February 1, 2004

Economic sanctions have been a frequently used tool of U.S. foreign policy in recent years. One of the most controversial applications of sanctions has been through the Iran-Libya Sanctions Act (ILSA), which was originally passed into law in 1996 and renewed in 2001. Events since the Act’s passage have, however, raised questions about the effectiveness of ILSA in particular, and sanctions in general, as foreign policy tools.

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U.S. relations with both Iran and Libya are poised at a critical stage, albeit in very different ways. Thus it is timely to review the recent experience and impact of the sanctions weapon. To contribute to this debate, the Atlantic Council asked Ambassador Stuart Eizenstat to write about his personal experiences with ILSA and other U.S. sanctions. Over the course of nearly two decades, Stu Eizenstat was at the center of implementing U.S. sanctions, and therefore has considerable first-hand experience with which to judge how well these have advanced U.S. policy or served U.S. interests. The Council is most grateful that he agreed to take on this project and thanks him for bringing his unique perspective to bear on it.

Executive Summary

The 1990s saw a cascade of contentious sanctions legislation. Congress passed the Antiterrorism and Effective Death Penalty Act of 1996, including an amendment to the Sovereign Immunities Act, which permits lawsuits against governments on the terrorism list – a major step in denying foreign governments normal immunity from suit in U.S. courts. The Iran-Libya Sanctions Act (ILSA) was also passed in 1996, with the goal of discouraging third-country companies from investing in Iran or Libya. This sparked outrage from European countries, which objected to the act’s “extra-territorial” reach, and from the European Union (EU) institutionally, which responded with a law barring any European company from complying with the legislation (and with similar provisions regarding Cuban trade under the controversial Helms-Burton Act).

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