472law5.txt EXCERPT FROM IRAN CHAPTER OF ROGUE REGIMES Extraterritoriality Politics and Idealism Trump Alliance Obligations There is a convergence of bureaucratic and domestic politics with idealism and perceived interests. As a result, alliance politics have little influence on American policy regarding terrorism and weapons of mass destruction. In this respect, threat perceptions of the Pentagon, the pro-Israel community, counter-terrorist ideals, and principles against proliferation prevail. Even though the allies oppose designating countries as rogues, their opposition was comparatively mild when Secretary of State George Shultz placed Iran on the list of states that sponsor international terrorism on January 13, 1984. He thereby subjected Tehran to a set of anti-terrorism laws, including the Anti-terrorism and Effective Death Penalty Act of 1996. In a prohibition of assistance to terrorist states, this Act imposes penalties upon U.S. persons who engage in a financial transaction with a country knowing, or having reason to know, that it has been designated under the Export Administration Act as a country supporting international terrorism. Because U.S. persons are the subject of the 1996 anti-terrorism law, the allies have little problem with its prohibitions. What is at issue for the allies in the Iran and Libya Sanctions Act is that Washington applies its laws to any person, e.g. to either humans or foreign firms that trade and invest with Iran and Libya. In response to the Act, the European Union voiced its strong opposition: There is no doubt that the Iran/Libya legislation is a case of extraterritorial application. American sanctions can be imposed even if the relevant parties are located outside of the U.S. and the transactions involve no American financial instruments or technology. The European Commission, ...fails to see why the United States needs to hit out at its friends while targeting its adversaries. Because of the convergence of politics, idealism, and perceived interests the United States hurts its friends while targeting its enemies. In addition to this convergence, there are legal precedents for American sanctions against foreign persons. These precedents include the Arms Export Control Act of 1967, the Iran-Iraq Non-Proliferation Act of 1982, and the Foreign Relations Authorization Act of 1994. There are also the Anti-Economic Discrimination Act of 1994 and the National Defense Authorization Act for 1993. They penalize foreign persons who support the Arab boycott of Israel. These two Acts restrict the Departments of State and Defense from doing business with foreign persons who comply with the Arab boycott of Israel. Despite the U.S. assertion of legal precedents for its claim of extraterritoriality, the EU passed its own regulations that make it difficult for its Member States to comply with the American secondary boycott of Iran and Libya. In addition, the EU mounted a challenge to the United States through the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO). The EU went to the WTO with its opposition to U.S. claims of extraterritoriality. The EU Council of Foreign Ministers called for a WTO dispute settlement panel that would deal with the issue of extraterritoriality. But because the GATT permits a signatory state to adopt measures that protect its national security, it allows economic sanctions by Member States. Despite Irans attempt to divide America from its allies and the U.S. extension of its laws against Iran to them, the battle is still mainly between Washington and Tehran. The Export Administration Act of 1979 seeks to limit the military capability of a foreign state to sponsor international terrorism. The Act contains a list of exports subject to national security controls, such as dual-use items that can be used for both civilian and military applications. Additional laws relevant to anti-terrorism are Section 620 (a) of the Foreign Assistance Act. It prohibits American financial assistance under that Act as well under the Agricultural Trade Development Act, the Peace Corps Act, or the Export-Import Bank Act to any country designated by the Secretary of State to be a supporter of international terrorism. The Arms Export Control Act contains prohibitions regarding international terrorism. One restriction requires that decisions as to whether to approve an export take into account whether that item would be used in support of international terrorism. 2 The Act applies to both a United States person and any person. Thus, it applies to foreign firms trading with Iran and Libya. 3 European Commission, EU Reacts to Iran/Libya Legislation, European Union News (July 23, 1996), No. 44/96. 4 In addition, The Missile Technology Control Regime (MTCR) provisions in the Arms Export Control Act apply to foreign persons. The penalties deny future U.S. government contracts and the right to export to the United States to foreign persons in violation of the MTCR. 5 The primary boycott banned direct Arab trade with Israel. The secondary boycott prohibited any non-Arab country from trading with Israel. And the tertiary boycott forbade companies from dealing with persons on the secondary boycott list. 6 European Commission, EU Reacts to Iran/Libya Legislation, European Union News (July 15, 1996), No. 42/96. 7 GATT Article XXI: Nothing in this agreement shall be construed...to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests... . Acknowledgments to the American Israel Public Affairs Committee for suggestions about prior American economic sanctions on Iran, precedents for extraterritoriality, and the GATT.