July/August 1995, pgs. 37, 97

Trade and Finances

Clinton's Executive Order on Iran: Taking It From AIPAC and Al Gore

By Colin MacKinnon

President Clinton's April 30 executive order banning U.S. trade with Iran is a stunning victory for the Israel lobby. The lobby got Clinton to take one of two pieces of Iran embargo legislation submitted this year by New York's Senator Alphonse D'Amato and make it his own. Why a lobby victory? D'Amato, as readers of the Washington Report will know, is a major boomer on the Hill for Israel. What they may not know is that the D'Amato legislation is AIPAC legislation.

The American Israel Public Affairs Committee's chief Middle East analyst, Keith Weissman, told the Washington Report that AIPAC had actually written the two D'Amato bills. It's a thoroughly believable claim. AIPAC writes a lot of legislation and gets it passed, though the organization's lawyers are usually not so sloppy in their work.

What's unusual here is the spectacle of a Democratic president taking an AIPAC-authored bill from a Republican senator, a troglodyte at that, and enshrining it as an executive order.

What the Order Does

Here in brief is what the order does: U.S. companies can no longer sell goods or services to Iran, not a nickel's worth. It doesn't matter whether the companies are located in the United States or are U.S. subsidiaries based somewhere else: if they're U.S. owned, they can't sell. U.S. banks can't finance Iranian trade anywhere in the world. Americans can't do anything to broker such trade.

The order also keeps in effect an older, Reagan-era prohibition on importing Iranian goods. Save for books and newspapers, U.S. residents can't bring anything Iranian into the U.S.: no carpets, no pistachios, no nothing.

This is small stuff, though. The main purpose of the order is to stop U.S. oil companies—Exxon, Amoco, Mobil, others—from their practice of acting as intermediaries in the oil trade between Iran and Iran's customers in Europe and the Far East. Last year, the U.S. companies' share of the trade came to some $4.5 billion, about a quarter of Iran's export earnings. The Europeans bought, the Iranians sold, and the Americans took a cut. The trade must have been lucrative, but it's over.

Such was the D'Amato bill, known at AIPAC as "D'Amato I" and now incarnated as Executive Order 12959.

The White House press office explained that the order underscored U.S. "opposition to the actions and policies of the Government of Iran, particularly its support of international terrorism and its effort to obtain materials and assistance critical to the development of nuclear weapons."

The order was issued only hours before President Clinton was set to leave for Moscow for discussions with Boris Yeltsin over, among other things, a proposed Russian sale of a nuclear reactor to Iran. Clinton felt he had to demonstrate to the Russians, as well as the Europeans, U.S. willingness to give up sales to the Iranians. As it happens, the Russians went ahead with the sale.

D'Amato II

The senator has another Iran bill in his briefcase which AIPAC calls D'Amato II and which is even zingier. This one would ban foreign companies that deal with Iran from selling any of their products to the U.S., in effect forcing foreign companies to choose between the Iranians and us.

If enacted, the bill would stir up our European and Asian allies like no other trade restriction. It would also provide vast opportunities of employment for lawyers and require an enormous bureaucracy to enforce.

As Columbia University Iran scholar Gary Sick put it in May, if D'Amato II is passed, "a blizzard of presidential waivers will be required...making a travesty of the legislative process and clogging the courts with frivolous litigation...corporate lawyers and entrepreneurs with a taste for complex legal dodges will have a field day, creating a swamp of evasive corruption."

AIPAC's Brief

To push its legislation, AIPAC released a 76-page brief on March 29 called "Comprehensive U.S. Sanctions Against Iran: A Plan for Action." The brief, a major piece of work, argues that Iran is a threat to its neighbors, is developing weapons of mass destruction, sponsors international terrorism, and opposes the Arab-Israeli peace process. The brief goes on to call for passage of D'Amato I and II.

None of AIPAC's claims are new. The administration itself had been saying the same things almost since day one and has found it increasingly embarrassing that U.S. companies have been dealing with Iran. The U.S., as part of its effort to get Iran to change its behavior, has been trying to talk the Europeans into curtailing their trade with the Islamic Republic. The Europeans for their part have simply pointed at Exxon et al. and gone about their business.

Why the AIPAC Fuss?

There's no doubt that Israel is deeply concerned about Iran's nuclear potential. But why has AIPAC been making such a fuss just now? And not just AIPAC. It was Israel's sympathizers who made a full-court press on op-ed pages (A.M. Rosenthal, Thomas Friedman) and in the halls of Congress to get a total U.S. embargo slapped on Iran. Why?

Eric Rouleau, the noted French journalist and Middle East expert, may have it right. Speaking in mid-June at a conference at the Woodrow Wilson Center in Washington, Rouleau speculated that domestic pressures in Israel may have brought the Rabin government around to a tougher general stance in the region.

Rouleau also noted that Israel's neighbors, led by Egypt, had been calling on the Jewish state to sign the Nuclear Non-Proliferation Treaty. In response, Rouleau suggests, Israel decided to play up the Iranian threat and get Uncle Sam on board.

Curiously, whenever American companies seemed to be doing deals with the Islamic Republic, Israeli "intelligence sources" leaked to friendly journalists various estimates as to how long it would take the Iranians to build a bomb. The bigger the deal, the shorter the estimate.

Thus Conoco's announcement in March that it had signed a $1 billion contract with Iran to develop an offshore oil field seemed to trigger a three-year estimate to an Iranian bomb, down from an earlier seven to ten years. (Clinton banned the Conoco deal.)

But does an essentially unilateral American embargo make any sense at all? Probably not. It may show purity of heart, but it won't impress Iran's other trading partners. It is simply another way of not dealing with Iran.

Military analyst Anthony Cordesman, speaking at the same conference with Rouleau, said the D'Amato bills "would not go down in history as carefully thought-out policy based on the advice of area experts." Going after Iran is easy domestic politics in the U.S., said Cordesman, "but just because it's a cheap shot doesn't mean you should take it."

U.S. sales to Iran were headed up in 1995. First-quarter export figures—$133.6 million—were double those of the year before. You can't say for sure in these things, but if the first-quarter figures meant anything, the U.S. could easily have sold half a billion dollars worth of goods to the Iranians this year.

Most U.S. sales to Iran over the last few years have been plain-vanilla oil field equipment, food, machine tools, Caterpillar farm machinery, Madonna videos, blue jeans. No atom bombs, of course, and no chemical weapons precursors.

A lot of this American stuff will get to Iran anyway, via entrepêts like Dubai. If the Iranians want Madonna videos or whatever, they'll get them. Otherwise, whatever sales the Americans abandon, the Europeans and Asians will pick up.

In the end, the president has not embargoed the Iranians. He has embargoed the Americans. And we can thank AIPAC.

Colin MacKinnon is chief editor of the Washington-based Middle East Executive Reports.