TRADE SCENE: TRADE SANCTION DECISIONS AT HAND

TRADE SCENE: TRADE SANCTION DECISIONS AT HAND

In 1996, Congress seemingly cleared the way for significant new trade sanctions against Cuba, Iran and Libya. In nearly one fell swoop, it enacted the Cuban Liberty and Democratic Solidarity Act and the Iran-Libya Sanctions Act. Five years later, the sanctions authorized under those two laws remain largely unimplemented, thanks to the Clinton administration's reluctance to put them into play.

Now it's President Bush's turn to decide whether the sanctions are really in the United States' best interests. By July, he has to decide whether to take potentially drastic action against Cuba under the 1996 Liberty Act. The 1996 Iran-Libya Sanctions Act expires in early August unless he and Congress renew it by then.The Cuban Act authorizes the president to clear the way for treble damage lawsuits by U.S. firms and individuals against foreigners 'trafficking' in their property illegally expropriated by Cuba, claims potentially totaling in the billions of dollars. What's more, the State Department was told to deny U.S. visas to executives of the foreign firms doing the trafficking.

The aim: to discourage foreign investment in Cuba, thereby tightening the U.S. economic squeeze on the Castro government. But President Clinton repeatedly opted against facilitating the lawsuits. The State Department denied visas to executives from only three firms - Mexico's Grupo Domos, Canada's Sherritt International and Israel's BM Group. It is still delaying a decision on denying visas to the executives of Sol Melia, a major Spanish hotel chain, despite having indicated nearly two years ago that the firm was profiting from illegally expropriated U.S. property.

The Clinton administration's lack of follow-through on the 1996 Iran-Libya Sanctions Act was at least as striking. Under this statute, the president is to penalize foreign firms investing more than $40 million during any 12-month period in either Iranian or Libyan oil and gas projects. The penalties range from U.S. import restrictions to a cut-off of U.S. Export-Import Bank financing.

Since 1996, European and other oil and gas firms have reportedly invested billions of dollars in Iran, but the Clinton administration assessed not a single penalty.

Behind the Clinton hands-off approach: the risk of alienating foreign allies, most notably the 15-nation European Union, which has threatened reprisals if its companies are hit by U.S. sanctions under either the Cuba or Iran-Libya statute.

Will Bush now set a new course?

So far, he appears to be taking a somewhat harder line against Castro's Cuba, not unexpectedly, given his links with Florida's Cuban-American community. He has pledged not to soften the U.S. embargo against Cuba, at least not until the Cuban government releases political prisoners and holds free elections. Still, this leaves open whether he will move to actually tighten economic pressures on Cuba.

The answer may soon be at hand. One test is whether the State Department will finally announce a denial of visas to Sol Melia executives. Ralph Galliano, editor of the Institute for U.S. Cuba Relations Policy Report, expects it will do so, and soon.

See Richard Lawrence, page 2