Econimic sanctions

Gregory Alan Bolcer (
Wed, 03 Jun 1998 10:04:52 -0700

Lungren held his election party last night in
Newport Beach. I should have grabbed Rohit and
crashed it, but I was already home when I figured
it out.

Speaking of governments, the US decided to loosely
interpret the sanctions arguement. Maybe Clinton
reads FoRK?


Posted at 9:07 p.m. PDT Tuesday, June 2, 1998

U.S. eases tech sanctions
on India, Pakistan

Mercury News Washington Bureau

WASHINGTON -- The Clinton administration has
decided to loosely interpret the law requiring
mandatory sanctions against India and Pakistan for
nuclear testing, allowing high-tech companies more
freedom to ship their products to those countries.

At least for now.

The 1994 sanctions law requires punishment of any
non-nuclear country that conducts nuclear tests -- as
India and then Pakistan did last month. The goal is to
keep U.S. technology from being used to develop
nuclear weapons.

But the law is open to interpretation as to what kinds
of high-tech goods will be prohibited, as well as
what kinds of financial services will be permitted
with the two countries. And since the sanctions had
not been invoked until now, officials from several
government agencies are scrambling to determine
how they should be put into place.

That might take a while. So the administration late
Friday issued an interim ruling that prohibits U.S.
companies from exporting anything to the Indian or
Pakistani governments or any quasi-governmental
entities involved in weapons development. It also
suspended the export licenses of a few U.S.
companies authorized to export nuclear or missile
technology or high-performance computers.

Companies that have contracts with private
businesses in India and Pakistan generally are not

That looser interpretation, issued by the Commerce
Department, is what U.S. high-technology
companies, banks and other firms have been quietly
lobbying for, saying the sanctions should not hurt
U.S. businesses whose products are marginally
related to developing nuclear weapons, such as
makers of high-end microprocessors and computer

American companies exported $3.62 billion in goods
to India in 1997 and $1.22 billion in materials to
Pakistan, according to Commerce Department
figures. High-tech industries make up a small part of
that figure, but they have established a growing
presence in India, seen as a potentially lucrative

It's not clear how long the initial interpretation may
stand. Officials from the Commerce, State, Defense
and Treasury departments met Tuesday and expect to
meet again as they try to sort out how the sanctions
law should be imposed, and could have a decision as
early as next week.

``For everyone involved, for the government, for
companies, for people producing different kinds of
products, there's great uncertainty out there,'' said
Daniel Burton, vice president of government
relations for Novell, Inc., a Silicon Valley firm that
makes networking software. ``The government
tomorrow could say nobody's going to export
anything to India, period . . . or it could say
as usual. Or anything in between that.''

Novell has an ongoing joint venture in India with a
software company to work on the Year 2000
computer problem -- whether some computer
software will malfunction when the calendar flips to
01-01-00. Burton said they are worried the project
might be affected by sanctions against India, but
according to the Commerce Department's guidelines,
that project appears to be allowed to continue.

In a May 14 letter to Samuel Berger, President
Clinton's assistant for National Security Affairs, the
Industry Coalition on Technology Transfer, a group
of five high-tech trade associations, noted the
administration has ``broad discretion'' regarding
export of so-called dual-use items -- goods that can
be used for nuclear development as well as
commercial purposes.

``The principal consumers of these items in India are
not the government and its nuclear weapons
activities, but nearly 1 billion private citizens,''
wrote Eric Hirschhorn, executive secretary of the
group. ``Forcing Indian businesses and consumers to
buy civil aircraft, computers, electronics and the
from Europe and Japan instead of from us will not
affect India's nuclear weapons policy.''

Hirschhorn and other industry lobbyists have been
critical of sanctions imposed only by the United
States, which, they argue, allow companies in
Europe and elsewhere to step into markets at the
expense of firms in the United States.

``It's been said that unilateral sanctions are like
damming half a river,'' Hirschhorn said Tuesday.
``We're not the only ones with this technology -- any
technology -- these days.''

But in light of the unsettling nature of the nuclear
tests conducted by India and Pakistan, U.S.
companies have had to pursue a careful and quiet
effort to convince the Clinton administration not to
be too broad in the sanctions it imposes.

``This is a very, very special situation. There's not
many people who are saying let the Indians and
Pakistanis test. . . . They're still lobbying, but you
don't see the big publicity,'' said Judith Lee, an
international trade lawyer with the firm of Gibson,
Dunn and Krutcher in Washington. ``It's a very
serious development. It's extremely destabilizing,
and businesses know the burden of addressing that in
terms of economic sanctions is going to fall on them.
The question is how can you reduce that to an
acceptable level.''

Given those concerns, one lobbyist who did not want
to be identified said the Commerce Department's
interim guidelines are ``about as good as we could
have hoped for.''

When the sanctions law was passed, ``the assumption
was that it would prevent itself from being enacted,''
Burton said. ``That sort of fail-safe didn't work, so
now we're in the sanctions game.''