GOP May Retaliate for Waiving of Sanctions

President Clinton’s refusal to aggressively apply trade sanctions against foreign companies this week has provoked a confrontation with the Republican-led Congress that damages his chances of advancing his foreign policy agenda.

Clinton rebuffed Congress by waiving sanctions against several foreign firms doing business with Iran and by announcing that he intends to try to ease punishment of foreign businesses dealing in property taken from Americans after the 1959 Cuban Revolution.

The moves are the strongest challenge the Clinton White House has mounted to the Iran-Libya Sanctions Act and the Helms-Burton law on Cuba, both enacted in 1996.

“This action sent a message to Congress that it should not trust the administration,” said a House Republican staff member who specializes in trade legislation. “There is absolutely no way that Congress will give the administration any discretionary authority over anything.”

The staff member said the action jeopardized the Clinton administration’s proposals to increase funding for the International Monetary Fund, begin to pay overdue United Nations assessments, expand the North American Free Trade Agreement and approve new trade accords.

However, Democrats on Capitol Hill insisted that the picture for the administration is not nearly so bleak. They argued that most lawmakers angered by Clinton’s decision on the Iran, Libya and Cuba sanctions legislation have opposed the administration’s agenda anyway.

Business leaders generally supported Clinton’s decision to waive the sanctions legislation, which they have opposed from the beginning.

John Howard, director of international policy and programs at the U.S. Chamber of Commerce, said the sanctions legislation amounted to a “dubious policy” that did the United States no good and invited retaliation from the Europeans.

He said Clinton should have gone even further and lifted the U.S. embargo against trade with Iran to allow U.S. companies to compete on an equitable basis with foreign firms.

Both the Iran-Libya Sanctions Act and the Helms-Burton Act impose “secondary boycotts”--that is, they direct the United States to apply sanctions against foreign companies doing business in the three countries. U.S.-based companies are barred from trading with Iran, Libya and Cuba under separate laws that were not affected by Clinton’s action.

The Iran-Libya law prohibits foreign companies that invest more than $20 million in the energy sectors of Iran or Libya from doing business in the United States. The Helms-Burton law imposes sanctions on companies dealing in property that Cuba nationalized from U.S. owners, including people who were Cuban citizens at the time but are now Americans.

Clinton waived sanctions against three foreign companies investing in a multibillion-dollar gas project in Iran, including one from Russia and one from France, and administration officials said the same decision is likely if other European companies invest in Iran in the future.

However, State Department spokesman James P. Rubin said Tuesday that no similar decision has been made concerning waivers for deals with Libya.

“We have made no decision with respect to petroleum investments in Libya,” he said.

The Chamber of Commerce’s Howard scoffed at critics who said Clinton’s action opened the way for investment in Iran. He said the sanctions in the statute are far too weak to dissuade any foreign companies from profitable investment.

In exchange for Clinton’s action, the EU promised to be more vigilant in preventing European companies from assisting Iran’s nuclear weapons and missile programs and to join the United States in an international effort to prevent the resale of property expropriated without just compensation.

Sen. Alfonse M. D’Amato (R-N.Y.), primary author of the Iran-Libya law, and Sen. Jesse Helms (R-N.C.), co-sponsor of the Helms-Burton statute, were scathing in their criticism of Clinton’s action. Both said the EU promises were essentially worthless. But they were cautious in describing retaliation.

“The decision was a mistake,” D’Amato said. “It will send a signal to others that they can do business as usual with Iran at a time when Iran continues to pursue weapons of mass destruction.”

Helms, chairman of the Senate Foreign Relations Committee, complained that Clinton had traded the Helms-Burton sanctions for “a lot of hot air” from the EU.

Paradoxically, Cuban President Fidel Castro also criticized Clinton. In a speech to the World Trade Organization in Geneva on Tuesday, Castro said the U.S.-EU agreement is “unclear, contradictory and threatening for many countries, as well as being unethical.”