Magazine article Insight on the News

Double-Edged Foreign Policy: Business Leaders Say Economic Sanctions on Repressive Regimes Can Backfire on U.S. Interests

Magazine article Insight on the News

Double-Edged Foreign Policy: Business Leaders Say Economic Sanctions on Repressive Regimes Can Backfire on U.S. Interests

Article excerpt

Business leaders say economic sanctions on repressive regimes can backfire on U.S. interests.

Last May Sen. Mitch McConnell, a Kentucky Republican, made some moving remarks before the Senate Banking Committee deploring the dismal situation in Burma, where democratic activist Aung San Suu Kyi and her followers have been battling a repressive military regime for years.

"Rape, detentions, killings, forced labor and relocations are just a few of the tools the military regime routinely uses to secure their power," said McConnell. The military regime "is convinced it will pay no price for recalcitrance and repression. Just as they have increased pressure on the democracy movement, we must increase pressure on them. This is the time to move forward and impose sanctions on Burma."

The senator is no stranger to sanctions - 10 years ago, he and Sens. William Roth, Republican from Delaware, and Chris Dodd, Democrat from Connecticut, pushed for the economic measures against South Africa. Other major trading partners of the United States, including France, Britain and Germany, participated in the sanctions, which widely are credited with having brought down apartheid.

But since that time, McConnell and his congressional colleagues have strayed from their initial strategy. Unilateral sanctions increasingly have become the fashionable tool among the political elite to retaliate against repressive regimes which run afoul of U.S. foreign policy, including Libya, Serbia, Cuba, Nigeria, North Korea, Rwanda and now Burma. And increasingly, that policy proclivity is unsettling many in the U.S. business community.

Sanctions score plenty of political points domestically and are easy to support on the cocktail-party circuit in Manhattan and Georgetown. But Caterpillar Inc., Allied Signal and other Fortune 500 companies see multimillion-dollar contracts - and thousands of jobs - lost to foreign competitors whose governments aren't participating in the sanctions. And now these U.S.-based multinationals formally are initiating an effort to convince Congress, the White House and opinion makers that sanctions should be used only as a last resort.

"Greater restraint should be exercised by our policymakers, meaning the Congress and the executive branch, in reaching for the instrument of unilateral sanctions to respond to a foreign-policy problem," says Daniel O'Flaherty, vice president of the National Foreign Trade Council, a group of 500 U.S. multinational companies. "There has been, for the last couple of years, a fairly dramatic increase in the number of sanctions that have been proposed and the number that have been imposed. There is a growing alarm and concern among CEOs of major companies that market after market either is being denied them, or their operations are being complicated by these efforts. And even if these efforts are unsuccessful, there is an effect on business relationships."

Adds Caterpillar Chairman Donald Fites in an opinion piece he is preparing on the subject: "The real pressure is on the U. …

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