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Managing Smart Sanctions Against Terrorism Wisely

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Q:\wwwroot\NESL\lawrev\Vol36\36-4\36-4 19 Fitzgeraldmacro.doc Printed On 1/7/2003: 957 Managing “Smart Sanctions” Against Terrorism Wisely Peter L. Fitzgerald∗ INTRODUCTION Economic sanctions, tools that seek to deprive terrorist organizations of the financial ability to support and conduct operations such as the attacks on Washington and New York, are among the U.S. government’s most powerful weapons in the war on terrorism. Sanctions greatly expand the reach of the government’s own anti-terrorism efforts, by effectively enlist-ing the aid of the financial and trading communities in identifying and blocking access to assets belonging to terrorist organizations and their supporters. However, there is a significant difference between simply serving political goals by announcing sanctions, and promulgating con-trols that are actually effective in combating terrorism. Osama bin Laden and his Al Qaeda network were targeted by a number of different sanctions well before the events of September 11th, as part of a series of anti-terrorist programs that date back to the mid-1990's. Addi-tionally, other sanctions were aimed at the Taliban in Afghanistan, and many other states believed to support or sponsor terrorist activities. Fol-lowing the attacks, this basic anti-terrorist sanctions framework was bol-stered with a new Presidential Executive Order on Terrorism1 as well as a U.N. Security Council Resolution2 calling for similar sanctions by other nations. Given the new appreciation of the very real need to deprive ter-rorists of the ability to finance attacks like those that occurred late last ∗ Peter L. Fitzgerald, Professor of Law, Stetson University College of Law. All rights reserved. Professor Fitzgerald was formerly counsel to the IBM Export Regulation Office, and recently testified before the Congressionally created Judicial Review Commission on Foreign Assets Control. Portions of this article appear in Tightening the Screws: The Economic War Against Terrorism, 66 NAT. INT. 76 (Winter 2001 – 2002). 1. Blocking Property and Prohibiting Transactions with Persons who Commit, Threaten to Commit, or Support Terrorism, Exec Order No. 13,224, 66 Fed. Reg. 49,079 (Sept. 25, 2001). 2. On September 28, 2001 the Security Council adopted the resolution on Threats to International Peace and Security Caused by Terrorist Acts, S.C. Res. 1373, U.N. SCOR, 56th Sess., 4385th mtg., U.N. Doc. S/RES/1373 (2001).Q:\wwwroot\NESL\lawrev\Vol36\36-4\36-4 19 Fitzgeraldmacro.doc Printed On 1/7/2003: 958 NEW ENGLAND LAW REVIEW [Vol. 36:4 year, one might ask how these controls can be made more practical and effective in the ongoing war on terrorism than they evidently proved to be in the past? The government’s anti-terrorist sanctions are neither isolated nor unique regulatory programs. Rather, they are but a small part of twenty-one simi-lar, yet ostensibly separate, economic sanctions programs administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). When Saddam Hussein threatens peace in the Middle East; when Slobo-dan Milosevic conducts ethnic cleansing in the republics of the former Yugoslavia; when human rights are abused in Sudan or Burma; when re-gional peace and stability is threatened in Liberia or Sierra Leone; when international terrorism, narco-trafficking, or weapons proliferation prob-lems arise; economic sanctions are frequently the government’s first -- and principal-- tool for dealing with these and a host of other similar complex and intractable international policy issues. The Terrorist Sanctions Regulations (TSR), promulgated in 1996, re-quire “U.S. persons” (i.e., U.S. citizens or residents wherever they may be located, and U.S. business entities including their overseas branches) to block or “freeze” the assets of those who threaten the Middle East peace process.3 The TSR also prohibits unlicensed transactions with such parties.4 When the President signed Executive Order No. 13,224 on Sep-tember 23, 2001, these controls were expanded to cover all global terror-ism.5 The Foreign Terrorist Organizations Sanctions Regulations (FTOSR), published in 1997, criminalize providing support or resources to foreign terrorist organizations designated by the Secretary of State. Addi-tionally, a broad range of U.S. affiliated financial institutions and busi-nesses providing financial services are required to block funds in which the designated terrorist organizations, or their agents, have any interest.6 Bin Laden and Al Qaeda are listed among the targets of both of these sanctions programs.7 Moreover, unlicensed financial dealings with the governments of states which have been designated by the Secretary of State as supporters of terrorism pursuant to the Export Administration Act -- Cuba, Iran, Iraq, Libya, North Korea, Sudan, and Syria -- are criminal-ized under OFAC’s Terrorism List Governments Sanctions Regulations 3. See 31 C.F.R. pt. 595 (2001). 4. See id. 5. See Blocking Property and Prohibiting Transactions with Persons who Commit, Threaten to Commit, or Support Terrorism, Exec. Order No. 13,224, 66 Fed. Reg. 49,079 (Sept. 25, 2001). 6. See 31 C.F.R. pt. 597 (2001). 7. See infra notes 49-58, and accompanying text.Q:\wwwroot\NESL\lawrev\Vol36\36-4\36-4 19 Fitzgeraldmacro.doc Printed On: 1/7/2003 2002] MANAGING “SMART SANCTIONS” 959 (TLGSR) issued in 1996.8 The Treasury Department also maintains sepa-rate stand alone economic sanctions programs targeted at each of these countries, with the exception of Syria.9 Among its other country-specific sanctions programs, OFAC also prohibited unlicensed dealings with the Taliban-controlled portions of Afghanistan and required U.S. persons to block all assets in which the Taliban has any interest under the Taliban (Afghanistan) Sanctions Regulations (TASR).10 As an alternative to the use of force, there are compelling reasons for employing such sanctions. Over the last twenty-five years the United States became known for its willingness to use sanctions for a variety of purposes, either unilaterally or in conjunction with its allies. The policy debates associated with the use of economic sanctions usually focus upon the question of whether unilateral sanctions are effective or valuable -- whether they represent “good” policy.11 Indeed, since less than one-third of the funds attributed to Osama bin Laden or his network were frozen by


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