Contributing Lawyers


Cyndee Todgham Cherniak

United States

Susan Kohn Ross


Andrew Hudson

Libya and Economic Sanctions – What Does It Tell Us About the Future?

Originally published in the Journal of Commerce magazine, March 2011

Understandably, the current focus of international news coverage has turned from regime change in Tunisia and Egypt to the events taking place in Libya. Compelled by circumstances to take action, the United Nations on February 26, 2011 passed Resolution 1970 which imposed a number of conditions on Libya’s Muammar Qadhafi, along with selected members of his family and a close circle of advisors. For purposes of this column, the most relevant condition is the travel ban.

The uprising in Libya occurred in the days leading up to an American Bar Association program entitled: "Economic Sanctions: Are They Effective Tools of U.S. Foreign Policy?" which took place on February 28, 2011. When we planned the program, the focus was going to be on unilateral versus multilateral sanctions and how to measure their effectiveness, but clearly, we were overtaken by events. The speakers consisted of Anthony Christino III, Director, Foreign Policy Division, Nonproliferation and Treaty Compliance, Bureau of Industry and Security; David Calibrese, Law Professor, George Washington University; Gary Clyde Huffbauer, Senior Fellow, Peterson Institute for International Economics; and William A. Reinsch, President, National Foreign Trade Council. In the last minute, James Henry Bergeron, Political Advisor, Striking Force NATO, was able to join by telephone from Europe.

Mr. Christino addressed current efforts being taken at BIS to stop the illicit acquisition of dual use items. Mr. Bergeron made comments from his perspective on the ground and involved in the imposition of sanctions. He mentioned that political pressure and economic effect are typically the reasons for any sanctions. Their impact is to make product more expensive, but the more partners to the sanctions, the better. The world has changed. Called foreign availability, many more companies throughout the world are now producing many of the same products American companies produce and at the same quality. Therefore, unilateral sanctions are becoming less effective as a tool of American foreign policy. Barring American companies from trading with certain countries or parties only opens the door for others (e.g., China, India, etc.) to trade with those same countries, companies and individuals.

David Calibrese has conducted studies about sanctions and their effectiveness. He noted that sanctions are most successful when the goals are limited and well-defined, and the targets are friendly or democratic, rather than antagonistic and run by autocrats. The trend with sanctions is for them to be multilateral. With notable exceptions, e.g., North Korea and Iran, sanctions are now tending to be focused on Africa and non-state actors.

An alarming trend with sanctions was commented on by Mr. Calibrese and Mr. Reinsch, which is the increasing activity by state and local entities, specifically through controls put on investments by pension funds. As more levels of government decide to take action, it causes enormous compliance headaches. Sounding familiar from other contexts, the rules are not uniform; in fact, they are often contradictory. One alleged bad actor is banned by one regulator in one jurisdiction, but does not appear on the list published by another regulator located elsewhere. Mr. Reinsch also pointed out that with the 24/7 news cycle, there is too much visibility and too little time to evaluate and think, which leads to unintended consequences. We saw that with the Libyan situation, where President Obama had the good sense to wait to make any critical remarks until all Americans were out of the country, at the same time, many Members of Congress could be found all over the news cycle demanding action without any regard to what that action should consist of or the consequences of their comments.

Mr. Huffbauer reiterated that autocrats are less susceptible to sanctions and pointed to Libya as a prime example. Things seemed to be going positively there for years, but obviously not now. There is a long history of bad relations between Libya and the U.S. and U.K. which we saw played out again as Mr. Qadhafi made a speech in front of his bombed out former home. Mr. Qadhafi’s insistence on keeping power by any means, coupled with that long-standing antagonism, is working against the U.S. having much influence towards a positive outcome. Now there is talk about a "no-fly" zone. Can that be made to work without putting the American military in harm’s way in yet another volatile area of the world? Is the solution cratering airport runways to stop military jets from taking off? What about destroying aircraft radar detection equipment? Is there a point at which acting to protect the Libyan population becomes an act of war that turns a U.N. resolution into putting Americans lives at stake in a part of the world where the U.S. is already struggling with its position and influence? While these are admittedly difficult questions with obviously complicated answers, perhaps the last question posed by the panel is the most telling and difficult one – what is the alternative?

So, when it comes to Libya, what is the alternative? Why bring up U.N. Resolution 1970? It requires the seizure of significant assets. The EU, UK, Switzerland and Canada have followed suit with comparable national orders. The U.S. was prepared to go it alone, and so the day before the U.N. action, Pres. Obama issued Executive Order 13566. The result was the U.S. seized a reported $30 billion in assets, more than under all prior sanctions programs combined! Britain is reportedly ready to seize £20 billion now that its nationals have gotten to safety. So far there is no change at BIS, but State/DDTC has suspended all existing licenses and not approved any new ones, State has already denied new visas to those closely associated with the Qadhafi regime. FinCEN previously issued updated instructions to banking institutions. OFAC has issued a general license allowing for the provision of goods and services to the diplomatic missions of Libya located in the U.S. and now we come back to the travel ban. Remember the earlier comment about from Bill Reinsch about unintended consequences? What is the goal of the U.N. resolution? Is it to quell the uprising of the population? Clearly that is not working. It appears something else is intended as the U.N. resolution talks in terms of freezing the assets of Qadhafi and his close family and advisors and making them available to the people of Libya. 1970 includes the provision, the U.N. also "[d]emands an immediate end to the violence and calls for steps to fulfil [sic] the legitimate demands of the population, ..." That certainly sounds like regime change, so if that is the goal, how does a travel ban on Mr. Qadhafi and his family accomplish it? This sounds like a really good example of yet another unintended consequence – how do you get Mr. Qadhafi to leave office while at the same time banning him from leaving the country? This is not Egypt where Mr. Mubarak left relatively peacefully to Sharm-El-Sheikh. Does the U.N. travel ban make sense to you?

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