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U.S.: Can Extended Sanctions Have Impact On Iran, Libya?

The U.S. is poised to extend its sanctions on foreign companies that invest in energy production in Iran and Libya. Washington has never applied this indirect financial pressure on the two countries, which are accused of sponsoring international terrorism. And some analysts question whether the sanctions could be effective even if they are strictly enforced. RFE/RL correspondent Andrew F. Tully reports.

Washington, The U.S. Congress has virtually assured a five-year extension of a law that would penalize non-U.S. companies that exceed investment limits in the energy sectors of Iran and Libya.

The aim of the Iran-Libya Sanctions Act, known by its English acronym ILSA, is to indirectly punish both countries, which are widely accused of sponsoring international terrorism. But some observers say the sanctions -- and many like them -- are not as effective as they are meant to be.

On 26 July, the House of Representatives voted 409-6 in favor of the extension. The night before, the Senate passed a similar measure by a vote of 96-2. The wording of the two bills is only slightly different, and the measures are expected to be reconciled by a House-Senate conference committee and sent to President Bush for his signature.

In Tehran, a spokesman for Iran's Foreign Ministry says the extension of the sanctions is illogical and is evidence of American hostility to Iran.

Bush's administration says the president would prefer an extension of two years, rather than the five years in the House and Senate bills. It argues that a shorter extension would give Bush more flexibility in improving relations with Iran if its government shows signs of moderating its policies.

But Bush is unlikely to veto the bill despite the longer extension. Given the nearly unanimous votes for the bill in both the House and the Senate, a two-thirds majority vote by both houses would be easy to muster to override a veto. In fact, 249 members of the House -- more than a majority -- were co-sponsors of the legislation.

Congressman Tom Lantos (D-Calif.), one of the most outspoken supporters of ILSA, singled out Iran in a speech to the House before the 26 July vote. He said the Tehran government has been a supporter of terrorism against Israel -- a leading U.S. ally -- for more than two decades.

"It's quite a tradition that Tehran has established. And the very least we can do is answer. That is what ILSA, the Iran-Libya Sanctions Act, does. It is our response to murder, our attempt to dry up some of the money that nourishes this terrorist monster."

Lantos said there is no evidence that Iran is lessening its support for terrorism. And he dismissed arguments that the re-election of reformist Iranian President Mohammad Khatami last month is a sign that that country will soon become more friendly to the West. The congressman said the real power in Tehran resides with the Islamic clergymen. He argued that they will never let their country become open to Western ideas.

ILSA became effective in 1996 and expires on 5 August. Several times, non-U.S. companies have exceeded the limits set by Washington on investment in Iranian or Libyan energy. But in every instance, the president has waived the penalties. American companies' dealings with Iran are limited in a separate law.

Despite the overwhelming support for ILSA in Congress, some observers question how effective ILSA can be.

One is Kenneth Allard, a former U.S. Army intelligence officer who now is an analyst at the Center for Strategic and International Studies (CSIS), a Washington policy foundation. Allard told RFE/RL that it is difficult to determine the effectiveness of ILSA. He says that, for example, the sanctions imposed against Iraq 10 years ago after the Gulf War have been very effective because many nations subscribe to them.

But Allard notes that ILSA may be less effective because it involves sanctions imposed unilaterally by the U.S., and because the penalties have been waived every time a non-U.S. company violated the sanctions. Besides, sanctions have become a common way for America to confront problems overseas.

"We [America] tend to pass sanctions almost at the drop of a hat. We really do. It's a very, very overused instrument of international policy."

Frank Cilluffo is another foreign policy analyst at the CSIS who specializes in terrorism, intelligence, and national security. He told RFE/RL that the unilateral sanctions are ultimately ineffective if they are not enforced.

"Sanctions, unless they're strictly enforced, could actually have the opposite effect and impact, wherein it's a pretty blunt instrument when what we're trying to deal with here is something that needs very specific and discrete leverage, rather than sort of like trying to hit a gnat with a sledgehammer."

Both Cilluffo and Allard say Bush is right to seek a shorter extension of the sanctions regime. They say the president needs to be able to act in a timely manner if he sees convincing evidence that Iran, for instance, is reforming. And Cilluffo added:

"I've always been of the school of thought: Never negotiate out of fear, but never fear to negotiate. So if you can get sort of indications and very direct messages coming out of Iran that they are willing to adhere to a global set of norms, however you want to define that, you obviously want to take advantage of any opportunity you can. And if they don't you can always tighten the screws later."

But despite his reservations about ILSA's effectiveness, Cilluffo says he believes the sanctions regime is an important part of U.S. foreign policy.

"I can understand why we'd want to do it and I think we have to do it because we need to lead based on what we think is right. But if you're looking at the actual impact and effectiveness -- rarely are they that effective."

Under ILSA, the president can impose a variety of sanctions on foreign companies that exceed the investment limit. They include forbidding imports of the companies' products or getting loans exceeding $10 million from a U.S. bank.

The extension of ILSA tightens the limits on foreign investment in Libya. The existing law targets non-U.S. companies that invest more than $40 million a year in that country's energy sector. That limit would be cut in half -- the same limit already imposed on investment in Iran.