Invoked Against Nicaragua, Iran and S. Africa : Sanctions Law Has Passed Supreme Court Tests

The law that President Reagan used to freeze Libyan assets in the United States and to end American trade with that nation has been invoked at least five other times to punish regimes from Iran to South Africa, according to legal records.

And despite initial charges that such sweeping sanctions might violate Americans’ rights to travel and conduct business in foreign countries, the Supreme Court has expressed its approval of the statute in sometimes emphatic terms.

The International Emergency Economic Powers Act of 1977 most recently was used by the Administration, in September, to impose economic restrictions on South Africa to ease congressional pressure for action against apartheid. The sanctions included a ban on purchases of new Krugerrand coins and curbs on U.S. loans, computer exports and nuclear technology transfers.

Last May, the same statute was invoked to place a virtual trade embargo on Nicaragua, drawing protests from some that the action violated both domestic and international law. It also was used in 1984 and 1985 as a stopgap measure to fill in for another, expired law, that had allowed the United States to restrict exports of sensitive goods such as computers.

Used by Carter

President Carter invoked the act for the first time during the Iranian hostage crisis in 1979 and 1980.

He initially used the law to freeze Iranian government assets in the United States. Carter relied on the law again in April, 1980, to cut off all U.S. economic contact with Iran, effectively forcing all American citizens to leave that nation or face prosecution.

A Justice Department official who asked not to be named said the aim then was to clear Iran of Americans before the ill-fated attempt to rescue U.S. hostages in Tehran, for fear that a successful rescue would prompt the Iranians to take new hostages or punish any remaining Americans.

Carter’s broad use of the law--essentially matched by Reagan with the sanctions against Libya--rests on the act’s mandate to “investigate, regulate or prohibit” foreign exchange transactions, money and securities flows and other economic ties between the United States and a target country. Such measures can be invoked whenever the President declares a national emergency.

Americans with claims against the frozen Iranian assets contested Carter’s use of the 1977 law, but the Supreme Court emphatically rejected their pleas in 1981. In enacting the law, Justice William H. Rehnquist wrote, Congress clearly intended “to put control of foreign assets in the hands of the President,” and added: “The frozen assets serve as a ‘bargaining chip’ to be used by the President when dealing with a hostile country.”

Court Precedent

“A lot of people used to think this was a pretty murky area, with a lot of First Amendment right to travel and freedom of speech questions in the background,” the Justice Department official said. But “the court seems to have upheld those powers. There’s precedent.”

Besides the court decision backing Carter, the high court in 1981 broadened executive discretion on foreign security matters, upholding the Treasury Department’s right to bar former CIA agent and author Philip Agee from traveling to Cuba.

In 1984, the court approved the use of an older, almost identical law, the Trading With the Enemy Act, to “sustain the President’s decision to curtail the flow of hard currency to Cuba--currency that could then be used in support of Cuban adventurism--by restricting travel” to that country by Americans, Rehnquist’s decision said.