Are Sanctions Effective?

Thank you. I am pleased to have been asked to participate on this panel on sanctions, and, in light of the ongoing events with Iran and North Korea, Carnegie's timing could not have been better.

Before I turn to my substantive comments, let me give you a little background about my position within the State Department. I am proud to serve as the Assistant Secretary for the Bureau of Verification, Compliance, and Implementation. The bureau is charged by law with ensuring that arms control, nonproliferation, and disarmament agreements are effectively verifiable, with assessing compliance with such agreements and commitments once they are reached; and with serving as the policy community's primary liaison to our intelligence community on verification and compliance issues. We have issued two reports on "Adherence to and Compliance with Arms Control and Nonproliferation Agreements", the most recent being in August 2005. These reports include our assessments of not just those activities that we believe violate agreements or commitments, but also activities about which we have serious compliance-related concerns. We have tried hard to include as much information as possible in the unclassified reports, and for anyone truly interested, you can find them on the State Department website.

After Libya's decision in December 2003 to abandon its WMD programs, I coordinated the day to day efforts in removing and eliminating these WMD programs, and I'll speak more about those efforts, and my observation about the impact of Libyan sanctions on their WMD programs, in a moment.

I view sanctions as a component of our compliance enforcement mandate: the process of acting on a determination that a party is not adhering to its obligations or international norms. Much like holding a firm line when states are not in compliance with their arms control, nonproliferation, or disarmament agreements, I believe it is equally important to hold entities, individuals, and governments accountable when they do not fulfill their WMD nonproliferation obligations. The proper use of sanctions is a key component of achieving the core objective of our nonproliferation policies - preventing rogue states and non-state entities from obtaining, transferring, or using nuclear, chemical or biological weapons. Along with the Bureau of International Security and Nonproliferation, we work closely with the rest of the State Department to prevent or halt these efforts.

Sanctions are an economic tool that requires the state or states imposing them to make a decision that is likely, especially in the short run, to impose costs on their own economy and commercial entities. No one should believe that this is an easy decision for any government to make. It is only when the potential long term benefits are important enough that it is reasonable to even expect use of that tool. And, the potential negative unanticipated consequences need to be understood and addressed. Without question, the spread of WMD and their means of delivery remain a grave threat to the United States and our allies, and the Bush Administration has adopted a muscular approach in implementing sanctions against WMD proliferators. In my experience, sanctions are most effective when implemented on a timely basis, closely tailored to deter the aberrant/harmful behavior, and when used as a part of a comprehensive policy to include diplomacy, interdiction efforts, and effective export controls. The reinforcing nature of such a comprehensive policy reflects the Administration's strategy of attacking nonproliferation with a layered approach to the WMD proliferation problem.

Proliferation depends upon networks of actors to enable the acquisition and delivery of WMD-they consist of financiers, logisticians, transporters and facilitators. The anatomy of a WMD transfer shows us several opportunities to implement the appropriate sanction on a certain activity: from the creation of the item-a chemical weapon precursor, a missile component, a centrifuge---to the transport of the item, to its delivery to the recipient, to the governments which allow an environment for such activities to occur, several targets appear upon which to apply sanctions to deter at least one of the actors in the proliferation chain from engaging in future transfers. Targeted sanctions against these entities can increase the cost to suppliers, transporters and recipients. They close prospective markets, and they encourage foreign governments to adopt more responsible nonproliferation practices to combat these networks. And the proliferation of WMD is, ultimately, a business: proliferating entities operate for profit and require access to the international financial system to conduct business. They are highly susceptible to public exposure and disruption of financing and support.

U.S. Sanctions Architecture

The United States has been the standard bearer for establishing nonproliferation norms, as well as penalties against those who contravene those norms. The Bush Administration has several authorities (tools in the sanctions toolbox, so to speak) to impose the appropriate sanction on an entity engaged in nefarious activity. Executive Order 12938 targets persons who materially contribute to the proliferation of WMD, and prohibits United States assistance and procurement and denies access to U.S. markets via an import ban. Executive Order 13382 authorizes financial sanctions, to include the freezing of assets and blocking transactions, against entities and individuals engaged in WMD proliferation. U.S. laws, such as the Iran Sanctions Act (formerly the Iran Libya Sanctions Act), the Iran, North Korea and Syria Nonproliferation Act, and the Arms Export Control Act, also authorize or require the imposition of sanctions against persons engaged in the transfer of WMD or their delivery systems. When possible, we share information regarding proliferation activities with our nonproliferation partners to maintain a solid, united front and to make a forceful statement against this behavior.

Multilateral Sanctions

Internationally, it is important to establish the proper legal framework to hold states accountable to adopt, implement, and enforce international norms against WMD proliferation. Questions of political will versus state capacity must be decided by voluntary efforts to build partner capacity while diligently overcoming resistance to adopting international nonproliferation norms, and the United States has worked hard to establish high standards for states to follow concerning WMD proliferation. Constructed under U.S. leadership, for example, UNSCR 1540 establishes obligations on states to implement and enforce legislation that prevents the transfer of WMD and its means of delivery to non-state actors. It is noteworthy that Resolution 1540, while it does not contain a sanctions regime expressly, was adopted under Chapter VII authority thereby making its obligations legally binding and punitive through Security Council authorization.

The question of whether the proliferation of WMD, or a state's failure to stem it, flows from the lack of will to adopt nonproliferation norms or the lack of capacity is a very important one: the lack of capacity is much easier to address than the lack of will. There are a myriad of programs to assist states who need and desire it--for instance, the United States has programs in place such as the State Department's Export Control and Border Security Program, which helps states establish, strengthen and enforce responsible export control policies consistent with international norms, as well as the Nunn-Lugar Cooperative Threat Reduction program, which assists former Soviet Union states in the security and dismantlement of WMD and their supporting infrastructure. In addition, United Nation Security Council Resolution 1540 also contains a provision to assist those states that lack the capacity to implement proper legislation and export controls, and the United States has volunteered to assist any state that needs such assistance. In short, the resources are there for states that have desire to control the spread of WMD and delivery systems, but lack the capacity.

The states that lack the will to join the effort in constraining the spread of WMD, or simply refuse to do so, pose the greater risk and a state's unwillingness to implement and enforce nonproliferation norms is much more difficult to address. The U.S. has set the standard for nonproliferation very high-as close to a ‘zero tolerance' policy as we can achieve, and that is why we believe the use of sanctions to be very important to reinforce the seriousness and the importance of the nonproliferation ideals.

The most effective sanctions take aim at the leaders responsible for illicit activity, and not the general public. The U.S. laws and executive orders I mentioned previously specifically target those entities or individuals engaged in the restricted activity, and the Bush Administration has used those authorities quite regularly. International support for targeted sanctions can be found specifically within the unanimous resolutions against Iran and North Korea. Against Iran, UN Security Council Resolutions 1737 and 1747 target not just the regime itself, but many of the entities and top officials involved in Iran's illicit activity and proliferation efforts. The leaders of Iran are responsible for making the decisions to defy the Security Council, and targeted sanctions against those leaders is appropriate. Some of the sanctions are aimed directly at increasing the difficulty for the regime to acquire the tools it needs for unacceptable activities, while other sanctions are designed somewhat more broadly, to make clear to the Iranian regime that it will pay a high price - in terms of lost economic opportunities and international stature - for its reckless policies. Administration officials from the State Department and the Treasury Department have engaged foreign officials to take similar restrictive measures to further Iran's isolation from the international financial community. As a result, Iran is experiencing difficulties in obtaining official export credits, entities and individuals have been denied access to major financial and commercial systems, and Iran is becoming increasingly more isolated from the international community.

Similarly, the UN Security Council's adoption of Resolutions 1695 and 1718, along with the multilateral six-party talks, have put significant pressure on the North Korean regime. The resolutions have obligated States to prevent the flow of financial and economic resources to, and freeze the assets of, entities involved or supporting North Korean WMD and missile proliferation. The show of unity within the Six Parties and from the Security Council in response to North Korea's activities have demonstrated that North Korea's behavior is a threat to all of our mutual security, and will not be tolerated.

Private Sector Initiatives

As a general rule, the private sector is for open trade, few regulations, and stable economies. However, in today's political environment, with technological advances making proliferation easier and more common, business interests are beginning to understand the need for a stringent governmental response to the destabilizing effects of proliferation.

In reaction to industry's growing awareness in proliferation issues, many have joined national governments in negotiations to advise them on the best path towards economic security and stability. This partnership between government and business leaders brings both authority and knowledge to the fight against proliferation.

This partnership, in many cases, is industry's answer to the concerns of their stockholders and investors. The desire for market stability, and in some cases, as gesture of patriotism, has led to unprecedented cooperation between national governments, governments and business, and business and their investors. For example, in the State of Florida, the state legislature passed and the governor signed a bill divesting the state pension fund of all stocks issued by companies doing business in terror sponsoring states.

An economic environment that supports cooperation between government and business and uses fundamental economic tools like divesture sends a strong message to rogue actors that their criminal activities are not only opposed by governments, but by the private sector and the citizens that invest in them. Private sector participation in the fight against proliferation is a key element in making this a safe, stable, and civilized world.

Libya Model

As I mentioned, I coordinated the planning and day-to-day activities in removing and disabling Libya's WMD programs after Libya made its historic decision in December, 2003 to renounce their WMD programs. I know that a lot of discussion has taken place about the motives for Libya's decision. The debate is well founded and instructional, but I view Libya as a success story of the proper balance of sanctions and diplomacy, and a model for other states similarly positioned to follow.

Success in any nonproliferation effort occurs when changed behavior lets us to remove sanctions, and I believe that Libya is a prime example of a regime choosing to give up its nuclear ambitions and support for terrorism because of pressure brought to bear by sanctions and diplomacy. It may be hard to draw a straight causal connection between the imposition of sanctions against a particular WMD program or proliferation and the cessation of those activities. But I can say this-as we removed and disabled Libya's WMD programs, we discovered--and this was confirmed by Libyan experts--that the progress of their programs was clearly impeded and slowed by their inability to gain access to key components and materials due to the imposition of sanctions. Many times, they were unable to procure the necessary materials, or it took a great amount of effort and resources to find a supplier (at greater cost to the Libyans) who would accept the risks and deliver a controlled item. Sanctions didn't completely stop Libyan efforts to develop WMD programs, but they certainly impeded and slowed their development until another resolution could be found. This is a key point to take away from Libya's history as we deal with both the Iranian and North Korean nuclear programs-sanctions alone may not compel an entity to stop its activities, but when combined with diplomacy and other pressures, they create resistance to progress to allow other alternatives to succeed.

Since its decision, Libya has worked closely with international organizations such as the IAEA and has been assisted by the U.S. to transparently and verifiably eliminate its WMD and MTCR-class missile programs. It has facilitated the removal of all critical elements of its previously undeclared nuclear program and turned over nuclear weapons documentation. It has worked with the international community to remove highly enriched uranium and agreed to convert its reactor at Tajura to operate on Low-Enriched Uranium fuel. Further, it has pledged to halt all military trade with countries of proliferation concern. And most notably, it has converted its notorious Rabta chemical weapons factory into a pharmaceuticals plant to combat infectious disease. As a result, most U.S. and UN sanctions have been removed, diplomatic relations are being restored, and Libya is back on the path to becoming a productive member of the international community.

Summary

So, to answer the question posed for the panel: "Are sanctions effective?" I say without hesitation, yes. They remain a useful tool in our diplomatic arsenal. The designations of certain entities and individuals as proliferators, both under U.S. authorities as well as under U.N. Security Council resolutions, have prompted many businesses and institutions around the world to scale down or terminate completely their dealing with proliferators. They have become more sensitive than ever about the very substantial risks, both legal and to reputation, posed by doing business with proliferators. As a result of the loss of access to many financial institutions, proliferators and the illicit actors supporting them have been forced to wage an aggressive campaign to revise their financial networks, looking for alternative avenues to conduct business. Quite simply, it has become harder and more costly to proliferate, and it is for this reason that we must remain vigilant to ensure that entities engaged in proliferation and illicit activities are denied traditional avenues of doing business worldwide.

Used properly, sanctions pressure entities, regimes, and governments to adopt a more responsible posture towards WMD proliferation. The U.S. is targeting additional entities and encouraging other governments to scrutinize the activities of rogue financial institutions and limit or end their business dealing with them. We will continue to support international initiatives as we improve our multilateral tools to combat the threat of proliferation, as well as work with our partners on ways to strengthen our mutual efforts to create a stronger, more effective, nonproliferation architecture.

Thank you.