have failed on their own
merits. In other words, the Iranian revolution was designed to try and
bring the fundamentalism of Islam, if you will, back to the surface.
The revolutionary fervor of the Islamic world is
not going to end no matter what we do in this country. That is happening on
its own merits, and it is a process that I think really cannot be
controlled by any legislation that we would put in place. But what has
happened in Iran is a realization that they went too far to the right, or,
I am sorry, this way, to your right, to my left. Too far to the right. And
in the process of doing that, they made a gross error in judgment about how
long they would be able to stay in power. Just like the Saudis had gone, in
my judgment, a little bit far to the left, they are now seeing that they
have to come back to the right to be able to stay in power. Just as the
Iranians went too far to the right, they now are seeing that they have to
come back a little bit to the middle to be able to just maintain power,
much less anything else.
Now, the one other point I would like to make
about constructive engagement, which is what I am advocating here in this
process—I can't talk about it in open session, but I would be happy
with either one of you gentlemen to talk about it in closed session in more
detail—but there are things going on behind the scenes, much of it at
my own initiation as a private citizen of the United States, between the
Sudan and other Middle Eastern countries, including Israel, that, in my
judgment, are very, very constructive elements of how you can take someone
who is considered to be a rogue Islamic state and put them in a position to
actually mediate with those fringes of Islam that we don't want to have
anything to do with, nor do we understand, nor do we have the resources to
go and find out what they are all up to, and at the same time bring them
back into a more, you know, logical and rational position.
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So I think there is this constructive engagement
process that, if we were to advocate it, I think you would get the Sudan to
actually help you to bring these radical Islamic states in line. I will
give you a very concrete example. The rapprochement between Iran and Saudi
Arabia was primarily mediated by Dr. Hassan Al Turabi, the de facto Islamic
force in the Sudan. He is doing the same thing between Iran and UAE. You
know, I mean, it is happening in many different components, and it is
because the purist Islamic influence these people have.
Mr. SCHUMER. Just one final question. Up to
now, at least with the chairman's questions and mine, we have been debating
tactics, assuming we all want to go after terrorism. But there is something
else that bothers me here, and that is more or less a moral question.
When I think of some of the acts that terrorists
try to do, whether it is blowing up an airplane as over Lockerbie,
Scotland, or blowing up the World Trade Center in my city, and I think of
the horror wrench brought on the families there, it turns my stomach. It is
beyond even the cold war spy versus spy and all of that kind of stuff that
has gone on. And obviously we have some people in our own country trying to
do similar things. We talk in the shadow of the trial of McVeigh.
And Chairman McCollum and I have tried to do
everything we can to eradicate terrorism at both levels. But if—and
let's just assume this for the sake of argument, that the governments are
either involved in the terrorism, as they are in some of these seven
states, or at the very least not doing anything to clamp down on it, as
they probably are in all of the seven, isn't there—and this is no Mr.
Latham and Mr. Ijaz who took the contrarian position. Don't we sort of
have—I mean, I find it morally almost repugnant to say, well, let's
trade, let's give them economic rewards, let's include them in the family
of nations.
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It seems to me there is a line. Understanding that
each state has its own interest, understanding that we in the United States
are not the fount of all wisdom as much as sometimes we think we are, but
when you step over that line and just murder, and that is what it is,
civilians, in another country who are just going about their lives and
having their families and everything else, that maybe we shouldn't deal
with these—maybe the debate about tactically which is better is
beside the point. Maybe there is just a moral issue here, and then you go
to Ms. Mann's point that moral leadership is required, and maybe others
fall into line.
So I would like to ask, and I am sure both you
gentleman, being conscientious folks, have thought about this: What is your
answer to that type of question, which I think in part motivates me. I
don't know if it motivates Bill, but it probably motivates the whole
Congress when we go after this.
So, Mr. Latham, you first, and then Mr. Ijaz.
Mr. LATHAM. Thank you.
The arrangement between Sheraton and the
Government of Syria goes back to 1973. We are historically locked into this
contract. Sheraton is very diligent in complying with all the regulations
as enunciated by the prior panelists. We confer regularly with OFAC. As a
company, and I am speaking, I guess, personally on this, I believe that
what we are trying to accomplish is an important—when I say ''we,''
what the United States is trying to accomplish is important. I think the
means may be somewhat misdirected in the sense that we should be going
after terrorism as an activity. Any contracts, business relationships, any
kind of commercial activity which furthers the growth of terrorism should
be addressed not only by the United States, but by the United States
bringing other countries with them in a unified approach to this.
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If I am precluded as a company from operating my
hotel in Damascus, within 24 hours there will be five other management
companies from the rest of the world that are anxious and pursuing
aggressively the opportunity to manage that hotel. My business is not
terrorism-related. I am in a commercial activity where I provide a
management service. I have no investment in that in that country. I bring
no resources of a terrorist application to my process. I am simply a
commercial corporation doing business on a worldwide scale.
Mr. SCHUMER. What if, Mr. Latham, and I
realize this is a difficult question, but what if you were persuaded or it
seemed fairly persuasive that by you leaving Syria, by Sheraton leaving
Syria, even another Western company should come in and manage the hotel, it
might decrease the amount of activity that Syria would engage in in terms
of worldwide terrorism? How would you face that kind of question then?
Mr. LATHAM. We would look at it as a policy
issue within our company. Personally I don't believe that that really would
happen, but I think that you would find in examining Sheraton's performance
on the world scale and reviewing that of ITT that we are good citizens.
Mr. SCHUMER. Right. I have no doubt and I
am not casting any aspersions on you. I am asking you here some theoretical
questions to help us deal with the provocative questions that you and
others have brought up.
Mr. Ijaz, do you want to answer that?
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Mr. IJAZ. I think you have raised
probably the question that comes in the hierarchy of the importance of
questions, that is the critical one. And I would answer it in the following
way: If it can be determined that a particular type of activity is going to
enhance a government's ability to sponsor or foster terrorist activities,
we have to be, as Ms. Mann said, the leader of the world and clamping down
on that. Whether the Germans go along with us or not, or whether the French
go along with us or not is irrelevant. We have to do that.
The problem is that you are increasingly starting
to see these—with the globalization, the information age, the ability
for Hamas, for the sake of argument, to operate from right here in the
United States. Hamas has a more sophisticated network of operations here in
the United States than they do in countries like the Sudan. I, by the way,
have visited the Hamas office in Khartoum. It is a joke, to be very honest
with you; it is a joke.
So all I am suggesting to you is when we look at
the moral imperative, what we have to think very, very carefully about is
whether or not we are using a blunt instrument or whether we are using a
fine ballpoint pen to write something that will actually stop on those
lines where a government is, in fact, doing something that is wrong.
That is why I have advocated, for example, moving
our embassy back to Khartoum. The State Department, the CIA, all the other
intelligence agencies in this country have stated on their own that there
was no tangible reason—for moving it out—the information that
they were given about moving the embassy out in the first place was
wrong.
One of the reasons that I have advocated that is
because we would then know what is actually going on on the ground. One
week a month or 3 days a month is not enough to know what is physically
happening on the ground by meeting all of the various people to know what
is actually going on in these countries. That is a critical part of our
intelligence. A satellite cannot tell you whether or not a Sudanese farmer
is a Hamas terrorist, but going around the countryside and physically
seeing these people, talking to them in their languages, listening to these
study groups that they get together and so forth, which I have done, to see
who is really doing something wrong and who isn't, that is the engagement I
am talking about. I am not willing to compromise on terrorism, I am just
saying we have to be more surgical about the way we root it out.
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Mr. SCHUMER. Thank you, Mr. Chairman.
Mr. MCCOLLUM. Thank you, Mr. Schumer.
I just want to follow up by making the observation
to all of you that we are not interested in trying to overly micromanage
it. And nobody here, including me, wants to have the appearance that we are
somehow anti-Muslim or trying to use this in some manner to foster that
impression. We are just the contrary. Terrorism is indeed what we are
after.
I could argue that the profits that are made by
the Government of Syria from your hotel, Mr. Latham, could go to the
support of a terrorist activity because all money is fungible, you know.
They are hiring you. It is not your hotel. You don't own it. But somehow
indirectly because of this contract, theoretically, maybe there is some
benefit.
I don't think that we are going to get into that
kind of a type of operation here, as I said earlier. But the issue for us
here is part of the fundamental question you raise, Mr. Ijaz, by putting a
declaration of American policy in the statute that says, we are not going
to let investment happen, investment in a way that really puts money into
the country where the country is indeed putting support to terrorist
organizations, whether or not that would in any way provide some leverage
and some benchmark upon which the State Department and others could then
say, look, this is the measuring device. You can come off the terrorist
list altogether if you do X, Y and Z and cooperate with us on this, and
then the investment can come in there. You are suggesting that that isn't
going to work. Ms. Mann is suggesting that to let the open door policy go
along isn't going to work. So we have to decide which way we are going to
go, and I think most of us on this panel believe that some kind of a stick
is necessary in this case. It is a carrot and the stick sort of thing.
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And I certainly have been told by government
officials of the Government of Sudan in my office fairly recently that they
are more than willing to do X, Y, and Z and that they have done X, Y, and Z
in the past. But I must tell you that some of the best sources that we have
in our government say that, yes, as was openly said today, this was done, Y
was done. But despite their saying X, it hasn't been done.
Mr. IJAZ. Sure.
Mr. MCCOLLUM. And the problem is that we do
not wish to condone nor encourage in any way terrorism as a moral matter,
but we also should be very pragmatic in trying to state clearly American
policy, for the ambivalence of that policy itself has produced wars in the
past.
And if we can succinctly state this, clearly state
this in terms of American business interest not being allowed to invest, if
you will, in ways that will wind up encouraging or promoting or training
terrorists or terrorist organizations, then that is where I think we have
the obligation to do it.
You call that moral, as Mr. Schumer says. Yes, it
is moral. You call it practical, pragmatic diplomacy, I think it is.
Diplomats like to have their hands free and don't want us telling them how
to do it, and we understand that, too. But there is a line we have to draw.
The Members will draw a very bipartisan line in the next few days with this
legislation.
Well, I want to thank all of you for coming. You
have contributed immensely to this. As I have said, you helped us shape
what we are going to do, and we appreciate very much your participation.
This hearing is adjourned.
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[Whereupon, at 12:30 p.m., the subcommittee
adjourned.]
48–095 CC
1997
PROHIBITION ON FINANCIAL TRANSACTIONS WITH COUNTRIES SUPPORTING
TERRORISM ACT OF 1997
HEARING
BEFORE THE
SUBCOMMITTEE ON CRIME
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
ON
H.R. 748
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PROHIBITION ON FINANCIAL TRANSACTIONS WITH COUNTRIES SUPPORTING TERRORISM
ACT OF 1997
JUNE 10, 1997
Serial No. 45
Printed for the use of the Committee on the Judiciary
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC
20402
COMMITTEE ON THE JUDICIARY
HENRY J. HYDE, Illinois, Chairman
F. JAMES SENSENBRENNER, Jr., Wisconsin
BILL McCOLLUM, Florida
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR SMITH, Texas
STEVEN SCHIFF, New Mexico
ELTON GALLEGLY, California
CHARLES T. CANADY, Florida
BOB INGLIS, South Carolina
BOB GOODLATTE, Virginia
STEPHEN E. BUYER, Indiana
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SONNY BONO, California
ED BRYANT, Tennessee
STEVE CHABOT, Ohio
BOB BARR, Georgia
WILLIAM L. JENKINS, Tennessee
ASA HUTCHINSON, Arkansas
EDWARD A. PEASE, Indiana
CHRISTOPHER B. CANNON, Utah
JOHN CONYERS, Jr., Michigan
BARNEY FRANK, Massachusetts
CHARLES E. SCHUMER, New York
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
STEVEN R. ROTH, New Jersey
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THOMAS E. MOONEY, Chief of Staff-General Counsel
JULIAN EPSTEIN, Minority Staff Director
Subcommittee on Crime
BILL McCOLLUM, Florida, Chairman
STEVEN SCHIFF, New Mexico
STEPHEN E. BUYER, Indiana
STEVE CHABOT, Ohio
BOB BARR, Georgia
ASA HUTCHINSON, Arkansas
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
CHARLES E. SCHUMER, New York
SHEILA JACKSON LEE, Texas
MARTIN T. MEEHAN, Massachusetts
ROBERT WEXLER, Florida
STEVEN R. ROTHMAN, New Jersey
PAUL J. MCNULTY, Chief Counsel
GLENN R. SCHMITT, Counsel
DANIEL J. BRYANT, Counsel
NICOLE R. NASON, Counsel
DAVID YASSKY, Minority Counsel
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C O N T E N T S
HEARING DATE
June 10, 1997
TEXT OF BILL
H.R. 748
OPENING STATEMENT
McCollum, Hon. Bill, a Representative in Congress
from the State of Florida, and chairman, Subcommittee on Crime
WITNESSES
Almquist, Kate, policy analyst, World Vision
Relief and Development, Inc.
Ijaz, Mansoor, chairman, Crescent Investment
Management, L.P.
Latham, James D., senior vice president and
general counsel, ITT Sheraton Corp.
Mann, Hillary, associate fellow, Washington
Institute for Near East Policy
Newcomb, R. Richard, Director, Office of Foreign
Assets Control, Department of the Treasury
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Ramsay, William C., Deputy Assistant Secretary of
State for Energy, Sanctions and Commodities, Bureau of Economic and
Business Affairs, Department of State
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Almquist, Kate, policy analyst, World Vision
Relief and Development, Inc.: Prepared statement
Ijaz, Mansoor, chairman, Crescent Investment
Management, L.P.: Prepared statement
Latham, James D., senior vice president and
general counsel, ITT Sheraton Corp.: Prepared statement
Mann, Hillary, associate fellow, Washington
Institute for Near East Policy: Prepared statement
Newcomb, R. Richard, Director, Office of Foreign Assets Control,
Department of the Treasury:
Letter dated October 15, 1997 from Barbara Larkin
Prepared statement
Ramsay, William C., Deputy Assistant Secretary of
State for Energy, Sanctions and Commodities, Bureau of Economic and
Business Affairs, Department of State: Prepared statement
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