US sanctions policy 'riddled with loopholes'

The UN Security Council meets to debate further lifting sanctions on Iraq, 15 December Mr Eizenstat said the credibility of the US before its international partners was at stake

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US sanctions tend to be riddled with exceptions that are neither humanitarian nor democracy-related, a former US sanctions official has said.

Stuart Eizenstat, a deputy treasury secretary in the Clinton era, told the BBC World Service that such loopholes were created by lobbying groups.

A New York Times report found evidence of US firms trading legally with blacklisted countries such as Iran.

Loopholes and exemptions were exploited in a trade worth billions of dollars.

An office of the US treasury department granted nearly 10,000 licenses for deals involving blacklisted countries over the past decade, the newspaper said.

Most of the licenses were approved as agricultural and medical humanitarian aid exemptions but the law governing them had been written so broadly that allowable items came to include cigarettes, chewing gum, hot sauce and weight-loss remedies, the New York Times found.

Start Quote

I don't like the word 'hypocrisy' but I think it implicates the integrity of the sanctions”

End Quote Stuart Eizenstat Former US deputy treasury secretary

More serious deals approved included

  • Permission for a US firm to bid on a pipeline job that would have helped Iran sell natural gas to Europe, even though the US opposes such projects
  • Permission for several US firms to trade with foreign companies believed to be involved in terrorism or weapons proliferation

Stuart A Levey, the Obama administration's point man on sanctions, responded by saying that to focus on the exceptions missed "the forest for the trees".

"No one can doubt that we are serious" about our sanctions, he said.

'Integrity at stake'

Mr Eizenstat told the BBC that some exemptions were entirely appropriate, such as the export of software that Iranian opposition figures might use.

"But one of the problems is that our sanctions policies tend to be riddled with exceptions that are neither humanitarian nor related to democracy promotion but really are put in by particular industries or interests to create loopholes," he said.

Most exemptions are inserted into sanctions legislation by individual members of Congress acting in the interests of a particular state or industry, he said.

"In that case, the administration oftentimes has no choice but to accept them if it wants to pass the broader sanctions passed," he added.

Such exemptions are not a secret but could become a problem over time without proper oversight by the executive, Mr Eizenstat suggested.

It would be difficult, he added, for the US to rally support for international sanctions if its own policy looked ineffective.

"I don't like the word 'hypocrisy' but I think it implicates the integrity of the sanctions," the former US treasury official said.

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