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Stuart Eizenstat
Under Secretary of State Comprehensive Review of U.S. Sanctions Policy
House Ways and Means Trade Subcommittee
October 23, 1997

Chairman and Members of the Committee, thank you for this opportunity to testify before you on the use and effect of unilateral trade sanctions.

Mr. Chairman, the view that I would like to lay before you today is that the record is clear. Properly designed, implemented, and applied as part of a coherent strategy, sanctions, including economic sanctions, can be and are a valuable tool for enforcing international norms and protecting our national interests. In this age of increasing globalization we have turned more frequently to sanctions to deal with inappropriate or unacceptable behavior by states. We should improve our ability to use them effectively. They should be used only when carefully considered by both the Executive and Legislative branches as to their likely effectiveness, after all benefits, costs, and consequences are analyzed, and after the full range of diplomatic and political options has been attempted to change the conduct in question by the target country or group.

Sanctions, especially multilateral sanctions, have been effective. Iraq, Libya, former Yugoslavia, Haiti and others provide examples. But at the same time, a realistic appraisal of our experience has taught that sanctions are not a panacea and they are not cost-free. Our object must be to learn from our growing experience, to draw the appropriate lessons so that we can find the best, the most effective way to employ this potentially powerful tool while minimizing the adverse costs.

Some things are clear. We should resort to sanctions only after other appropriate diplomatic options have been aggressively pursued and have failed, or would be inadequate. Sanctions are much more likely to be effective when they have multilateral support and participation. Multilateral sanctions maximize international pressure on the offending state while minimizing damage to U.S. competitiveness and more equitably distributing the sanctions burden across the international community. There are times, however, when the stakes are high, when important national interests or core values are at issue, that we must also be prepared to act unilaterally. Before imposing unilateral sanctions, serious thought must be given to all the potential ramifications.

In many instances, engagement can be preferable to isolation although the choice is not always so stark. In some cases, a mixed policy approach that incorporates both carrots and sticks may be appropriate. Engagement, including engagement by the U.S. business community, may contribute a positive influence. In the case of some rogue regimes, however, engagement would simply feed the regime's appetite for inappropriate or dangerous behavior.

Most importantly, there can be no "one-size fits all" approach. The President must have the flexibility to tailor our response to specific situations.

Mr. Chairman, the general concept of sanctions is not new; the idea is as old as society itself. In their work "Economic Sanctions Revisited" authors Hufbauer, Schott and Elliott cite the imposition of a trade embargo by the Athenian leader Pericles on neighboring Megara in approximately 432 BC in retaliation for Megara's attempted expropriation of territory and the kidnapping of three women. In 1812 the United States imposed an embargo on Great Britain in retaliation for British attempts to limit U.S. trade with France. In 1917 President Wilson imposed an embargo on the sale of iron, steel and other war essentials to Japan. President Roosevelt also imposed economic sanctions on Japan in 1940. I was personally involved in the use of sanctions against the former Soviet Union following its invasion of Afghanistan during my service in the Carter White House. So the use of sanctions in pursuit of foreign policy objectives is not new.

We, however, are living in an age of heightened political and economic global integration and growing interdependence in which most countries derive their prosperity, and even power, from growing engagement in the international economy. In such a world, sanctions are an important and potentially effective, if problematic, tool for enforcing international norms and standards of behavior, mediating not only between differing countries, but in the relationship between individual states and their own citizens as well. Sanctions are also a tool, however, which bring with themselves real costs as well as potential benefits.

The frequency with which we turn to sanctions has increased dramatically, particularly since 1990. The U.S. has applied sanctions for foreign policy purposes a total of 115 times since World War I, 104 times since World War II, and according to the count of the President's Export Council, 61 times since 1993. Thus more than half the sanctions imposed in the past 80 years have been imposed in only the past four years. These figures do not include the increasing use of sanctions at the state and local levels.

In the UN, the Security Council imposed sanctions only twice between 1945 and 1990: Rhodesia and South Africa. Since 1990, however, the UN has imposed mandatory sanctions on 8 countries: Iraq for its invasion of Kuwait; Serbia for its use of force in former Yugoslavia; Libya in reaction to the PanAm 103 massacre; Somalia and Liberia in their civil strife; Rwanda for genocide; Haiti for abrogation of democracy; and Angola during a renewed insurrection. Just within the past few weeks the UN has threatened further tightening of existing sanctions on UNITA, and imposed sanctions on the revolutionary junta in Sierra Leone.

Others have also resorted to sanctions. The EU, Japan and Canada have joined us in imposing sanctions on Burma. The EU is withholding aid from Kenya until that country deals with problems of corruption and rigged elections. The IMF has also moved to condition its lending to Kenya on serious efforts to deal with problems of pervasive corruption. The East African states imposed sanctions on Burundi, the Economic Community of West African States (ECOWAS) on Sierra Leone, and the Association of South-East Asian Nations (ASEAN) on Cambodia.

Sanctions are used for a variety of purposes:

-- to punish a country for unacceptable behavior;

-- to influence the behavior of a target country;

-- to signal disapproval of a government's behavior;

-- as a necessary early reaction and as a warning that harsher measures -- even military -- could follow;

-- to limit a target state's freedom of action;

-- to deny resources or technology;

-- to increase the cost of engaging in unacceptable behavior;

-- to draw international attention to unacceptable behavior;

-- to challenge our allies to take more forceful action themselves in support of common objectives;

-- or at times, simply to signal that a business-as-usual approach to a government that violates core values is not acceptable.

We also use sanctions in pursuit of a large number of policy objectives. These include such things as support for human rights, including workers and religious rights, promotion of democracy, to combat terrorism or the scourge of narcotics, in support of weapons of mass destruction and conventional non-proliferation or protection of the environment.

We have available a broad array of policy measures. These include not only punitive or coercive economic measures but political and military steps as well. These may range from simple measures such as a change in the level and size of diplomatic missions to the ultimate sanction, application of military force, with many possible stops in between. The Secretary's Advisory Committee on International Economic Policy has developed an "Illustrative Matrix of Foreign Policy Tools" including possible diplomatic, political, cultural, economic and military measures ranging from friendly persuasion, including positive inducements, to hostile or coercive steps. This matrix offers a response ramp of measures from which one could select appropriate tools for seeking to change the behavior of states that violate international norms.

We must be frank to recognize that in today's interdependent, global economy, the ability of the U.S. to unilaterally deny key economic benefits to a target country is limited. Nevertheless, there are some measures which are not subject to foreign substitution, such as denial of a U.S. quota, withdrawal of port privileges or landing rights, and actions in international financial institutions, consistent with their own rules, to withhold loans and assistance.

In any event, it is not always easy for us to agree whether specific sanctions have been effective. How we judge the effectiveness of sanctions depends on the desired results -- overthrow of a government (in which case anything other than the application of military force is likely to be ineffective by itself); changes in a regime's behavioral patterns by increasing the cost of doing business (by deferring investment, deterring trade and the like where multilateral sanctions are likely to be most effective); or simply as a means of expressing moral or other outrage at what we consider unacceptable behavior.

There is no single, common standard against which to measure success or failure. The standards proposed by a firm dependent on sales to Burma (where we imposed targeted unilateral sanctions) would certainly differ from those applied by a committed human rights activist who oppose any interaction that might legitimize or strengthen the position of the authorities. The lower the expectations set for what sanctions are intended to accomplish, of course, the more likely the judgment is to be positive and, perhaps, the greater the willingness to bear the costs imposed on the country imposing sanctions.

One thing is clear: sanctions are an important potential tool but are not a panacea and they are not without costs. Sanctions do offer, however, important levers for behavior modification and will continue to do so. There is one common thread: the sanctions which are most likely to be successful are multilateral ones in which a significant number of countries with economic and political clout have agreed. These also impose fewer burdens on the U.S. business community since the companies of a significant number of countries will be required to forswear doing business with the target country.

Multilateral sanctions on South Africa were certainly a major contributor to bringing down apartheid. In Iraq, multilateral sanctions have blocked Saddam Hussein's access to the resources needed to rebuild his war machine and, even worse, restock his arsenal of non-conventional weapons. In Libya, UN sanctions have made Qaddaffi pay a heavy price for failing to turn over for trial those indicted for the massacre of PanAm 103. In Serbia, sanctions, backed up by the very real threat of military reversals for the Bosnian Serbs, clearly brought Milosevic to the negotiating table in Dayton.

There are examples of unilateral sanctions which have been effective or which have served as an encouragement to others to take action. The sanctions the United States imposed on Burma called increased international attention to human rights abuses by the ruling regime. The Europeans, Canadians and Japanese have now also imposed sanctions or withdrawn benefits. Even in Cuba, while Castro remains in power, U.S. sanctions have discouraged foreign investment and increased pressure on the regime to adopt reforms. In other areas such as the effort to combat the source of drugs, the use or threat of unilateral sanctions has proven to be an effective tool.

In general, however, such cases tend to be fewer in number and generally restricted to those instances where we have overwhelming economic or political leverage.

Nonetheless, it is often important to show U.S. leadership in isolating regimes or governments whose actions violate international norms. The repressive Castro regime, the last dictatorship in the hemisphere, is such a case. The greatest challenge is to develop common policies with our allies to deal with such regimes.

Unilateral sanctions are not only less likely to be successful than multilateral, they also impose costs, which must be honestly recognized. For one thing, the unilateral nature of many of our sanctions efforts has embroiled us in differences with key allies that detract from the desired results.

Unilateral sanctions are also now being imposed on countries by U.S. states and localities -- such as New York City and the State of California's actions against Swiss banks, or the sanctions imposed by Massachusetts on Burma. While the latter were adopted in pursuit of a noble goal, the restoration of democracy in Burma, these measures also risk shifting the focus of the debate with our European Allies away from the best way to bring pressure against the State Law and Order Restoration Council (SLORC) to a potential WTO dispute over its consistency with our international obligations. Let me be clear. We are working with Massachusetts in the WTO dispute settlement process. But we must be honest in saying that the threatened WTO case risks diverting United States' and Europe's attention from focusing where it should be -- on Burma.

The actions against Swiss banks are counter-productive, failing to recognize the real progress made by Switzerland in dealing with its past conduct during WWII, and discouraging further cooperation to right the wrongs of the past.

While state and local governments should express the democratic will of their citizens, unless sanctions measures are well conceived and coordinated, so that the United States is speaking with one voice and consistent with our international obligations, such uncoordinated responses can put the U.S. on the political defensive and shift attention away from the problem to the issue of sanctions themselves.

Questions have been raised about the constitutionality of state sanctions, and I am not here to debate that issues. But from the perspective of the Department of State, we are concerned about the impact of state and local sanctions on the President's ability to send a clear and unified message to the rest of the world. As the world's only economic and military superpower, the United States has the obligation to project a coherent and consistent message to oppressive regimes. Ad hoc and scattered actions at various levels of government, however well-intentioned, can do more harm than good in achieving the desired objective and impede the President's and Secretary of State's conduct of foreign policy. It is the Executive Branch of the U.S. Government which is charged with conducting the nation's foreign policy, in consultation with the U.S. Congress, not states and municipalities. We should have only one foreign policy at a time.

We are working with Massachusetts, and with other state and local governments which have implemented or are considering the imposition of various sanctions measures, to try to ensure that they are designed so that they do not conflict with our international obligations and work to advance rather than retard progress toward meeting our foreign policy objectives.

Unilateral sanctions in particular also have real costs to U.S. business and American workers. A number of organizations have recently released different studies of the cost and effectiveness of sanctions, including the President's Export Council, the National Association of Manufacturers, the European-American Business Council, the United Nations Association of the United States, the Secretary's Advisory Committee on International Economic Policy, and the Carnegie Foundation. Others are engaged in on-going studies on sanctions, such as the Center for Strategic and International Studies. USA*ENGAGE has been formed with over 600 U.S. member companies solely for the purpose of dealing with the sanctions issue from an American business perspective.

Most of these studies reach similar conclusions and criticisms of the current use of sanctions. According to these studies, sanctions, particularly unilateral economic sanctions, are often seen as undisciplined, poorly targeted and/or ineffective. Measures may be overly broad -- like applying a meat cleaver where laser surgery would be more appropriate -- and the consequences are not well thought through. Decisions to impose sanctions may be made with little or no analysis of the actual impact the proposed sanctions are likely to have on various groups within the target country, or on how economic pressure is likely to be translated into political pressure. Alternatives such as diplomatic measures, sometimes more effective, may not always be considered.

Some also argue that the cost to the U.S. economy and U.S. competitiveness can be disproportionate to the results achieved. The President's Export Council, for example, recently estimated the direct cost of economic sanctions to the U.S. economy in 1995 at $15-19 billion in lost export sales and up to 250,000 jobs. It also suggested that sanctions have an indirect effect through undermining confidence in the reliability of U.S. suppliers and providing a competitive advantage to foreign competitors. Other studies have also pointed to lost exports and lost jobs, to cases where U.S. components are specifically designed out of products because the producers do not wish to face the prospect of eventual restrictions on exports to particular markets, and to reports that foreign firms have intentionally switched R&D away from the U.S. to Europe because of a desire to avoid sanctions problems.

The imposition of sanctions may also place us in difficult policy dilemmas. Would, for example, the imposition of strict sanctions on Syria, a country on our terrorist list (and with good reason), be consistent with our desire and need to engage Syria in the most cooperative way possible in seeking peace in the Middle East?

It is unfortunately also true that too often a decision to impose sanctions may be taken reactively, to demonstrate moral indignation or the resolve to be seen as doing something -- without any real consideration of whether the measures imposed will be an effective means of advancing our goal and without consideration of the costs along with the benefits. H.R. 2431 (the Wolf-Specter Freedom from Religious Persecution Act) is, we believe, as case in point. While we agree with the goal of the bill and have made respect for religious freedom a top priority in our human rights policy, as originally constituted the bill could actually undercut our efforts to promote the very values that the bill seeks to foster: adversely impacting our diplomacy in regions from South Asia to the Middle East, and undermining our efforts to promote the very regional peace and reconciliation that can foster religious tolerance and understanding. H.R. 2431 is an excellent example of the need for the Administration and Congress to work together to craft the kind of legislation that will be effective in meeting our common goals.

This is not to say that we should forswear the use of sanctions, or that sanctions are an inappropriate tool. They do have a role to play in our panoply of tools to defend U.S. interests. There is a great need for more dialogue and engagement between the Executive and Legislative branches, more opportunity for comment by the public, and more careful attention to all the potential consequences before we leap. The issue is how we can ensure that this potentially valuable tool is an effective instrument of policy while minimizing the costs.

The studies to which I have referred generally indicate that thoughtfully designed and implemented, sanctions may be an effective policy tool. The task we face is to substantially reduce negative effects while still achieving policy goals. Critics recommended a number of both policy and process changes. These include: broader and more methodical consideration of policy alternatives, increased emphasis on multilateral sanctions, improved consultation and coordination between Congress, the Administration and State and local governments, and revisiting sanctions if the objectives are not achieved in a reasonable period of time.

The mixed results of various sanctions regimes, both multilateral but especially unilateral; the lack of an agreed "standard of performance" against which to measure the utility of sanctions; the economic and other costs imposed on those imposing the sanctions and on third countries; the differences which unilateral sanctions with an alleged extraterritorial impact in particular have caused with our allies, who may share our objectives but disagree with our tactics; all have led to a growing number of calls to reexamine, to rethink the way in which we use sanctions. Here are some of the lessons we have learned from our growing experience with sanctions:

First, as a general rule, we should resort to sanctions only after other appropriate diplomatic options have been aggressively pursued and have failed or would be inadequate. Sanctions are, after all, only one of many measures available to us, from symbolic measures like withdrawing an Ambassador, reducing Embassy staff, to denying visas to target figures, entering into security arrangements with neighboring countries, to military intervention and everything in between. We should also not forget the power of positive inducements -- rewarding desired behavior.

Second, a major objective of sanctions is to change behavior. That implies that a primary consideration in considering a sanctions regime must be whether or not the sanctions measures are indeed likely to be effective in achieving that goal and whether they are part of an integrated strategy. Sanctions that are ineffective, that are easy to evade or avoid, that are imposed merely to "make a statement," are not only pointless in achieving our objectives, but in the longer run debase and undermine the value of sanctions as a potent foreign policy tool.

Third, we should design sanctions carefully so that, to the maximum extent possible, the target country feels the pain, not the innocent and certainly not solely our business community and citizens. Sanctions should be constructed so as to minimize the cost to the U.S. and its allies while extracting maximum leverage. Whether we act alone or in concert with others, we should analyze before we penalize, studying in advance the specific purpose, enforceability, cost and likely effect of any decision to impose sanctions.

Fourth, sanctions are much more likely to be effective when they have multilateral support and participation. Multilateral sanctions maximize international pressure on the offending state. They show unity of international purpose. And, because they are multilateral, these sanctions regimes are also more difficult to evade or avoid, while minimizing damage to U.S. competitiveness and more equitably distributing the sanctions burden across responsible countries. We should make a maximum effort to develop a multilateral sanctions regime in instances when sanctions are a viable option, and given a reasonable period of time to develop an international consensus for such sanctions.

Fifth, if we have been unsuccessful in achieving a multilateral regime, we must nonetheless recognize that, while our preference will be to act multilaterally, there are times when the stakes are so high, when important national interests or core values are at issue, that we must also be prepared to act unilaterally. Such actions must be considered, sometimes applied, if the United States is to play a leadership role. Otherwise, our ability to influence or respond to international or regional threats will always be subject to someone else's veto. But again, primary considerations in any eventual application of unilateral sanctions must be whether they are effective, whether they are part of a cohesive strategy to change behavior, and whether they contribute to or detract from our efforts to gain multilateral support for our policy objectives. There generally should be some reasonable expectation that the sanctions will have a significant impact on those targets, and that there is some expectation they can be effectively implemented and enforced.

Sixth, we must recognize that in our democratic system the impulse to impose sanctions is by no means restricted to the Executive Branch. If our policies are to be effective, we must work together -- Administration, Congress, communities at the state and local level, the business community, NGOs -- to see that our use of sanctions is appropriate, coherent, and designed to attract international support. Congress should go through the same careful consideration and balancing of interests as the Executive Branch. There must be more structured, systematic discussions between the Executive Branch and Congress when sanctions are an option.

Seventh, engagement is more often better than isolation though the choice is usually not between these two extremes. There are many countries which engage in certain practices or policies which we find objectionable, which we seek to change. We need to tailor our approach, whether carrots or sticks or a mix of the two, to fit the individual target. In many cases, engagement at every level may be a better, a more effective way to achieve our intended result. In such cases, engagement, including engagement by the U.S. business community, will contribute a positive influence. Cutting off dialogue and engagement with those countries would be counterproductive. In other countries, critical U.S. interests may be so involved that isolation is simply not an option, as is the case with China, where not simply economic but important security interests in the Pacific are at stake. Even during the height of the so-called "evil empire," for example, the Reagan Administration sought to both engage and change the Soviet Union.

In other cases, however, the practices of a country may be so egregious, so outside the norms of international behavior, so threatening to U.S. interests and those of our allies, that any attempt at engagement is pointless. Engagement with a country such as Iraq would simply feed Saddam Hussein's appetite for inappropriate behavior. In the case of Iran, economic pressure is one component of a policy designed to demonstrate that countries which want to benefit from full participation in the international community must abide by accepted norms of international behavior. Pending such a change, our approach limits the capacity of Iran to support terrorism or acquire weapons of mass destruction.

Eighth, the President, the custodian of the country's foreign policy under the Constitution, must be given discretion to waive sanctions in the national interest. This authority, or example in Title III of the Libertad Act (Helms-Burton) has been used effectively to help build an international consensus to take a much tougher position to encourage democracy and human rights. The Administration, which is charged with carrying out our foreign policy, must have the flexibility to tailor our response to specific situations. There can be no "one-size fits all" approach.

Ninth, Mr. Chairman, experience has shown that the development early on of appropriate consultative mechanisms with countries which share our goals can be helpful on states of critical concern. While such mechanisms do not guarantee results, the absence of such a mechanism can almost certainly guarantee failure.

Let me turn now, Mr. Chairman, to two special cases, ILSA and the Libertad Act.

I would venture to say that no nation's behavior poses a greater threat to U.S. political and security interests than that of Iran. Iran's support for terrorism, its efforts to obtain weapons of mass destruction and the means to deliver them, and its efforts to disrupt the peace process in the Middle East are intolerable. They threaten our friends, allies, and interests in the Persian Gulf, the Middle East and beyond. As the Mykonos decision in Germany indicated, the reach of Iran's terrorist activities extends to Europe, as well. The behavior of the Iranian regime is dangerous and unacceptable. It has been for years and remains so. Even with the new government and the possibility of change which it may present, we see no sign that Iran has changed its external behavior in areas of critical concern to us and to our allies as well. It is a matter of great frustration that some of our allies do not seem to share our sense of urgency in confronting Iran's dangerous behavior and convincing the new Iranian government of the need for change.

We are not prepared to carry on business as usual with the Iranian regime, and we feel very strongly that our friends and allies should not do so either. We supported the Iran and Libya Sanctions Act (ILSA) only after our earlier bilateral and multilateral efforts failed to produce change in Iran's behavior in areas of critical concern to us. In the case of Iran, efforts were made for years to develop a multilateral consensus inhibiting Iran's efforts to acquire weapons of mass destruction and deter support for global terrorism. They were not fully successful. Our allies have resisted trade and investment sanctions that impose economic pressure on Iran. Europe joined us in some efforts to prevent Iran from acquiring the technology and components needed to build weapons of mass destruction. Europe's "critical dialogue" was designed to engage Iran but had no apparent effect in altering its unacceptable behavior. The "critical dialogue" seemed, at times, less critical and more a design for economic benefit.

Nonetheless, the sanctions provided by ILSA are not an end in themselves, but the means to further our goal of denying to Iran the ability to carry on its highly objectionable behavior. That is why ILSA also includes a provision for a waiver of the law towards any country that agrees to undertake substantial measures, including economic sanctions, to inhibit Iran's behavior. We are committed to working with our allies in the EU and others to build an effective multilateral coalition that would increase our cooperation on Iran. European Union members, for example, believe that their existing cooperation in the various nonproliferation agreements -- such as the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual Use Goods and Technologies, the Missile Technology Control Regime, and the Nuclear Suppliers' Group -- and their on-going efforts to fight international terrorism provide an adequate basis for the Administration to grant country-wide waivers. We do not. These steps are important and we should not be dismissive of them. But they are not enough. We believe that they should do more to address our common concern regarding Iran, particularly on the issues of their pursuit of long range missile capability, weapons of mass destruction, terrorism, and sales of sensitive technology, but we should not be dismissive of the steps taken so far. In the wake of the Mykonos decision, the EU has withdrawn its Ambassadors and suspended its critical dialogue, although we cannot be certain that these measures will continue. Of more lasting importance are the commitments barring arms transfers. Nevertheless, we have told the EU we will not be in a position to grant country-wide ILSA waivers based on these measures alone.

We are undertaking a thorough investigation of foreign investment in two Iranian energy projects -- one in the Balal field involving the Canadian company Bow Valley and the Indonesian company Bakrie and another in the South Pars field in which the French company Total, the Russian company Gazprom and the Malaysian company Petronas are reportedly large investors. We are making every effort to gather as expeditiously as possible the necessary information to establish whether sanctionable activity under ILSA has occurred. Since we take the possibility of sanctions very seriously, we want the information on these cases to be as complete and accurate as possible. While we have not made any final decision, we are committed to fully implementing the law.

Our Cuba policy is illustrative of one of the principal goals of economic sanctions -- to encourage our friends and allies to adopt policies that can advance our common interests. Our allies and major trading partners disagree with our embargo of Cuba and have urged us to change or alter the provisions of the Libertad Act. At the same time, our allies have said they agree with us on the key goal of encouraging democracy and human rights in Cuba.

Last year, the President, for the first time in the 37 years since Castro took power, launched a broad effort to develop a multinational approach to promote democracy in Cuba. The President's initiative built on years of bipartisan policy towards Cuba.

The President launched this initiative when he acted to suspend the right of claimants to file suit under Title III of the Libertad Act. He wanted to use the opportunity presented by the six-month suspension to explore whether U.S. friends and allies were prepared to do more to achieve our common objective of expediting a peaceful-transition to democracy in Cuba. I was appointed as Special Envoy for the Promotion of Democracy in Cuba.

After months of effort, thorough consultation with the Congress and the Cuban-American community, and thousands of miles of travel by myself and many dedicated people, we have succeeded in launching an unprecedented, multilateral effort that has changed the terms of the discussion about Cuba. Much more can, should, and will be done, but today we can genuinely say that Cuba's government is increasingly isolated and under growing pressure to launch fundamental democratic change.

Our initiative has involved governments, non-governmental organizations, and the private sector. As part of our April 11 Understanding with the EU on Helms-Burton, we are seeking to reach an agreement on disciplines on investment in properties expropriated in contravention of international law, and to address questions of conflicting jurisdiction. Agreement on such disciplines would make an important contribution to advancing a key Helms-Burton objective, that is, to deter foreign companies from unfairly acquiring assets that have been confiscated from U.S. nationals by governments, like the Castro regime, which refuse to abide by international norms.

Last week we held another round of talks with European Union representatives. While we still have significant differences with the EU, both sides agreed that we should continue the talks since we are making progress and see promising areas for future work.

EU representatives have said they are disappointed that no agreement was reached at this last round. So are we. Both the EU and the U.S. will benefit from additional protections afforded to our investors abroad by effective and enforceable disciplines on investments in confiscated properties. And we can both benefit from avoiding problems arising from so-called conflicting jurisdiction, which have been at issue in connection with Helms-Burton and other legislation. That is why we proposed, as part of the agreement, a high-level consultative mechanism to encourage discussion before either side acts. Closer cooperation with our international partners in responding to threats posed by states that refuse to respect international norms will be more effective in changing unacceptable behavior and will be less likely to result in conflicting policies which undercut our respective interests.

In conclusion, as the world becomes more interdependent, as we move forward to establishing codes of acceptable international behavior and the will to enforce them, the effective application of sanctions will be a real asset. But it is no panacea. Thus it is all the more important that we undertake a rigorous analysis of sanctions before we impose them. We need to know not only how they will affect the target governments, but also how they affect vulnerable groups within the target countries. We also need to know how proposed sanctions affect U.S. interests in other areas, including U.S. business and workers, and how they affect our international partners on whose cooperation we depend to advance key foreign policy goals.

Sanctions can be an effective tool to punish states that violate international norms and threaten vital U.S. interests. And we must keep this tool at our disposal. But we need to work to sharpen our ability to use it effectively. One lesson is that taking time to forge a consensus both at home with the American people and abroad with our allies can greatly increase the effectiveness of sanctions and reduce the cost to the United States. Building such a consensus in many cases does not come quickly. However, it can help to avoid problems down the road while demonstrating to the offending state that our nation and the international community are united in opposing its unacceptable behavior.

Sanctions are intended to send a serious message. Both Congress and the Administration need to ensure that, when we do choose to impose them, we do so in a way that has the greatest possible impact with the least possible damage to the U.S. business community, to American workers, and to other U.S. interests.

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