NFTC Urges Congress to Allow ILSA to Expire

Wednesday, 9 May 2001

“After five years, any objective review will conclude that ILSA has not achieved its own objectives,” Reinsch said. “We are strongly convinced that ILSA has been entirely ineffective and that it is counterproductive for U.S. interests. ”

When enacted in 1996, ILSA was intended to deny Iran and Libya the capital needed to develop oil and gas exports, and in turn, the ability to develop and acquire weapons of mass destruction.  Instead, Reinsch said, “ILSA is creating collateral diplomatic damage to U.S. interests for essentially symbolic purposes.  In short, it does not meet a national interest test.”

“U.S. national security issues should always be of paramount concern.  However, this case requires a far more sophisticated and target approach than ILSA offers,” Reinsch continued.  “ILSA is nothing more than a blunt instrument that hinders the real work of U.S. diplomacy.”

Despite ILSA’s extraterritorial sanctions, both Iran and Libya receive significant capital investment in their oil and gas sectors. Last March, the Congressional Research Service reported that $10.5 billion of foreign investment has taken place in Iran’s oil and gas sector since 1997. Iran expects $1.5 billion to be invested in its petrochemical sector this year. These investors include France, Canada, Italy, Japan, the UK, among others – companies from our closest allies and most important trading partners, which have not been deterred by the threat of ILSA.

“Our sanctions policy toward Iran and Libya has been ceding those markets to our foreign competitors,” Reinsch continued, recommending that Congress work with the Administration as it develops its policy toward Iran and Libya.

“We urge Congress to continue its review of the utility of using unilateral sanctions as an instrument of foreign policy.  ILSA has not been effective in isolating Iran or Libya, but it has been very effective in isolating the United States from these two countries," he said.

“Allowing ILSA to expire would clear the way for a new policy based on current realities, and better designed to U.S. interests and carefully considered policy objectives,” Reinsch concluded.

The National Foreign Trade Council is a leading business organization advocating an open rules-based world economy. Founded in 1914 by a group of American companies that supported an open world trading system, the NFTC now serves more than 500 member companies through its offices in Washington and New York.

USAHENGAGE is a coalition of over 670 small and large businesses, agriculture groups and trade associations working to seek alternatives to the proliferation of unilateral U.S. foreign policy sanctions and to promote the benefits of U.S. engagement abroad.  For more information on USAHENGAGE and the harmful effects of unilateral trade sanctions, visit the USAHENGAGE web site at www.usaengage.org.