It appears that the US Congress this year will continue advocating the use of economic sanctions as a foreign policy tool. Major oil companies, often accused by their detractors of having special sway in the Republican-led House of Representatives, have had few victories on this issue.
Last month, Congress passed by overwhelming margins a 5 year renewal of the Iran Libya Sanctions Act. President George W. Bush signed the bill into law, although his administration unsuccessfully sought a 2 year extension.
Congress tightened the 1996 law so sanctions could be leveled against any company investing more than $20 million/year in either nation's energy sector.
Escape clause
The legislation also now includes a nonbinding provision that calls on Congress to consider rescinding the law sooner pending the outcome of a White House sanctions report. The new ILSA continues the president's power to waive sanctions in the national interest.
A White House energy blueprint calls for an interagency review to see if some sanctions should be reconsidered or modified. But pending congressional legislation does not focus enough on the issue, industry says. Lawmakers who favor sanctions argue Congress is always willing to remove sanctions if a government is no longer a threat to US interests or its own people. But sentiment remains strong on Capitol Hill that many of the oil-producing nations now under sanctions should remain isolated because of human rights abuses or military aggression. Interest also remains in continuing the use of multilateral sanctions, aimed at allies that choose to invest in targeted countries.
That position is likely to result in the US being dragged back to international court over the issue, administration officials fear. Many other countries, especially those with international energy companies, strongly oppose US efforts to sanction them. Foreign oil companies don't mind at all, however, when the US bars US citizens or US-based companies from trade. European oil companies stand to benefit in Libya, which says it may let European oil companies take over fields once owned by US companies before unilateral sanctions were imposed in 1986.
More to come
The House has passed a bill that includes a provision that would impose multilateral sanctions against countries that invest in Sudan. The House bill would force foreign companies that operate in Sudan to delist from the New York Stock Exchange. Two big companies, China's PetroChina Co. and Canada's Tailsman Energy Inc., would be immediately affected.
The White House, as well as Federal Reserve Chairman Alan Greenspan oppose the bill, saying it is counterproductive and could harm the US economy by pushing huge amounts of financing to capital markets in Europe and Asia. A Senate version expands humanitarian aid but does not seek to block foreign access to US capital markets.
The White House is hoping the Senate version will prevail in conference, but the outcome remains uncertain. If the Senate did agree to the House version, the president could veto the bill; but if there is overwhelming support on Capitol Hill, he may be forced to approve the measure, much as he did with ILSA earlier this summer.
US businesses have been blocked from investing in Sudan since November 1997.